By Tim Hepher
PARIS (Reuters) -India is working to resolve discrepancies between global aircraft leasing rules and its national bankruptcy laws, the country’s aviation secretary told Reuters on Monday on the sidelines of the Paris Airshow.
A resolution could help lessors to Go First airline reclaim their planes and fly them out of the country after the carrier filed for bankruptcy protection in May, a move that resulted in a freeze on all its assets including the jets.
The freeze came even though some lessors had already terminated leases and placed requests with the aviation regulator to repossess dozens of planes prior to granting of bankruptcy protection.
The repossession requests, however, were put on hold as local laws supersede global aircraft leasing rules under the Cape Town Convention – a treaty designed to protect repossession rights. India has ratified the treaty but there was no local legislation enforcing it, rendering it ineffective.
The government is working to resolve the discrepancy between the Cape Town Convention and India’s bankruptcy rules which may involve an amendment to the national laws, aviation secretary Rajiv Bansal said, adding that he expected to have clarity in the next few weeks.
Lessors have warned that India’s decision to block leasing firms from reclaiming Go First planes will jolt the market and raise costs for all airlines, while also making the world’s fastest-growing aviation market a ‘risky jurisdiction’.
(Reporting by Tim Hepher in Paris, additional reporting by Aditi Shah in New Delhi; editing by David Evans and Jonathan Oatis)
