Context:
The Rajya Sabha has approved the Protection of Interests in Aircraft Objects Bill, 2025, aligning India’s legal framework with the Cape Town Convention and Protocol. This legislation aims to streamline aircraft leasing regulations, protect the rights of lessors, and reduce disputes arising from unpaid dues by airlines.
Key Provisions of the Bill
- Legal Clarity for Lessors: Establishes clear guidelines for aircraft repossession and dispute resolution in case of payment defaults.
- DGCA’s Authority: Recognizes the Directorate General of Civil Aviation (DGCA) as the key regulator for implementing the treaty’s provisions.
- Enhanced Creditor Rights: Ensures standardized enforcement mechanisms for creditors under the Cape Town Convention.
Expected Benefits
For the Aviation Industry
- Lower Leasing Costs: Expected to reduce leasing expenses by 8-10%, benefiting airlines financially.
- Stronger Leasing Industry: Encourages investment in India’s aviation sector, making it more attractive for international lessors.
For Airlines
- Improved Access to Leased Aircraft: Easier lease agreements boost fleet expansion without large capital investments.
- Increased Liquidity: Airlines can allocate resources efficiently rather than making outright purchases.
For Passengers
- Potential Reduction in Airfares: Cost savings from lower leasing expenses may translate into cheaper ticket prices.
Background and Need for the Bill
- Past Leasing Disputes: Issues with SpiceJet and Go First highlighted legal uncertainties in aircraft repossession.
- 86% of Indian Airlines’ Fleets Are Leased: India’s aviation sector heavily relies on leased aircraft, making regulatory clarity essential.
- Global Compliance: Aligning with international leasing norms enhances India’s credibility in global aviation finance.
The Protection of Interests in Aircraft Objects Bill, 2025 is a critical step in strengthening India’s aviation sector. By ensuring legal certainty for lessors, reducing leasing costs, and encouraging investment, the bill is expected to make aircraft leasing more viable while potentially lowering airfares for consumers.
