Govt green light to Aircraft Leasing Bill to boost Indian aviation sector: Sources

To usher in further reforms in the civil aviation sector, the government is believed to have approved the Protection and Enforcement of Interests in Aircraft Objects Bill, 2024, sources told businessline. Accordingly, the Bill will lower the leasing and financing costs of aircraft for Indian carriers, thereby also reducing airfares. At present, the majority of commercial aircraft in India are leased. The Bill, sources said was approved by the Cabinet on Thursday 16 Jan ’25. It will now be presented before Parliament. If passed, the resulting Protection and Enforcement of Interests in Aircraft Objects Act, 2024 will guarantee lessors rights to repossess their leased equipment.

The reworked Bill comes in the wake of the Go First crisis, which concerned global lessors about leasing aircraft to India-based airlines. The country is increasingly being deemed a ’risky jurisdiction’. The Bill said sources, would accord primacy to the provisions of the convention in case of a conflict with any other law.  It will empower the Centre to make necessary rules for implementing the convention and protocol in India. This is also expected to boost lessors’ confidence in the Indian civil aviation space and reduce lending costs, thereby positively impacting airfares.

The industry has welcomed the development.

“With over 2,700 new airplanes anticipated in India over the next 20 years, the rapidly growing aviation sector requires a robust infrastructure, supportive policies, and strong financing mechanisms.

Recognizing the Cape Town Convention under Indian law is vital for the smooth movement of aircraft assets in this fast-growing market. The absence of ratification poses risks for creditors, increasing leasing rates for airlines,” Salil Gupte, President, Boeing India and South Asia told businessline