In a move that could give an impetus to the Abu Dhabi-based Etihad Airways buying a stake in Jet Airways, the Government is planning to issue directions that an aircraft de-registered by the Indian aviation regulatory authority, the Directorate General of Civil Aviation (DGCA), can leave the country even if the company that has imported the aircraft has unpaid dues.
This move will also help companies that have leased aircraft to now-grounded Kingfisher Airlines and are having problems taking them back.
Cape town convention
“Till now, the Government was not interfering as we looked at it as a commercial issue between various parties. But now, it has become a burning issue. So a meeting was held with the DGCA and the considered opinion was that India will be in violation of the Cape Town Convention on leasing of aircraft if it does not allow a de-registered aircraft to leave the country because of unpaid dues,” a senior Government official said.
This is said to be one of the issues on which Etihad wants clarity before it takes a decision on whether to pick up a stake in Jet Airways.
The Union Cabinet acceded to the Cape Town Convention in November 2007, which offers benefits to lessors and those in the business of mortgaging aircraft, including providing additional security for repossession of aircraft in case of default especially when payment obligations have not been met.
The rethink in the Government comes in the backdrop of various agencies, including state-owned Airports Authority of India and the service tax department, seeking monies from various companies to take back aircraft that they had leased to the now-grounded Kingfisher Airlines.
AAI, which is owed around Rs 390 crore by Kingfisher, was allowing the aircraft to be taken back only after the state-owned airport operator had been paid an average of about a $1 million for each Airbus A-320 or ATR aircraft.
Kingfisher aircraft
When the row erupted in August last year, three ATR aircraft that Kingfisher had leased were parked at Chennai airport. AAI had then argued that since Kingfisher had curtailed its flights allowing these leased aircraft to go back would affect the AAI’s chances of getting its dues from Kingfisher.
Senior Government officials now maintain that airport operators need to seek bank guarantees from airlines at the time of giving them permission to operate to their airports. In case of default in payments by airlines, airports can then look at encashing these guarantees rather than holding back aircraft.