India's Parliament recently passed a transformative aviation bill aimed at enhancing global aircraft leasing practices by allowing easier repossession of aircraft and engines when airlines default on payments. The bill, called the Protection of Interests in Aircraft Objects, will fully implement the Cape Town Convention and Protocol—an international asset-based financing agreement.

This new legislation addresses the challenges faced by leasing companies, particularly in light of the 2023 Go First bankruptcy case, where international lessors like SMBC Aviation were unable to repossess their aircraft from the airline due to local laws. By aligning domestic regulations with global standards, the bill is expected to provide much-needed relief to lessors, boosting their confidence in the Indian market.

Key Impact of the Aviation Bill:

• Aircraft Leasing Confidence: The bill is anticipated to reduce risks for global lessors, making India a more attractive market for leasing activities.

• Lower Leasing Costs: With improved confidence, leasing rates may decrease, potentially lowering airfares for passengers.

• Growth of Aviation Industry: This legislation supports the booming Indian aviation sector, which has witnessed an order of over 1,300 aircraft by domestic carriers like IndiGo.

Lawyers suggest that the law will help in making aircraft leasing more affordable, directly benefiting both airlines and passengers in India's rapidly expanding aviation industry. As India continues to experience a surge in air travel, the new law positions the country to capitalize on its potential as a hub for international aircraft leasing.

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