THE last decade has seen India's aviation on a steady upward path, recovering quickly from the impact from Covid and returning to growth, reports New Delhi's Financial Express.
But there is one major obstacle in the way, says Air India's CEO Campbell Wilson, that is, its failure to ratify the cape Town Convention, an international agreement that establishes a framework for financing and leasing high-value mobile equipment to create a secure environment for creditors.
'Specifically, the Cape Town Convention allows creditors to register their interests in aircraft assets on an international registry, enabling them to recover their investments swiftly in the event of defaults,' said Mr Wilson, writing in the Financial Express.
Although India acceded to this treaty in 2008, it has yet to be ratified in Parliament, he said.
At present, the moratorium under India's insolvency rules brings to a sudden halt any recovery efforts being made and also blocks lessors from repossessing aircraft for a significant period.
By the time the lessors can assert their rights, the aircraft may have already lost value or become entangled in lengthy legal disputes.
The Cape Town Convention addresses that risk by setting out rules that create legal certainty for these transactions.
The airlines can then pass on the lower cost to the flying public in the form of more competitive ticket prices, helping to democratise access to flying as a mode of transport.
It is not as if the government has not made attempts to address these issues. In the past, pending approval of Parliament, there have been efforts such as the Ministry of Civil Aviation making changes to the Aircraft Rules, 1937 to expedite the de-registration of planes when a lessor issues an irrevocable request.
'As we work towards Indian aviation to lead internationally, we cannot ignore the importance of a well-defined legal framework. The ratification of the Cape Town Convention, once this new bill is enacted by Parliament, is more than a legal formality,' said Mr Wilson.
'It sets the stage for more resilient growth that will put India's aviation sector on a global footing. It will reduce costs, improve competitiveness, attract fresh investments, and boost the confidence of lenders and lessors. Along with other reforms, it will ensure that Indian aviation becomes robust, competitive, and ready to soar to new heights!' Mr Wilson said.
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But there is one major obstacle in the way, says Air India's CEO Campbell Wilson, that is, its failure to ratify the cape Town Convention, an international agreement that establishes a framework for financing and leasing high-value mobile equipment to create a secure environment for creditors.
'Specifically, the Cape Town Convention allows creditors to register their interests in aircraft assets on an international registry, enabling them to recover their investments swiftly in the event of defaults,' said Mr Wilson, writing in the Financial Express.
Although India acceded to this treaty in 2008, it has yet to be ratified in Parliament, he said.
At present, the moratorium under India's insolvency rules brings to a sudden halt any recovery efforts being made and also blocks lessors from repossessing aircraft for a significant period.
By the time the lessors can assert their rights, the aircraft may have already lost value or become entangled in lengthy legal disputes.
The Cape Town Convention addresses that risk by setting out rules that create legal certainty for these transactions.
The airlines can then pass on the lower cost to the flying public in the form of more competitive ticket prices, helping to democratise access to flying as a mode of transport.
It is not as if the government has not made attempts to address these issues. In the past, pending approval of Parliament, there have been efforts such as the Ministry of Civil Aviation making changes to the Aircraft Rules, 1937 to expedite the de-registration of planes when a lessor issues an irrevocable request.
'As we work towards Indian aviation to lead internationally, we cannot ignore the importance of a well-defined legal framework. The ratification of the Cape Town Convention, once this new bill is enacted by Parliament, is more than a legal formality,' said Mr Wilson.
'It sets the stage for more resilient growth that will put India's aviation sector on a global footing. It will reduce costs, improve competitiveness, attract fresh investments, and boost the confidence of lenders and lessors. Along with other reforms, it will ensure that Indian aviation becomes robust, competitive, and ready to soar to new heights!' Mr Wilson said.
SeaNews Turkey
