New Law Offers Repossession Path, But Enforcement Worries Remain

India's new Protection of Interests in Aircraft Objects Act, aligned with the Cape Town Convention, aims to give aircraft lessors a faster way to repossess planes from airlines that fail. The law was created after lessors faced long delays trying to reclaim assets when Go First collapsed in May 2023. This event highlighted the risks in India's aviation market. Even though the law signals a better environment, many in the global aviation finance industry are still cautious weeks after it took effect. Their main worry is the gap between what the law intends and how efficiently it can actually be put into practice. They fear legal cases and bureaucracy could still slow down the return of aircraft.

Growth Potential Tied to Lessor Confidence

India's aviation market is set for major growth, expected to be the world's third largest by 2030. This expansion relies on airlines securing financing and aircraft, which depends heavily on aircraft lessors' confidence. While the new law is a step forward, the industry's full trust requires clear procedures and court rulings that guarantee fast and predictable asset recovery. Without this, lessors might charge more for risk or look elsewhere, potentially slowing down India's ambitious aviation goals.

Lessor Concerns Rooted in Past Delays

Aircraft lessors usually feel more secure in countries with strong legal frameworks for asset recovery, like Ireland and Singapore, which have very smooth repossession processes. Before the new law, India's system presented major hurdles. The Go First bankruptcy was a clear example, with lessors facing big delays in getting their valuable planes back. The new law moves India closer to international standards, but its success will depend on how effectively it's applied, especially when dealing with local legal interpretations and administrative steps.

Go First Shadow Fuels Skepticism

Even with the new law, lessors' concerns are not gone. A key worry is that India's legal system might still cause delays. The long, drawn-out process of recovering Go First's assets casts a long shadow, creating doubt about how quickly and reliably aircraft can be repossessed in the future. Lessors are watching closely how courts will interpret and enforce the Act, worried that bureaucratic delays could make it less effective than intended. This uncertainty could lead to higher costs for Indian airlines, such as increased leasing rates or insurance.

Full Confidence Still a Work in Progress

The aviation finance industry is now closely watching how the new law is put into practice. Lessor groups expect clear court rulings and efficient administrative steps to confirm the Act can help speed up the return of aircraft. For India's aviation market to reach its growth targets, it needs a stable and reliable leasing environment. The next few months will show if the new law truly builds confidence among global aircraft lessors, helping Indian airlines achieve their expansion plans.