A terrible precedent for aviation leasing and finance is being set – Take Action!

The Indian government is to assist SpiceJet in retaining its aircraft as lessors try to repossess their equipment after breach of contract. This response comes now as we here said it might because the Indian government has recently been thrown the leeway to make this move by the huge lessor interest in the Air India RFP.

The Indian government it seems will therefore not order the de-registration of SpiceJet’s leased aircraft. One wonders if this sets a dangerous precedent that will lead to the partial collapse of the Cape Town Convention in countries that decide they do not feel like compliance at any point in time. So does the aviation sector need to challenge this flagrant repeal of the convention which defines the rights of aircraft owners and lessors in case of a default on payments? Will lessors come together to save the integrity of the Cape Town Convention and to avoid a precedent being set?

No of course they will not, save for those affected and a few others that have been burned in the past.
The bottom line is this: If you are investing in an aircraft or looking to invest in an aircraft or a fund then make very sure that your assets are not being put into India. That is the message from the Indian government and the only logical conclusion to draw from the Indian government’s actions of late. I would personally add to this to state that some Indian carriers, especially the likes of the ultra-successful and safe IndiGo, are being damaged and tarnished by the recent actions of the Indian government. It is most unfair and IndiGo should really speed its international expansion plans to dilute home market exposure.

At risk of sounding like a broken record, we should add that those lessors that took-in the information this news service has put out would not have got burned by Kingfisher or SpiceJet at any point as we lead the market by over a year in each case in stating that things were going to go very wrong. In India we are two for three ( it would have been three for three but for Etihad intervention).

If lessors and financiers were ever needed to come together for the common good then this is both the time and the cause. Don’t let Cape Town fail, withdraw Air India support, only that action will cause the government to take note.

Source:http://www.aviationnews-online.com/editorial-comment/a-terrible-precedent-for-aviation-leasing-and-finance-is-being-set-take-action/