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By Abhijith Ganapavaram
NEW DELHI (Reuters) - India's parliament on Thursday passed a landmark aviation bill that will make it easier for global aircraft leasing companies to repossess jets and engines when a carrier defaults on its payments, a big win for international lessors in a key market.
India's "Protection of Interests in Aircraft Objects" bill will fully implement the Cape Town Convention and Protocol, an international agreement on asset-based financing.
The issue has been in focus since 2023 when lessors like SMBC Aviation couldn't repossess aircraft from India's Go First after it filed for bankruptcy.
In that dispute, India's local laws superseded global aircraft leasing rules. But the new bill changes that, bringing relief to lessors in the world's fastest-growing aviation market.
Parliament approved the bill on Thursday and India's president will need to sign it into law, which is seen as a formality.
"The legislation will improve lessors' confidence in the Indian market and may also make it easier for upcoming airlines to lease aircraft," said Lovejeet Singh, a partner at law firm Chandhiok & Mahajan who specialises in aviation laws.
It will bring down the cost of leasing, which may translate into cheaper airfares, he added.
In the Go First saga, lessors ran into difficulties in repossessing over 50 Airbus aircraft, calling India a "risky jurisdiction" for aircraft leasing.
The country's carriers, led by biggest player IndiGo, have placed orders for over 1,300 Boeing and Airbus aircraft since 2022, aiming to take advantage of a boom in air travel.
India's aviation minister this week said the legislation was a "key step in making aircraft leasing cheaper, benefiting airlines and passengers alike".
The majority of aircraft operated by Indian carriers are on lease, either under simple leases or sale-and-leaseback agreements.
(Reporting by Abhijith Ganapavaram. Additional reporting by Nigam Prusty and Tanvi Mehta. Editing by Aditya Kalra and Mark Potter)