DGCA Begins Removing Go First Planes from Registry, A Year After Shutdown

The Directorate General of Civil Aviation (DGCA) has finally deregistered all 54 aircraft belonging to Go First, a year after the airline ceased operations due to bankruptcy. This move comes as a relief to aircraft leasing companies.

The Delhi High Court recently directed the DGCA to process the deregistration applications of aircraft leased by the airline within five working days. This decision followed a prolonged legal battle between fourteen lessors, backed by major banks, and Go First. The National Company Law Tribunal (NCLT) had initially barred the lessors from repossessing the planes during the insolvency process.

The delay in deregistration led to the Aviation Working Group (AWG), a global aviation leasing body, downgrading India. This could potentially increase leasing costs for Indian airlines.

However, remarketing these aircraft to other airlines will take time as the court-appointed resolution professional has not yet undertaken maintenance work on the planes. Some lessors reported that critical parts of the aircraft were missing or cannibalized.

Alok Anand, chairman of Acumen Aviation, expressed hope that the deregistration would pave the way for these assets to be put back into service with other airlines. He emphasized the need for legislation conforming to the Cape Town Convention (CTC), a global treaty facilitating aircraft repossession in cases of airline bankruptcy.

Although India acceded to the CTC in 2008, there is no domestic legislation to enforce its provisions. The absence of such laws has prolonged legal battles and hindered asset recovery.

Anand highlighted the importance of enacting the CTC into law to streamline aircraft repossession processes and improve India’s business environment. He emphasized that while aircraft repossession has been allowed under the Bankruptcy law, it is not ideal and lacks the clarity provided by the CTC.

Despite efforts, the Ministry of Civil Aviation has been unable to present the bill in Parliament. It is expected to be introduced after the upcoming Lok Sabha elections. In the meantime, a notification issued last year exempting aircraft from the mandatory moratorium during bankruptcy proceedings has enabled the repossession of planes, albeit through legal challenges.

In conclusion, while the deregistration of Go First’s planes is a positive step, there is still a need for legislative measures to streamline asset recovery processes and improve India’s business environment.