Lessors Thankful to Kingfisher Airlines

Friday, 26th April 2013 at 05:59am

Thanks to Kingfisher Airlines for the lesson it has given us. Thus said Nirvan Veerasamy, managing director of Veling Ltd, an aircraft lessor to the doomed airline.

The lessor has been trying to recover its planes it leased to Kingfisher Airlines after it was unable to comply its past obligations even before it was grounded in September last year. The official said that what happened to Kingfisher is a lesson they will take note of when leasing to any Indian airlines in the future.

Veling has a lot to be thankful for as its 2 ATR turboprops it has recovered from Kingfisher were the only ones remain intact, therefore still functional. The 15 other recovered planes were stripped off its vital parts such as landing gears, auxiliary-power units, seats and even engines, making them unserviceable anymore.

He noted that the Kingfisher's dilemma exposed the sore spot in the country's aviation industry which badly needs immediate reform.

He further said that the current aviation policy has disadvantaged lessors to a great extent especially when the airline is in trouble like what happened recently to Kingfisher. He particularly noted the extent of the government's interference when it comes to payment of the troubled airline's debt.

The Indian government recently asked the lessors to help pay the debt incurred by Kingfisher Airlines and they were not even allowed to get near their aircraft they leased to the airline at various airports during the crisis.

He said that if India won't take actions to effect reform in its aviation industry, leasing companies will have no choice but impose their own stringent policies regarding aircraft leasing to Indian air carriers.

India is one of the countries that signed the treaty, specifically the aircraft protocol, held in Cape Town, Africa in 2001 concerning standardization transactions involving moveable properties such as aircraft and its engines. The protocol allows lessors to recover any equipment leased to airlines in the event of bankruptcy or insolvency.

An executive from a consulting firm said that India needs to reform its policy in the aviation industry to conform to the Cape Town Convention in order to make it easy for lessors to repossess the fleet in case of insolvency.

The current legal ambiguities in the country's aviation policy enable airport and tax authorities of India to grapple for possession of the airline's tangible assets such as aircraft, thus preventing the true owners from reclaiming what belongs to them.

Veling Ltd., a Mauritius-based leasing firm, has been trying to recover its two turboprops leased to Kingfisher since the cancellation of its license in September last year by the Indian government.

The official said that their experience with Kingfisher will serve them a lesson in its future contracts with Indian airlines.

By: Pete Lee.