New Delhi: The Rajya Sabha on Tuesday passed The Protection of Interests in Aircraft Objects Bill, 2025, which seeks to give legal effect to certain international agreements in their application to India with Civil Aviation Minister Kinjarapu Rammohan Naidu asserting that it will partly help in bring down airfares.
Replying to the discussion on the bill, the Minister of Civil Aviation said the legislation will create a lot of security for lessors and lessees and the overall aviation market, as there has been a lot of confusion in this area. It has been a grey area for some time.
“With the bringing of this bill, definitely, it is going to create a lot more clarity. We hope this is going to give a lot of push for the leasing industry, which is the need of the hour. There is an immediate need for this bill to be there in the industry,” he said.
The bill seeks to give legal effect to certain international agreements in their application to India, which includes the Convention on International Interests in Mobile Equipment (also known as Cape Town Convention of 2001) and Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment. India had acceded to these in 2008.
The Bill states that before exercising any remedy, the creditor must notify the Directorate General of Civil Aviation (DGCA) about the occurrence of a default. In cases of a default, it gives creditors certain remedies, including the right to take back possession of the asset within two months or a mutually agreed upon period, whichever is earlier.
Naidu said the ‘inconsistencies’ in dealing with default by Indian carriers to their lessors in the absence of proper law, as witnessed in the cases of SpiceJet in 2015, the bankruptcy of Jet Airways in 2019 and that of GoAir, led to the decline in the country’s score of Cape Town convention compliance index, maintained by the Aviation Working Group (AWG) across the globe, to 50.
It also resulted in higher leasing costs for carriers in India. Thereby, forcing them to reduce fleet sizes, which in turn, pushed up airfares as demand was still high, he noted.
Citing comments by carriers like Air India, Indigo and Akasa Air in favour of the bill, the minister said, “Once by getting this Act into place, you’re reducing the leasing cost by 8 to 10 per cent. Now, these are the costs which are going to trickle down to the passengers and the airfares also.
“That is why this becomes very, very important for us.”
Asserting that the civil aviation industry needs the Bill, the minister said, “It is going to change the aviation landscape of the country”.
The Bill was introduced in the upper house on February 10 this year.
“The whole reason we are bringing this Act is to give the force of law to the Capetown convention and protocol. If you see the majority, other than giving the force of law, it contains the Capetown convention, it contains the aircraft protocol and the declaration that we are signing, abiding ourselves to both the convention and protocol as a signatory to the International Civil Aviation Organisation,” the minister said.
The convention and protocol aim to bring uniformity in securing rights for high-value assets like aircraft, helicopters and engines.
He further said the Bill will also give a boost to the aviation leasing industry in India, with the government aiming to reach up to 90 - the globally favoured average score -- in the AWG score, which has slightly improved to 62.