Amid Go First crisis, MCA says monitoring civil aviation sector, looking into lessors’ concerns

The Ministry of Corporate Affairs is in touch with the Ministry of Civil Aviation over the ongoing insolvency proceedings in the Indian aviation sector, sources told CNBC-TV18 on July 11. They said the ministry is looking into issues raised by aircraft lessors in the cases of Go First and SpiceJet.

“The ministry is of the view that it should be easier for lessors to take their aircraft back once the airline goes into insolvency. The lessors’ have raised concerns that the planes are not being used and the payments are not made. This causes inconvenience,” an official said on condition of anonymity.

MCA sources said lessors may want to price the inconvenience in future leasing to airlines, which can cause issues for Indian airlines. The ministry will take a view on the issue soon, they said, adding that it is closely monitoring the aviation sector.

With two airlines filing for bankruptcy recently and two major players merging, MCA is also looking at it from a fair competition perspective.

The development comes against the backdrop of the National Company Law Tribunal (NCLT) allowing initiation of voluntary insolvency proceedings by Go First, which was als upheld by the National Company Law Appellate Tribunal (NCLAT).

Since the airline is under moratorium, lessors cannot take back their aircraft even as they argue the lease time period has terminated. Earlier this month, the Delhi High Court refused to direct India's aviation regulator to re-register the cash-strapped airline's aircraft. The court also allowed lessors to access the aircraft they leased to Go First to carry out maintenance at least twice a month while the airline has been restricted from removing any parts from the planes in question.

Go First blames Pratt & Whitney for its financial troubles and argues the US firm failed to supply engines on time. Pratt says those claims are without merit.

At the same time, IndiGo is unable to capitalise on Go First's absence due to 25 grounded aircraft while SpiceJet's plans to fill the void too are hit by lessors seeking deregistration of planes over unpaid dues.