The Indian government is protecting its aircraft fleet from threats posed by leasing companies.

These "creditors," emerging amidst the severe impact of the pandemic on the aviation industry, have traveled the globe demanding the decommissioning of aircraft currently operated by numerous airlines, significantly affecting the nascent recovery of aviation activities in many countries and major aviation markets.

In India, the world's third-largest aviation market, Prime Minister Narendra Modi's government recently decided to prohibit aircraft leasing companies and "vulture" funds from repurchasing aircraft, deregistering them, or forcing their export. According to Cirium, India is one of the world's leading aircraft leasing markets, with 75% of aircraft delivered between 2018 and 2022 being through sales and leaseback arrangements, compared to a global average of only 35%.

The Indian government 's move comes after Go First Airlines filed for bankruptcy protection and ceased operations on May 3, 2023. Some of Go First's 54 aircraft were ordered deregistered and repossessed by creditors. Three companies leasing aircraft to SpiceJet, another Indian airline, also submitted requests to the Indian Civil Aviation Authority to deregister four aircraft currently in operation earlier in May. The Indian government has stated that it will not allow leasing companies to remove aircraft from the country without an agreement with the airlines. The AWG (Airline Working Group) downgraded India's aviation credit rating by 0.5 points, from 3.5 to 3, but the government and airlines seem unconcerned, arguing that aircraft owners have already made too much money from leasing in this booming market.

The Indian government's decision also reflects the views of regulatory bodies and governments worldwide in protecting their aviation operations and fleets from "attacks" by certain leasing companies or vulture funds that took advantage of the Covid-19 pandemic to buy back aircraft collateral from operating airlines at low prices. These actions by tycoons, especially vulture funds, are carried out despite airlines' willingness to pay lease fees, their desire to continue operating the aircraft to restore traffic and fulfill financial obligations after the pandemic, or previous mutually beneficial cooperation agreements in force majeure situations caused by the pandemic.

Given the signs affecting the recovery of the aviation industry, the driving force behind economic recovery, the actions of governments and regulatory agencies in protecting aircraft fleets and the interests of airlines are expected to mitigate risks and prevent exploitation by financial institutions and aircraft leasing companies.

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