Lessors Set To Shun India

Grounded Indian carrier Kingfisher Airlines is a disaster for anyone close to it, from staff who have gone unpaid for months to creditors who have written off millions in bad debts.

Now, though, rival airlines are also being dragged into its mire as lessors, unable to recover their aircraft, shut up shop to India.

“[We will] not finance any new aircraft to operate in India, regardless of the operator, because we cannot exercise our security over these planes,” said Carsten Gerlach, SVP aviation finance at German bank DVB, to the Financial Times.

Other lessors to Kingfisher – including ILFC, BOC Aviation and Awas – are also legally unable to recover their assets because Indian authorities refuse to de-register the grounded aircraft as they try to recover some of the money owed by Kingfisher – effectively by holding foreign-owned aircraft as ransom.

The impasse could be broken if Kingfisher consented to the de-registration of its fleet, but that won’t happen so long as chairman Vijay Mallya persists in viewing Kingfisher’s protracted three-year collapse as a mere blip on the road to eventual greatness*.

But if Indian authorities continue to exploit this delusion for their own ends, such as recovering roughly $50m owed to Airports Authority of India, they could do yet more harm to a sector already dogged by high fuel taxes, poorly run airlines and patchy infrastructure.

This is because any lessors that do still choose to take on Indian customers will inevitably charge a hefty premium to compensate for asset recovery risk, resulting in higher costs for airlines and inflated prices for passengers.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.