Rajya Sabha passes Bill aimed at reducing aircraft leasing cost

New Delhi: The Rajya Sabha on Tuesday passed a bill enabling aircraft lessors to repossess aircraft in case of non- payments by Indian airlines.

The Protection of Interests in Aircraft Objects Bill 2025 will help reduce lease rentals and cost of operations for Indian airlines, thus, leading to rationalisation of fares.

The bill will now be moved to the Lok Sabha before being notified. It was introduced in the Upper House on February 10.

Civil aviation minister Ram Mohan Naidu, while replying to the discussion on the bill said, “At times when civil aviation is growing in India, we need to have proper legislations in place so that we can bring in more planes into the country.”

The bill, the minister said, provides enhanced remedies for lessors and financiers, empowering them with Irrevocable De-registration and Export Request Authorisation (IDERA) to facilitate swift aircraft repossession in case of default.

Naidu said that the country currently has 840 operating aircraft out of which 84.6% of them are in the leasing model.

“All airlines are indicating that if the country doesn’t have its own legislation then we are all paying high rates and we are at a disadvantage from the other countries,” Naidu said.

“Upon the enactment of this legislation, Air India has said that, we will improve India’s complying score in the AWG’s (aviation working group) outlook.. which will significantly reduce the (aircraft) leasing cost by approximately 8 to 10 percent…IndiGo said that in the absence of legislation it might be possible that other lessors may reduce their exposure in India or increase their pricing between another five to ten percent over and above.. Akasa Air said that in the absence of the legislation, lease rates may increase by an additional USD of 15,000 per month…,” he added.

Naidu said the legislation will create security for both the lessors and the lessees and the overall aviation market.

“..It (the bill) 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 minister said that the bill is intended to give protection to security interests by which the financers, which are the banks, will be comfortable in financing aviation assets as well.

Speaking on the role of the regulator; the Directorate General of Civil Aviation (DGCA), Naidu said that the regulator will maintain the registry (of the aircraft). “All the airlines will have to regularly update the DGCA on the number of dues pending along with the details of the lessors. They (the airline) will have to plane by plane, periodically update the DGCA and keep a list of the dues they have with all the lessors. Even the lessors will have to continuously intimate the DGCA about the activity in the country. This will create a lot of security for the lessors…because there has been a lot of confusion in this area.. It has been a grey area..”

“(the bill) is going to give a push to the leasing industry which is the need of the hour,” he said.

Speaking on the Sale and lease back (SLB) model, the minister said, “Out of the 397 aircraft that IndiGo has, 350 are under the SLB model.” SLB is a financial agreement where an organisation sells its assets to another party and simultaneously leases it back.

On the other hand, Naidu addressed a few questions from the Opposition and said that apart from Mumbai and Delhi, cities like Bengaluru, Chennai and Kolkata are in dire need of a second airport. “Kolkata city also needs a second airport. The state government should look at having an alternate airport because it’s very much required today. Unless you start providing land, it becomes very difficult. I would request the state government to look in this direction.”

The minister also said that it aims to come up with 50 more airports in the next five years.

“He said that the government was working to have additional facilities in Bihar, Darbhanga, Bhubaneshwar, Telangana and Kerala. “We want all airports to grow,” he said.

Sharing statistics on the growth of aviation, Naidu said, “In 2014, India’s total domestic passenger market was 60.7 million. In 2024, we stand at 161.3 million, more than double the growth in passenger numbers. International passenger numbers have also risen from 43 million in 2014 to 66.8 million in 2024. The number of aircraft in the country has increased from 359 in 2014 to 840 in 2024, making 4,000 journeys across the country every single day..”