Summary: India has enacted the “Protection of Interests in Aircraft Objects” bill in 2025 to streamline the repossession of aircraft and engines by international leasing companies when Indian airlines default on payments. This new legislation ensures India’s full compliance with the Cape Town Convention, an international agreement standardizing asset-based financing. The move follows challenges faced by lessors during the Go First airline’s bankruptcy, which had made India appear as a risky market. By simplifying the recovery process, the law intends to increase confidence among global lessors and attract greater investment into India’s rapidly expanding aviation sector. The government anticipates that this legislation will lead to lower leasing costs for Indian airlines, such as IndiGo which has significant aircraft orders, ultimately benefiting passengers by potentially reducing air travel expenses. Given the heavy reliance of Indian airlines on leased aircraft, this legal reform is considered vital for the continued growth of the industry.
Introduction
India has enacted a new aviation law that significantly streamlines the process for international aircraft leasing companies to reclaim their jets and engines if an Indian airline fails to make payments. This legislation, known as the “Protection of Interests in Aircraft Objects” bill, brings India into full compliance with the Cape Town Convention, an international agreement designed to standardize asset-based financing.
The move comes after lessors faced considerable challenges recovering aircraft during the Go First airline’s bankruptcy, leading them to view India as a risky market. By simplifying repossession, the new law aims to boost confidence among global lessors and attract more investment into India’s rapidly growing aviation sector.
With Indian airlines, particularly IndiGo, placing substantial orders for new aircraft to meet the surging demand for air travel, the government expects this legislation to lower leasing costs, benefiting both airlines and passengers. Since most Indian airlines rely heavily on leased aircraft, this legal change is seen as crucial for the sector’s continued expansion.
[1] The Protection of Interest in Aircraft Objects Bill, 2025, has been passed in India, marking a significant step towards aligning the nation’s aircraft leasing and financing ecosystem with global standards. This legislation builds upon the Cape Town Convention of 2001, aiming to simplify and standardize international leasing agreements.
Civil Aviation Minister Shri Ram Mohan Naidu emphasized that the bill seeks to address previous legal enforcement gaps that resulted in higher leasing costs in India. By providing legal certainty to aircraft financiers, the legislation is expected to reduce costs for Indian carriers.
Significant Growth in India’s Aviation Sector
Minister Naidu also highlighted the impressive growth of India’s aviation sector:
The Ministry of Civil Aviation focused on sustainability, aiming to transition over 100 airports to renewable energy. Addressing the growing demand for trained pilots is another priority, with plans to increase the number of Flight Training Organizations.
Aviation Turbine Fuel (ATF) Costs
The press release also touched upon the high cost of Aviation Turbine Fuel (ATF) and the need for states to reduce ATF tax to boost regional connectivity and lower passenger costs.[2]
Compliance with Cape Town Convention
The Protection of Interests in Aircraft Objects Bill, 2025 will provide legal backing for the Cape Town Convention that mainly pertains to the leasing of aircraft.
There have been inconsistencies in leasing regulations for aircraft.
Under the Cape Town Convention, lessors can take back the possession of aircraft leased to airlines.
Notes:-
[1] https://www.reuters.com/business/aerospace-defense/indias-parliament-passes-landmark-bill-boost-aircraft-lessors-2025-04-03/
[2] https://pib.gov.in/PressReleasePage.aspx?PRID=2118797
Author Bio
