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13 Issues Aviation L. & Pol'y 55 (2013-2014)
Unwinding the Vicious Loop of Aircraft Finance Leases

handle is hein.journals/isavialp13 and id is 59 raw text is: Unwinding the Vicious Loop
of Aircraft Finance Leases
by Nithya Narayanan*
I. Introduction
The global aviation industry is facing tough times, amid eco-
nomic as well as political uncertainties in different parts of the
world. The last two years have been a rather stormy period for
Indian airline companies and foreign aircraft financiers and les-
sors alike. Unable to honor its financial obligations and repay
debts, India's third largest airline operator, Kingfisher Airlines
(Kingfisher), whose flying license was suspended in October last
year, recently submitted a revival plan to the Indian aviation reg-
ulator, the Directorate General of Civil Aviation (DGCA). The
death knell for Kingfisher was sounded as lender banks took pos-
session of the airline's head office property in Mumbai and the
DGCA directed Kingfisher to clear all its debts and salaries of its
employees before resuming operations.
Kingfisher's suspension of operations has had a flow-on impact
on the global leasing and financing sector, highlighting some of
the challenges facing aircraft financiers and lessors in the Indian
market and raising concerns regarding regulatory safeguards for
international investment in India.
A security interest is created by way of a charge over an air-
craft, in favor of the lenders who provide financing for its acquisi-
tion, before the aircraft is leased by its owner to an airline
operator. The Convention on International Interests in Mobile
Equipment' and the Protocol2 referred to therein (Cape Town
* The author is an associate at AZB & Partners, Mumbai, India and an Ad-
junct Professor at Government Law College. The author would like to thank
Soumyadri Chattopadhyaya for his invaluable suggestions and assistance on
the paper.
I Convention on International Interests in Mobile Equipment, opened for
signature Nov. 16, 2001, 2307 U.N.T.S. 285 (entered into force Apr. 1,
2004) [hereinafter Cape Town Convention].
2   Protocol to the Convention on International Interests in Mobile Equip-
ment on Matters Specific to Aircraft Equipment, opened for signature
Nov. 16, 2001, 2367 U.N.T.S. 517 (entered into force Mar. 1, 2006).

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