- Aircraft lessors (in the Go First Airlines case) sought deregistration and repossession of 20 aircraft leased to the Wadia Group airline by filing applications with the Directorate General of Civil Aviation (DGCA) using their Irrevocable Deregistration and Export Request Authorisation (IDERA).
- Irrevocable Deregistration and Export Request Authorisation, or IDERA, empowers lessors to get their aircraft deregistered from the registry of the country where the lessee is based, repossess them, and fly them out, in cases like those of lease payment defaults.
Cape Town Convention:
- The Convention on International Interests in Mobile Equipment, commonly known as the Cape Town Convention (CTC), and the related 2001 protocol on matters specific to aircraft equipment, are key elements of the global aviation structure.
- It aims to protect lessors’ interests in case of defaults by the lessee.
- As per the CTC, the lessor can seek deregistration and export of aircraft without consent of the airline using IDERA.
- The airline has no power to revoke the lessor’s IDERA rights without the latter’s consent.
- The objective is to simplify and improve the efficiency of aircraft leasing operations, while providing comfort to lessors that their assets (planes) would not get stuck for extended periods due to legal issues.
- The quick deregistration process allows lessors to repossess planes and lease them to other operators, minimising the losses they would have to incur if their planes got stuck in litigation.
- This makes lessors ready and willing to lease out aircraft in countries that follow the CTC protocols in letter and spirit.
IDERA & India
- Although India ratified the CTC back in 2008, its incorporation in India’s legal framework has been a work in progress.
- The last CTC-related amendments to India’s aviation rules took place in 2018, simplifying deregistration and export of aircraft through IDERAs.
- The lessor (IDERA holder) must file an online application with the DGCA seeking to enforce an IDERA with regard to a specific aircraft.
- The DGCA immediately posts on its website the application filed by the IDERA holder.
- The date of the application is considered the date of declared default.
- The regulator also immediately notifies all airport operators in India about the IDERA filing.
- The DGCA then moves to deregister the aircraft within five working days from the date of declared default, and informs airport operators about the date of deregistration.
- The lessor then proceeds to clear all dues.
- The lessor then submits all the payment certificates to the regulator, along with the request to export, or fly out, the aircraft from India.
- After this, the DGCA issues all necessary permissions to export the aircraft.
SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB