'Aircraft rentals to rise as lessors' funding falters'

Indian airlines may face rising lease rentals as aircraft lessors with exposure to the country encounter funding challenges with some lenders withholding financing for planes leased to Indian carriers following Go Airlines (India) Ltd’s voluntary insolvency filing, a top executive at an Ireland-based aircraft leasing company said

- Anu Sharma

Filing for voluntary insolvency prevents aircraft lessors from reclaiming their planes for six months, leading to mounting dues and grounded jets. “There is no question that some of the counterparts that we deal with on the financing side, banks, lenders, etc. are very much pausing on providing capital to Indian airlines or lessors financing Indian exposure. They are stopping temporarily," said Andy Cronin, the chief executive officer of Avolon, in an interview.

While Cronin did not outline the extent of the increase in rentals for Indian carriers, some estimates suggest that it could rise by as much as 25%.

Avolon has approximately 50 aircraft on lease with multiple Indian airlines such as IndiGo, Air India, Vistara, and Akasa Air.

Low-fare airline Go First filed for insolvency on 2 May, and two days later, lessors moved the Directorate General of Civil Aviation (DGCA) to de-register over 20 aircraft they had leased to Go First.