In News:

The Protection of Interests in Aircraft Objects Bill, 2025, recently passed by the Rajya Sabha, aims to implement two key international agreements in India’s legal framework:

• Cape Town Convention on International Interests in Mobile Equipment (2001)
• Protocol to the Convention on Matters Specific to Aircraft Equipment

Objective:

To provide legal clarity and security to stakeholders in the aviation leasing industry by integrating global standards into Indian law.

Background:

• India became a signatory in 2008 after Cabinet ratification in 2007.
• The Cape Town Convention addresses complex issues of cross-border leasing and financing of high-value mobile assets like aircraft, helicopters, and engines.
• With over 86.4% of India's 840 commercial aircraft under leasing arrangements, there was an urgent need for a dedicated legal framework.

Key Provisions:

• Directorate General of Civil Aviation (DGCA) is designated as the registry authority.
  • Responsible for registration and deregistration of aircraft.
• Creditors must notify the DGCA prior to initiating recovery actions in case of defaults.
• In case of default by airlines:
  • Creditors can reclaim aircraft or related equipment within two months, or as per a mutually agreed period.
• Lessors and airlines are required to regularly inform the DGCA about dues and lease activities.
• The central government is empowered to make rules for the implementation of the convention and protocol.

Expected Benefits:

• Enhances legal protection for creditors and lessors.
• Reduces leasing costs by an estimated 8–10%, potentially lowering airfares for consumers.
• Encourages the growth of a domestic aircraft leasing industry, reducing dependence on foreign jurisdictions like Ireland, Singapore, and Dubai.

Civil Aviation Minister’s Remarks:

• The Bill addresses a long-standing legislative vacuum.
• It will bolster investor confidence and attract leasing businesses to India.
• Airfare regulation remains complex and is influenced by multiple factors including fuel prices, leasing charges, and maintenance costs.