India Finance News

Lessor AWAS requests de-registration of SpiceJet planes over unpaid dues – Economic Times

In a first, aircraft lessor AWAS has appealed to India’s aviation regulator to deregister three Boeing aircraft leased to low fare over unpaid dues.

The cash-strapped low fare carrier has received default notices from aircraft lessors. This is the first time a lessor has invoked the so-called Irrevocable Deregistration and Export Request Authorization (IDERA) request and appealed for de-registration to the Directorate General of Civil Aviation (DGCA).

“It is now legally binding upon the regulator to take action within five days,” said a government official on condition of anonymity.

Dublin-based AWAS was acquired by Gulf-based lessor Dubai Aerospace Enterprise (DAE) in 2017

The aircraft, 12 year old Boeing 737-800s, were originally leased by Jet Airways in 2010 from BOC Aviation. Jet later got into a leasing contract with DAE. The leases were transferred to SpiceJet in 2019 after Jet Airways shut operations due to cash and debt problems.

“A lessor would file an IDERA application as a last resort. This means that it has made up its mind to deregister and repossess the aircraft. According to aircraft rules, once the IDERA has been filed by an IDERA holder, the DGCA will need to deregister the plane within 5 working days, post which the lessee (in this case SpiceJet) can’t operate it any further,” said Ajay Kumar, managing partner at KLA Legal.

“This step may have a domino effect. Other lessors will likely follow suit. Interestingly, once an IDERA application is filed, the lessor will have to pay all outstanding dues on those aircraft to various authorities, including the airport operator and the GST department,” he added.

A SpiceJet spokesperson claimed this is part of a plan to return old planes to lessors.

He said the airline plans to “replace all its older Boeing aircraft with the new Max model in a phased manner,”

“Between now and next calendar year, SpiceJet will induct around 20 new Max planes into its fleet. As part of this modernization plan, we are returning older aircraft in a phased manner including these three aircraft. These returns have been planned and will not have any impact on our operations. SpiceJet has already returned 12 old Boeing aircraft to lessors in the last calendar year. We have 13 MAX aircraft in our fleet and the new inductions would begin from October 2022,” he added.

DAE did not respond to emailed queries immediately.

SpiceJet’s flights have also had frequent safety snags in the last two months. The DGCA issued a show cause notice to the airline recently and probed the incidents. This was followed by a mandate that SpiceJet can only operate 50% of the flights approved for the summer schedule. The airline said its flights won’t be impacted as it already has curtailed its capacity by half.

Previously, SpiceJet has been in disputes with aircraft company De Havilland for Bombardier Q400 planes and lessor Avolon Boeing planes for non-payment of dues.

The airline is in a financially precarious situation and is late on its tax payments–TDS and GST. People close to the development said a section of employees haven’t got their tax declaration document or Form-16 yet

SpiceJet has previously said it has never defaulted on tax payments.

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