Brief Context
The Rajya Sabha passed The Protection of Interests in Aircraft Objects Bill, 2025, a landmark legislation aimed at giving legal force to international treaties governing aviation finance.
Source Content
Syllabus: GS2/ Bills & treaties
In Context
- The Rajya Sabha passed ‘The Protection of Interests in Aircraft Objects Bill, 2025‘, a landmark legislation aimed at giving legal force to international treaties governing aviation finance.
- It seeks to implement the Cape Town Convention and Aircraft Protocol within the Indian legal system.
What Is the Cape Town Convention?
- About:
- Adopted in 2001, the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol were designed to create a uniform legal framework to facilitate asset-based financing and leasing of high-value mobile equipment like aircraft, helicopters & aircraft engines.
- Objectives of the Convention:
- Safeguard the rights of lessors and creditors
- Provide legal remedies in cases of default
- Reduce cross-border legal complexities
- Enable quick repossession and deregistration of aircraft in case of payment failures
- Ratification:
- India ratified the Convention in 2007, but until now, had no domestic legislation to operationalize its provisions.
Protection of Interests in Aircraft Objects Bill, 2025
- Key Provisions of the Bill:
- Legal Enforceability: Grants statutory recognition to the Cape Town Convention and Protocol in India.
- Creditor Remedies: In case of default, allows creditors or lessors to reclaim possession of aircraft within two months or a mutually agreed period.
- DGCA as Domestic Registry: Designates the Directorate General of Civil Aviation (DGCA) as the domestic registry for aircraft-related international interests and dues.
- Mandatory Reporting: Airlines must report dues to lessors on a per-aircraft basis.
- Lessors must inform DGCA about their operations and interests in India.
- Clarity in Bankruptcy Scenarios: Offers clearer protections to lessors in situations where airlines become insolvent.
Impact and Benefits
- The legislation is expected to:
- Reduce leasing costs by 8–10%
- Encourage global leasing firms to operate from or partner with India
- Lower airfares over time due to more affordable aircraft financing
Source: IE