Sky-High Drama: Inside India's Aviation Industry..
Last year, when Air India was chatting up with Irish aircraft leasing bigwig Griffin Global Asset Management to snag some Boeing planes, bam! Nusli Wadia threw Go First into the National Company Law Tribunal (NCLT) with an insolvency plea.
So, what happened next? Well, Go First swiftly got bankruptcy protection, leaving aircraft lessors scratching their heads over nearly four-and-a-half dozen planes, worth a jaw-dropping USD5 billion, still hanging with Go First.
This sudden twist not only put the brakes on the lessors' plans but also threw Air India's deal into a tailspin.
At a recent Airline Economics Growth Frontiers India conference in Delhi, Michael Lombardi, big shot at Griffin Global Asset Management admitted, “From our end, it was a bit of a shocker. Definitely made us hit the brakes.” And the deal with Air India? It got a solid timeout.
Lombardi spilled more beans, sharing how their plan for 737 MAX planes hit pause after the Go First saga, leaving them dodging questions from their investor pals.
“Couldn’t give them a straight answer at the time…I guess it’s a reminder to pick your partners wisely. You can't dodge the risk of bankruptcy.”
When aircraft lessors hesitate to stick to their deals with an airline like Air India, backed by the almighty Tata Group with USD144 billion in annual revenue, it sends ripples through the aviation scene.
Especially now, when India’s wooing global aircraft hotshots to set up shop in Gujarat’s GIFT City, dreaming big to turn it into an aircraft leasing powerhouse like Dublin or Singapore.
The Go First drama’s got everyone on edge, and aircraft lessors are sweating bullets, fearing it could spell doom for struggling Indian carriers.
And yes, trust? Took a nosedive after UK’s Aviation Working Group downgraded India in 2023 post-Go First fiasco. The Indian government’s scrambling to fix it with the Cape Town Convention (CTC) Bill, hoping to make aircraft financing and leasing smoother.
But challenges still loom large, especially with Indian tax authorities breathing down lessors’ necks, citing tax issues related to aircraft leases.
But despite the drama, India’s aviation market’s a hot ticket, with a massive order book of 1,700 planes. Boeing’s even chirped about India being the next big thing, with air traffic set to skyrocket by 7% annually through 2040.
John Duffy, the brain behind Dublin’s SKY Aero Management, sees India as the next China, buzzing with potential. “If just 1% of train travelers decide to fly, we’d need to double the fleet size!.
So, as the Go First saga continues, it’s clear: India’s aviation scene is a rollercoaster ride, packed with twists, turns, and surprises. But hey, that’s what makes it exciting, right?
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Source: Economic Times, Mint, Business Standard
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