The COVID-19 induced downturn in demand for air travel continues to cause liquidity challenges for Indian airlines. Given these issues, much like their peers globally, Indian airlines too have struggled to stay up to date with payment of aircraft lease rentals. In some cases, airlines are known to have defaulted on statutory dues like payment of GST as well.
Lessors who currently have exposure in India find themselves in a precarious situation wherein after exhausting all other options, they may have no choice but to enforce their rights under the Cape Town Convention and Aircraft Protocol (to the extent they have been incorporated into local law).
India had in 2018 made a series of amendments and / or additions to its rules and regulations in relation to de-registration and export of an Aircraft on the basis of an Irrevocable Deregistration and Export Request Authorisation ( “IDERA”).
The Aeronautical Information Circular (the “AIC”) No. 12 of 2018 which deals with “Standard Operating Procedure for Implementation of Rule 32A Relating to Export of Aircraft Covered under Cape Town Convention” was one such document issued by the Directorate General of Civil Aviation (the “DGCA”) on 15th November 2018.
The procedure be followed to enforce an IDERA is as follows:
| No. | Step | Action to be Taken |
| 1. | Application to the DGCA | The IDERA Holder or their authorised representative shall file an application with the DGCA on the regulator’s online platform, the e-GCA. This application must inter alia, include consent of all board of directors of the aircraft owner / lessor. |
| 2. | DGCA shall publish the fact and email all airports | The DGCA shall immediately post the fact of the application being filed by the IDERA Holder on its website giving the date of receipt of the request, type, registration details and name of the operator. The DGCA shall also email all the “designated officers” of all the airport operators to the same extent. |
| 3. | DGCA shall de-register within 5 working days | The DGCA shall de-register the Aircraft in accordance with Rule 30(7), i.e. within 5 working days of receipt of application from the IDERA Holder. It shall also email the date of such de-registration to all the “designated officers” of all the airport operators. |
| 4. | Airports shall calculate dues for 3 months preceding IDERA Holders application to DGCA | The airport operators shall calculate the outstanding dues relating to the Aircraft in question (not of the fleet) for a period of 3 months immediately preceding the date of receipt of the application from the IDERA Holder – the date of “Declared Default”. Dues prior to this 3-month period are not to be included in the said calculations. |
| 5. | Airports to raise bills within 5 days | The airport operators shall raise bills within 5 working days of receipt of the first email from the DGCA (step 3 above). The airport operator shall forward all such bills to the IDERA Holder by email with a copy of the DGCA and also indicate the relevant bank details to enable electronic payment. |
| 6. | Other Government entities may also raise bills | Any other central government entity or any inter-governmental organisation in which India is a member, or other private provider of public services in India having any outstanding dues pertaining to the Aircraft in question (not of the fleet) may also raise its bills and intimate the DGCA within 5 working days from the date of receipt of the application from the IDERA Holder – the date of “Declared Default”. The DGCA shall inform the IDERA Holder by email about such liability only if received within 5 working days from the date of “Declared Default”. The DGCA shall not be responsible for any dues not notified to it within the specified period of 5 working days. A certificate from the defaulting Lessee will be required confirming GST dues against the aircraft. The IDERA holder will be required to make a payment of the entire GST payable against the Aircraft. |
| 7. | IDERA Holder to make payment | The IDERA Holder, on receipt of any bills by email, may make the payment. |
| 8. | Payment Certificate to be issued by recipient | Once payment is made by the IDERA Holder, the said person receiving payment shall issue a certificate to the IDERA Holder within 2 working days of receiving payment, stating that the bills raised by them have been cleared. Such certificate shall also be forwarded to the IDERA Holder via email with copy of the DGCA. |
| 9. | Certificates to be submitted to DGCA | The IDERA Holder shall submit to the DGCA a copy of the certificate of payment of bills along with its request for permission to export the Aircraft from India. |
| 10. | DGCA shall issue permissions | On receipt of such request, the DGCA shall issue the necessary permissions promptly as provided in Rule 32A. |
| 11. | IDERA Holder to write to airport operators for remaining dues | On receiving permission from the DGCA, the IDERA Holder shall send an email to the concerned airport operator forwarding a copy of the DGCA’s permission and indicating the exact date of the flight out of India while also requesting a bill in respect to any dues accrued in relation to the Aircraft after the date of “Declared Default” up to the day of departure. |
| 12. | Airport operators to raise such bills | The airport operator shall raise a bill for such dues within 1 working day and send the same to the IDERA Holder by email with copy to the DGCA along with all necessary bank details. |
| 13. | On making final payment, Aircraft can depart India unhindered | Once the IDERA Holder makes the payment, the Aircraft may depart from India in accordance with the DGCA’s permission and no airport operator shall prevent the Aircraft from leaving India. |
