Every time an Indian airline collapses, the same headline follows: lessors struggle to get their aircraft back. This is the biggest reason India carries a leasing risk premium, which is reflected in the lease rates paid by every Indian carrier, not just those that have failed.
India has seen more than 10 airline bankruptcies over the past two decades, with the vast majority involving carriers that operated leased fleets. Every time an Indian airline collapses, the same headline follows: lessors struggle to get their aircraft back.
As the insolvency petition against SpiceJet has been deferred by the court as one of the judges is demitted office, the case highlights the challenges lessors face in recovering dues or repossessing assets from airlines in India — and brings a strong sense of deja vu for most of them.
This is the biggest reason India carries a leasing risk premium, which is reflected in the lease rates paid by every Indian carrier, not just those that have failed.
Go FIRST case still fresh
Government-owned AIESL cheered the return of one former Go FIRST aircraft to the lessor. AIESL should be proud of its achievement as its achievement is almost impossible — getting airborne an aircraft that lay without engines and almost mothballed. However, this came at a cost borne by the lessor over and above what the lessor has already lost over the years.
When Go First grounded itself on May 3, 2023, it left behind 54 aircraft scattered across nine Indian airports, with almost half of them grounded due to engine issues, the primary reason stated by the airline for voluntary bankruptcy. Delhi held the largest share with 23, followed by Bengaluru and Mumbai with nine each, Kannur with five, Nagpur with three, Hyderabad with two, and Ahmedabad, Kochi, and Goa-Mopa with one each.
More from BusinessThree years and three months later, 53 have made it out of India while one remains in Delhi.
Go First’s collapse was not a conventional financial failure. The airline had blamed faulty Pratt & Whitney engines for grounding roughly half its A320neo fleet in the months before it filed for insolvency, and it framed its Section 10 application to the NCLT as voluntary — a move to protect itself from lessors rather than a response to lender pressure. That framing mattered enormously because it triggered a moratorium under Section 14 of the Insolvency and Bankruptcy Code that froze lessors out of their own aircraft, even on leases they had already terminated before the insolvency filing.
What followed was one of the more consequential legal disputes in Indian aviation. Lessors argued they had validly ended their leases and were entitled to repossess their aircraft under India’s Cape Town Convention commitments, which is meant to guarantee repossession rights within a short window after default. The Directorate General of Civil Aviation (DGCA), bound by the domestic moratorium, refused to deregister the aircraft. The National Company Law Appellate Tribunal (NCLAT) sided with the moratorium’s primacy, telling lessors their remedy lay in separate proceedings rather than immediate repossession.
The Aviation Working Group, the Airbus-and-Boeing-backed body that rates countries on Cape Town compliance, downgraded India’s score and put the country on a negative watchlist.
The Cape Town convention has subsequently been ratified by the parliament now with the Protection of Interests in Aircraft Objects Act, 2025. Yet the SpiceJet case shows how things are not as simple as they look.
Out of 54 aircraft with Go FIRST in May 2023, none left that year. The first aircraft left only in July 2024, with a total of 29 aircraft (54 per cent) leaving India in 2024, another 19 left in 2025, while five have left in 2026, leaving just one behind.
While legal challenges were one part of the problem, maintenance of the plane and the airworthiness along with documentation were another. Aircraft parked for months without active maintenance programmes —missing engines in several cases that had already been removed or were undergoing Pratt & Whitney’s rectification backlog— are not simply flown or ferried out the day a court clears the way. Each aircraft typically needed fresh airworthiness certification, engine sourcing or leasing, and resolution of outstanding maintenance and parking dues before it could safely leave Indian soil.
Tail note
The Go First saga and the ongoing issues at SpiceJet offer a useful case study in why lessors price ‘jurisdictional risk’ into every lease they write in India. This is not merely an abstract concern or a one-off issue. The resulting increase in costs affects not only large carriers such as IndiGo and the Air India group but also newer entrants such as Akasa Air. Ultimately, these higher costs are passed on to consumers in the form of increased fares.
While it is important to have more airlines in the market, it is equally important that airlines remain solvent and resolve disputes with lessors. Otherwise, the consequences can go beyond the carrier to affect other airlines and ultimately end consumers in one way or another.
(Ameya Joshi is an aviation analyst.)
