Customers hold back investment because of concerns over bankruptcy protection
Indian aviation services company Aviators has abandoned plans to launch a fractional-ownership programme, due it says, to a lack of faith in the Indian legal system.
Aviators managing director Arun Sharma says that despite having received around 50 letters of intent (LoI), the planned Cessna Citation Excel and Pilatus PC-12 shared-ownership scheme cannot go ahead without firm customer commitment. The LoIs are equal to around 4,000h on six aircraft, including a commitment from the Indian conglomerate Tata Group, he says, but customers are withholding investment primarily due to concerns over bankruptcy protection and ownership rules under the present Indian legal system. "Unlike in the USA, where creditors can claim back lost funds after a couple of months," Sharma says, "the process in India can take over two years and even then can be very complex."
India has witnessed several recent incidents of ownership disputes involving leased aircraft and none of Aviators' interested companies is willing to risk an investment in such circumstances, he adds. The Indian licensing body, the DGCA, has recently strengthened ownership rules for aircraft, but Sharma says more changes are needed.
Aviators initially delayed its fractional launch to this year after a lack of demand (Flight International, 23 December-6 January 2004).
Sharma says the Bangalore-based company has fallen back on its plan to launch a charter operation, and will receive its first Beechcraft 1900D this month. Aviators is also understood to be talking to international fractional operators about possible tie-ups.
JUSTIN WASTNAGE / LONDON
Source: Flight International
