ModiLuft is preparing to relaunch airline operations, despite the fact that it is yet to resolve issues from its previous, abortive attempt to operate a domestic network in India.
The Delhi-based carrier was set up in 1993 by Satish Kumar Modi, with assistance from Lufthansa, operating four Boeing 737-200s leased from the German carrier. The airline also subleased three General Electric Capital Aviation Services-managed Boeing 737-400s from Air UK.
Since 1996, ModiLuft has been involved in a prolonged dispute with Lufthansa about its alleged failure to meet the leases' financial obligations, resulting in all the 737-200s being grounded in September 1996 (Flight International, 20-27 November, 1996). A legal battle in the Bombay high court was resolved in Lufthansa's favour, with the German airline being appointed custody of the aircraft. Their recovery is being blocked, however, pending the verdict of an appeal filed by ModiLuft in the Indian Supreme Court, and Lufthansa is still seeking repayment of around DM32 million ($18 million) in alleged debts.
Air UK is still fighting a legal battle with ModiLuft to recover the $3.5 million of outstanding landing fees it says it was forced to pay to the Indian authorities to recover one of its 737-400s, and for "substantial" outstanding lease payments, says Air UK's chief financial officer, Stuart Carson. The UK carrier has now managed to recover all of its aircraft, which has "-cost us a lot of time, money and effort", adds Carson.
The grounding of the 737-200s, plus the return of the 737-400s to Air UK, forced ModiLuft to suspend operations in late 1996. UK remarketing agent Fortis Aviation has now been appointed to help the airline rebuild its fleet, while British Airways consultancy arm Speedwing has provided an executive manager. An initial fleet of three Boeing 737-400s is being sought, with an operating lease being preferred. ModiLuft plans to resume its previous network of domestic routes, serving points such as Madras and Mumbai from its Delhi base.
Source: Flight International
