AVGEEK
How aircraft leasing works in India, from contracts to repossession
Aviation lawyer Nitin Sarin explains the legal and commercial structures behind aircraft and engine leases, and the conditions lessors weigh in India.
The conversation
This week’s guest is Nitin Sarin, Managing Partner at Sarin & Co, India’s only aviation law firm. The topics ranged from how aircraft leasing happens, to how an engine lessor takes the much bigger risk, to the Capetown convention, the emerging GIFT city, what MoCA and DGCA can do to make India more attractive for leasing companies, aircraft repossessions in India, and more.
Nitin Sarin - @Deaphen
Vishal Mehra - @vishal1mehra
Key Takeaways
- Aircraft selection is also a financing decision. Nitin Sarin asked founders to assess residual value, parts availability and serviceability alongside operating costs before negotiating the acquisition or lease.
- Acquisition funding can involve separate stages: pre-delivery payments, funding at delivery and a later sale-and-leaseback. Each requires its own contractual work; a fleet buyer’s repeatable process may differ from a business-jet buyer’s bespoke transaction.
- The Cape Town Convention and aircraft repossession in India were practical credit questions, not legal background alone. The October 2024 episode’s assessment of recovery uncertainty must be read against the law and enforcement position then; it is not advice on the current repossession regime.
- Recovery uncertainty can weigh more heavily on a startup than on an established airline. In Sarin’s historical assessment, established operators could offer assurances that a new entrant might struggle to provide; that distinction should not become an unsupported claim about every borrower.
- Engine leasing requires a separate risk assessment from airframe leasing. Sarin identified ownership evidence and recovery issues that can differ, and can expose an engine lessor to greater risk; airframe safeguards cannot simply be assumed to protect the engine transaction.
- GIFT City needs a commercial advantage, not merely an Indian replica of Ireland. Sarin identified finance leases as a possible fit and discussed what MoCA and DGCA could do to make India more attractive to leasing companies; these were proposals, not a verdict that the ecosystem was complete.
- The lessor’s tax location can affect the airline’s economics. Sarin treated counterparty structure as part of the lessee’s commercial evaluation, alongside financing and asset risk, rather than an administrative address with no bearing on the transaction.
Editorial analysis
Finance starts with choosing the right asset
Aircraft finance begins before a lease is signed. Nitin Sarin argues that the first serious choice is the asset itself: operating cost, residual value, spare parts and serviceability all influence whether a business plan can attract an aircraft. A new airline must then persuade a manufacturer or lessor to commit a valuable asset and delivery position to a company without an established financial record. The contract sits inside that commercial judgement, rather than replacing it.
Financing extends beyond delivery
The transaction also unfolds in stages. Sarin describes legal work around purchase agreements, pre-delivery payments, financing before delivery and subsequent refinancing or sale-and-leaseback arrangements. His comparison with business jets makes the organisational difference tangible: a fleet buyer wants repeatable agreements across many aircraft, whereas an occasional corporate purchaser has a smaller decision-making group and more scope for a bespoke transaction. The aircraft may look like a single purchase, but the financing and contractual decisions extend across its acquisition.
The price of legal uncertainty
For Sarin, the cost of capital is also a question of institutional predictability. Speaking about India’s experience at the time, he says uncertainty over repossession and competing demands can make creditors reluctant to back new entrants. Large established airlines may offer reassurance that a startup cannot. His argument for implementing the Cape Town framework is therefore commercial as well as legal: a financier’s confidence in what happens after default can affect access to an aircraft before operations even begin. These are his historical assessment and policy recommendations, not a statement of current law.
GIFT City, engines and the shape of risk
That distinction between a promising framework and a workable proposition also shapes his view of GIFT City. Sarin sees a need to offer an identifiable benefit rather than simply imitate Ireland, and identifies finance leases as a possible niche. Engine finance adds another caution: he argues that ownership evidence and recovery can be more complicated than for an airframe. Across the conversation, technical understanding, contractual structure and enforceability help determine how much risk a financier will accept—and which airline ultimately bears its cost.
Questions & answers
Why can the choice of aircraft determine financing access?
Sarin links operating costs, residual value, spare-parts support and serviceability to the asset risk a financier is prepared to carry. The contract cannot compensate for an unsuitable aircraft.
When do financing decisions occur in an aircraft purchase?
The legal and financial process can include pre-delivery payments, delivery funding, refinancing and sale-and-leaseback transactions. Different stages generate different obligations.
Why does repossession predictability matter to an airline startup?
A lessor must judge what recovery will look like after default. In Sarin’s assessment at the time, uncertainty could make an unproven entrant harder to finance than an established airline.
What is the argument for aircraft finance at GIFT City?
Sarin argues that India should seek a distinct competitive advantage instead of replicating Ireland wholesale. He identifies finance leases as one possible area for differentiation.
Are engines financed like airframes?
Not necessarily. Sarin describes engine ownership documentation and recovery as requiring particular care, so lenders must assess the risks separately.
Sources & attribution
Original conversation: The Indian AvGeek — Episode 13. Published 27 October 2024.
Historical context: This is an editorial analysis of a conversation recorded and released in October 2024. Guest assessments, future plans, regulatory proposals and commercial claims reflect that historical discussion and are not presented as current, independently verified developments.
Editorial method: Questions and answers are carefully edited explanatory paraphrases—not verbatim interview quotations. Commentary, figures and claims requiring updated verification should be checked against the recording and contemporaneous official sources before final public release.