Lessors move to reclaim SpiceJet aircraft as fresh challenges mount

On July 13, the aviation regulator, Directorate General of Civil Aviation (DGCA), uploaded four requests to deregister four MAX aircraft of SpiceJet. The aircraft involved are VT-MAX, VT-MXA, VT-MXB, VT-MXC. Sky high leasing and its co-companies had leased these aircraft to SpiceJet and have raised the IDERA request.

DGCA was acting on IDERA requests. An IDERA request is a formal legal document empowering an aircraft lessor or lender to have an aircraft deregistered, repossessed, and exported from a country when the lessee defaults on lease payments or loan obligations, as established under the Cape Town Convention. It simplifies the process for creditors to recover their assets from a defaulting airline, providing crucial security in global aircraft financing.

This development comes as SpiceJet has to deposit an outstanding amount of Rs 144.5 crore in a long-running arbitration dispute with former promoter Kalanidhi Maran and his KAL Airways Pvt Ltd. The airline received a relief from the Delhi High Court on Monday to make the deposit in tranches.

On lessor rights, India ratified the Cape Town Convention by passing the Protection of Interests in Aircraft Objectrelief2025, which received the Presidential assent in April 2025, formally bringing the Convention's provisions concerning aircraft financing and leasing into Indian law. The bill was enacted to align India's domestic laws with the international treaty, aiming to boost aircraft leasing, reduce costs, and attract investment in the Indian aviation sector.

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Prior to this, India was a signatory to the Cape Town Convention but the local laws were not aligned, which caused difficulty for lessors to take the aircraft back. A shining example of these troubles was the case of grounded airline GoFIRST. Ironically, two Go FIRST aircraft, out of 54, continue to be in India, three years since the airline filed for voluntary bankruptcy.

Two of the SpiceJet aircraft are listed to be based at Hyderabad, while one each is at Amritsar and Delhi. In reality, VT-MAX, VT-MXA, VT-MXC are parked at Hyderabad, while VT-MXB is parked in Kolkata. VT-MAX was the first MAX aircraft inducted by SpiceJet.

The aircraft was inducted in October 2018, months after Jet Airways inducted the first MAX in India, in its fleet. SpiceJet, which has a history of naming its aircraft, named VT-MAX “King Chilli”. A lot has changed since 2018, for SpiceJet, India and the world.

The induction of MAX was to be the turning point for the airline, which had seen a new low in December 2014, before the change in management. The grounding of MAX and the pandemic broke the back of the airline completely, though its balance sheet looked stronger with the accounting for compensation for the grounding and slump sale of Spice Xpress, its cargo subsidiary. All its freighter aircraft also remain grounded currently.

More trouble for SpiceJet?

SpiceJet is down to 2.5 per cent domestic market share in May, the best- ever month recorded in the history of domestic aviation in India. The airline is yet to induct the wetleased A320s it had announced would come in July; its own fleet is down to a handful, and its on-time performance is at an absolute bottom, yet the airline continues to survive its shocks.

The airline handful,sed Iits on-timee from multiple investors in September 2024, which was supposed to act as a turnits shocks.led with the resolution with lessons for the Q400 aircraft. The airline owns 19 Q400s, though only two are operational right now.

Can the lessor recover the planes?

While the IDERA request demands deregistration of planes, taking them out of India will be another challenge for the lessor. Documentation and legal paperwork are not the only challenges for the lessor, but the condition of the aircraft matters more. The lessor will have to spend a significant amount on the aircraft that are not stored in certified conditions as per guidelines.

The non-recovery traditionally puts other carriers at risk of increased lease rates, as the impact is considered at the country level. During times when sliding rupees has impacted the outgo for airlines, SpiceJet's nonpayment will put additional pressure on leasing to India.

Tail Note

The airline has continued to maintain its operations in Dubai, one of its two scheduled international destinations. It has otherwise shrunk at most places in India, including suspending flights from Chennai, one of the top six metros.

Since the four aircraft for which IDERA is raised are already grounded, deregistration will not have any direct and immediate impact on passengers. SpiceJet has continued to sustain against all odds, from auditor reports to groundings, court cases to lessor issues. With a market share as low as 2.5 per cent in domestic market and a shrunk fleet, what does it have up its sleeve now

Ameya Joshi is an aviation analyst.