India is the third-largest domestic aviation market in the world, with over 150 million passengers annually and a fleet that is expected to triple over the next two decades. The growth story is well-documented. What is less visible is the legal and regulatory infrastructure that underlies it — and the increasingly complex disputes that arise when that infrastructure is stressed by airline bankruptcies, regulatory enforcement, and cross-border commercial conflicts.
DGCA: India's Aviation Regulator
The Directorate General of Civil Aviation (DGCA) is India's primary civil aviation regulatory authority, operating under the Aircraft Act, 1934 and the Aircraft Rules, 1937. DGCA oversees the certification of aircraft, licensing of pilots and air traffic controllers, approval of airlines' operations specifications, aircraft maintenance standards, and safety oversight. DGCA also handles consumer complaints against airlines for denied boarding, flight delays, and baggage disputes under the Civil Aviation Requirements (CAR).
DGCA enforcement actions — suspension of operating permits, show cause notices, revocation of licences — are challenged before the High Court or the Civil Aviation Tribunal (when constituted). Regulatory interactions with DGCA require careful management: responses to show cause notices, safety audit queries, and permit renewal applications can have significant consequences if handled without specialised aviation law expertise.
Aircraft Acquisition, Financing, and Leasing
Aircraft acquisition in India is typically structured through operating leases (where the airline uses the aircraft without acquiring ownership) or finance leases (where the airline acquires ownership at the end of the lease term). Operating leases are the dominant model for Indian carriers — most aircraft in Indian airline fleets are leased from lessors in Ireland, the US, and the Cayman Islands.
Aircraft financing involves Cape Town Convention instruments — International Interests in Aircraft Objects (IIIA), registered on the International Registry maintained in Dublin. The Convention, ratified by India in 2008, provides lessors with enhanced remedies including the right to repossess aircraft without court order in case of default. India's implementation of the Convention — specifically the deregistration and export provisions — has been the subject of significant litigation, particularly in the context of the Go First and Jet Airways insolvencies.
Airline Insolvency: The Go First Lesson
The insolvency of Go First in 2023 highlighted the tension between IBC's moratorium provisions and lessors' repossession rights under the Cape Town Convention. Go First's IBC filing triggered a Section 14 moratorium that the NCLT initially held prevented lessors from repossessing aircraft. Lessors challenged this before the NCLT Appellate Division and the Supreme Court, arguing that the Cape Town Convention's deregistration provisions should prevail over the IBC moratorium. The proceedings — which involved dozens of aircraft and billions of dollars in exposure — remain instructive for anyone dealing with Indian airline risk.
The Go First insolvency also highlighted the NCLT's learning curve on aviation-specific issues: the interaction between operating licences and insolvency, the regulatory role of DGCA in aircraft deregistration, and the international dimension of multi-jurisdiction aircraft repossession proceedings.
Passenger Rights in India
Indian passenger rights are governed primarily by DGCA's Civil Aviation Requirements (CAR Section 3, Series M). Passengers are entitled to compensation for denied boarding due to overbooking (up to ₹20,000 depending on delay), flight cancellation compensation (typically equivalent to the base fare with a cap), and care and assistance during significant delays. These rights can be enforced through DGCA complaints, consumer forum proceedings, or civil suit depending on the nature and quantum of the claim.
Cross-Border Aviation Disputes
Cross-border disputes in aviation — between Indian carriers and foreign lessors, between codeshare partners, or between ground handlers and airlines — are typically governed by arbitration clauses in the relevant agreements. IATA's standard ground handling agreement specifies IATA arbitration. Aircraft lease agreements typically specify LCIA or ICC arbitration with a neutral seat. The enforcement of foreign arbitral awards against Indian airlines in Indian courts has become a significant area of practice following multiple airline insolvencies.
For legal advice on aviation regulatory matters, aircraft disputes, airline insolvency proceedings, or cross-border aviation litigation, contact DC Law Offices or reach us on WhatsApp.