Indian Aviation Law Reforms 2024-2025: Airline Insolvency, Regulatory Overhaul, and Global Integration

Introduction

The Indian aviation sector has witnessed unprecedented legal and regulatory transformations in 2024-2025, marking a pivotal moment in the evolution of domestic Indian aviation law. These developments, driven by landmark cases and legislative reforms, have fundamentally altered the landscape of aviation governance, aircraft financing, and airline insolvency proceedings. The period has been characterized by the resolution of high-profile airline liquidations, the enactment of comprehensive new legislation replacing colonial-era laws, and the implementation of international conventions that promise to reshape India’s position in global aviation finance.

The confluence of judicial decisions, particularly in the Go First and Jet Airways insolvency cases, has exposed critical gaps in India’s aviation regulatory framework while simultaneously catalyzing urgent reforms. The National Company Law Tribunal’s handling of these cases has established new precedents for airline insolvency proceedings and aircraft lessor rights, fundamentally altering the balance between creditor protection and insolvency law moratoriums.

Simultaneously, the legislative branch has responded with sweeping reforms, including the Bharatiya Vayuyan Adhiniyam, 2024, which replaces the 90-year-old Aircraft Act, 1934, and the Protection of Interests in Aircraft Objects Bill, 2025, which implements the Cape Town Convention into Indian law. These legislative initiatives represent India’s commitment to modernizing its aviation legal framework and aligning with international best practices.

The Go First Liquidation Saga: A Watershed Moment in Aviation Insolvency

Background and Initial Proceedings

The Go First Airlines liquidation case has emerged as one of the most significant aviation law developments in recent Indian legal history, establishing crucial precedents for airline insolvency proceedings and aircraft lessor rights. On May 2, 2023, Go First filed a voluntary petition under Section 10 of the Insolvency and Bankruptcy Code, 2016 (IBC), citing financial distress and operational difficulties [1].

The airline’s decision to seek voluntary insolvency was precipitated by mounting debts totaling over ₹11,000 crores, including significant obligations to aircraft lessors and financial creditors. The National Company Law Tribunal (NCLT) admitted the application on May 10, 2023, appointing a Resolution Professional and imposing a moratorium under Section 14 of the IBC, which stayed all legal proceedings and recovery actions against the airline.

The Aircraft Deregistration Controversy

The Go First case brought to the forefront the tension between India’s insolvency law and international aviation financing practices, particularly regarding aircraft deregistration rights. Aircraft lessors argued that their lease agreements had been terminated prior to the insolvency filing due to Go First’s payment defaults, and therefore, their aircraft should not be subject to the IBC moratorium.

The lessors’ primary contention was that under international aviation law, particularly the Cape Town Convention principles, they retained the right to deregister and repossess their aircraft regardless of the airline’s insolvency status. However, the NCLT’s imposition of the moratorium effectively prevented the Directorate General of Civil Aviation (DGCA) from processing deregistration requests, creating a legal impasse.

Judicial Resolution and Precedential Impact

The matter reached the Delhi High Court, which, on April 26, 2024, delivered a landmark judgment directing the DGCA to deregister all 54 aircraft leased to Go First within five working days [2]. This decision represented a significant shift in judicial approach to the intersection of insolvency law and aviation regulation.

The High Court’s ruling was based on several crucial legal principles. First, the court recognized that the October 2023 notification by the Ministry of Corporate Affairs had clarified that Section 14(1) of the IBC would not apply to transactions involving aircraft, engines, airframes, or helicopters. Second, the court emphasized India’s international treaty obligations and the need to protect aircraft lessor rights in accordance with global aviation financing standards.

Most significantly, the Delhi High Court applied the October 2023 notification retrospectively to the Go First proceedings, departing from the traditional Indian legal principle that laws typically have only prospective application. The court reasoned that India’s international treaty obligations required strict adherence to lessor protection principles, and the notification had been issued specifically to address gaps in creditor protection highlighted by aviation insolvency cases.

NCLT Liquidation Order

On January 20, 2025, the NCLT finally ordered the liquidation of Go First, bringing to a close one of India’s most complex airline insolvency proceedings [3]. The liquidation order came after the Committee of Creditors unanimously decided in their 37th meeting on July 23, 2024, that liquidation was the only viable option due to the absence of feasible resolution plans.

The NCLT’s order appointed Mr. Dinkar T. Venkatasubramanian as the liquidator, replacing the originally proposed Resolution Professional in accordance with Insolvency and Bankruptcy Board of India guidelines advising against appointing the same individual as both Resolution Professional and liquidator. The tribunal approved litigation funding from Burford Capital under a Capital Provision Agreement to cover arbitration costs for proceedings at the Singapore International Arbitration Centre against engine manufacturer Pratt & Whitney.

Jet Airways: Supreme Court Confirms Liquidation

The Jalan-Kalrock Consortium Failure

In a parallel development that underscored the challenges facing airline restructuring in India, the Supreme Court of India, on November 7, 2024, ordered the liquidation of Jet Airways, once India’s premier airline [4]. The decision followed the failure of the Jalan-Kalrock Consortium, the successful resolution applicant, to implement the resolution plan approved by the NCLT in 2021.

The Supreme Court’s judgment in State Bank of India & Ors. v. The Consortium of Murari Jalan and Florian Fritsch & Anr highlighted several critical failures in the resolution process. The Consortium had failed to deposit the required first tranche payment of ₹350 crores in cash by the prescribed deadline, seeking instead to adjust the Performance Bank Guarantee against part of its payment obligations.

Legal Principles Established

The Supreme Court’s decision established several important legal principles for aviation insolvency proceedings. First, the Court held that resolution plans, once approved, cannot be modified by the NCLT, Committee of Creditors, or the successful resolution applicant. This principle, drawing from the Court’s earlier decision in the Ebix case, ensures the sanctity of approved resolution plans and prevents endless modifications that could undermine the insolvency resolution process.

Second, the Court emphasized that timely implementation of resolution plans is a fundamental objective of the IBC, and obligations under approved plans cannot be endlessly postponed or extended. This principle addresses a common problem in Indian insolvency proceedings where successful resolution applicants seek repeated extensions for plan implementation.

The Supreme Court also introduced the concept of creditor duties during insolvency proceedings, suggesting that creditors must actively contribute to successful and timely resolution to ensure the IBC’s objectives are achieved. While acknowledging that the Insolvency and Bankruptcy Board of India’s power to provide a code of conduct for banks and financial institutions is debatable, the Court emphasized the importance of all stakeholders working toward effective resolution.

Legislative Revolution: The Bharatiya Vayuyan Adhiniyam, 2024

Replacing Colonial Legacy

On January 1, 2025, the Bharatiya Vayuyan Adhiniyam, 2024 came into force, replacing the 90-year-old Aircraft Act, 1934 [5]. This legislative transformation represents one of the most significant overhauls of Indian aviation law since independence, modernizing the regulatory framework to address contemporary challenges in the aviation sector.

The 1934 Act, enacted during the colonial period, had been amended 21 times over the decades but remained fundamentally outdated in addressing the complexities of modern aviation operations, emerging technologies, and international regulatory standards. The new legislation provides a comprehensive framework for regulating aircraft design, manufacture, maintenance, operation, and safety oversight.

Key Provisions and Innovations

The Bharatiya Vayuyan Adhiniyam retains the three-pillar regulatory structure established by the 2020 amendments to the Aircraft Act, 1934. The Directorate General of Civil Aviation (DGCA) continues to perform regulatory functions and oversee safety, the Bureau of Civil Aviation Security (BCAS) maintains responsibility for security oversight, and the Aircraft Accidents Investigation Bureau (AAIB) handles aircraft accident investigations.

However, the new Act significantly expands the powers of these regulatory bodies, particularly the DGCA and BCAS, enabling more effective regulation of the rapidly evolving aviation industry. The legislation incorporates provisions for emerging technologies, including enhanced regulation of drone operations, which had become increasingly important with the growth of unmanned aircraft systems in commercial and recreational applications.

Consumer Protection and Appeals Mechanism

One of the most significant innovations in the new Act is the introduction of a robust appeals mechanism for regulatory decisions. Unlike the previous framework where appeals against DGCA or BCAS decisions were limited to the Union Government, the new Act provides for a more structured appellate process, potentially improving the efficacy of regulatory oversight.

The Act also strengthens consumer protection provisions, introducing a streamlined, time-bound grievance redressal system for passengers. This online platform is designed to provide efficient resolution of passenger complaints, ensuring higher service quality and better consumer protection in aviation services.

Sustainability and Environmental Considerations

The Bharatiya Vayuyan Adhiniyam incorporates provisions promoting sustainable aviation practices and environmental protection. The legislation encourages the adoption of green technologies in aviation operations and provides a framework for reducing carbon emissions from aircraft operations. These provisions align with global efforts to address climate change and environmental sustainability in the aviation sector.

Implementation of the Cape Town Convention: The Protection of Interests in Aircraft Objects Bill, 2025

International Treaty Implementation

The passage of the Protection of Interests in Aircraft Objects Bill, 2025 by both houses of Parliament represents a culmination of nearly two decades of efforts to implement the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol into Indian law [6]. India had ratified the Convention in 2008, but the absence of domestic implementing legislation had prevented the practical application of its creditor protection provisions.

The Cape Town Convention, adopted in 2001, establishes a uniform legal framework for asset-based financing and leasing of aircraft, helicopters, and engines. The Convention creates standardized legal mechanisms for protecting the interests of lessors and creditors in international aviation finance transactions, reducing legal uncertainty and facilitating more efficient aircraft financing.

Key Features of the Indian Implementation

The Protection of Interests in Aircraft Objects Bill designates the DGCA as the domestic registry for aircraft-related international interests and dues, centralizing the administration of aircraft financing information. Airlines are required to report dues to lessors on a per-aircraft basis, while lessors must inform the DGCA about their operations and interests in India.

The legislation provides crucial protections for lessors in airline insolvency scenarios, addressing the very issues highlighted by the Go First case. In case of default, the Bill allows creditors or lessors to reclaim possession of aircraft within two months or a mutually agreed period, providing much-needed certainty for international aviation financiers.

Importantly, the Bill establishes that in case of inconsistencies between its provisions and other laws, the Cape Town Convention provisions will prevail to the extent of the inconsistency. This supremacy clause ensures that international creditor protection standards take precedence over potentially conflicting domestic legislation.

Impact on Aviation Financing

The implementation of the Cape Town Convention is expected to significantly reduce aircraft leasing costs for Indian airlines, with industry estimates suggesting savings of 10-15% on leasing rates. This reduction in financing costs stems from the decreased risk perception among international lessors and financiers, who will have enhanced legal certainty regarding their rights in Indian aviation transactions.

The legislation is particularly beneficial for startup airlines and regional carriers, which often struggle to access aircraft financing due to higher perceived risks. Enhanced creditor protections should facilitate easier access to modern aircraft, supporting fleet modernization efforts across the Indian aviation sector.

Regulatory Developments and Policy Initiatives

Ground Handling Services Framework

On July 8, 2024, the DGCA issued the Civil Aviation Requirement for Ground Handling Services (GH CAR), establishing a comprehensive framework for the safety clearance and operations of Ground Handling Service Providers at licensed airports in India [7]. This regulatory development addresses a critical gap in aviation safety oversight by establishing standardized requirements for ground handling operations.

The GH CAR requires all Ground Handling Service Providers to obtain safety clearance from the DGCA within six months of the regulation’s issuance. Providers must develop comprehensive Ground Handling Service Manuals, implement Safety Management Systems, and maintain proper training and certification for personnel. The regulation also mandates regular audits, incident reporting, and emergency response planning to ensure ongoing compliance with safety standards.

Tax and Economic Reforms

The Ministry of Finance, effective July 15, 2024, implemented a uniform Integrated Goods and Services Tax rate of 5% on import of aircraft, representing a significant reduction in the tax burden on aircraft imports. This tax reform is expected to reduce the cost of aircraft acquisition for Indian airlines and promote fleet modernization efforts.

The GIFT City initiative gained momentum in 2024, with approximately 30 aircraft lessors registering and more than 120 aviation assets, including aircraft, helicopters, and engines, being leased from GIFT City. However, the expected movement of aircraft financiers to GIFT City has yet to fully materialize, indicating ongoing challenges in establishing India as a regional aviation finance hub.

Competition Law Developments

The Competition Commission of India issued new Combination Regulations in September 2024, replacing earlier regulations and introducing a deal value threshold for merger control notifications. Transactions involving the acquisition of control, shares, voting rights, or assets with a deal value exceeding ₹2,000 crores, where the target enterprise has substantial business operations in India, now require CCI approval.

These regulatory changes particularly impact airline mergers and acquisitions, as demonstrated by the proposed merger between Air India and Vistara, which was completed in March 2024. The new regulations provide greater clarity for aviation sector consolidation while ensuring appropriate competition oversight.

Litigation Funding and Financial Innovation

Third-Party Litigation Funding

The Go First liquidation case has emerged as a notable instance of litigation funding in India, with Burford Capital providing financial support for the airline’s arbitration proceedings against Pratt & Whitney at the Singapore International Arbitration Centre. The NCLT’s approval of this arrangement, despite initial reservations about third-party funding, represents a significant development in Indian litigation finance.

The tribunal’s acceptance of litigation funding arrangements was based on Supreme Court precedent recognizing the permissibility of third-party litigation funding under Indian law. This development is expected to be game-changing for Indian aviation law and other sectors, with several litigation funders likely to show increased interest in Indian legal proceedings.

Airport Development and Private Participation

The aviation infrastructure sector continued to evolve with significant private participation in airport development and operations. As of December 2023, airports in Ahmedabad, Bengaluru, Cochin, Delhi, Guwahati, Hyderabad, Jaipur, Lucknow, Mangaluru, Mumbai, Kannur, Durgapur, Mopa, and Thiruvananthapuram operate under public-private partnership models through Operation, Management, and Development Agreements with the Airports Authority of India.

The government granted “in principle” approval for approximately 21 greenfield airports to be developed by private parties, state governments, or other government agencies. Notable developments include the operational commencement of Manohar International Airport in Goa and the anticipated opening of Noida International Airport (Jewar Airport) and Navi Mumbai International Airport.

Consumer Protection and Digital Initiatives in Indian Aviation

AirSewa Platform Enhancement

The DGCA’s AirSewa web portal and mobile application continued to evolve as the primary platform for addressing travel-related passenger grievances. The platform provides a centralized mechanism for passengers to lodge complaints and seek redressal from airlines, contributing to improved consumer protection in the aviation sector.

The integration of artificial intelligence and automated response systems has enhanced the platform’s efficiency in handling passenger complaints and providing timely resolution. The platform’s data analytics capabilities also provide valuable insights into common passenger issues, enabling proactive regulatory interventions.

Safety Management Systems

The implementation of Safety Management Systems across various aviation sectors gained momentum in 2024, with enhanced requirements for airlines, ground handling service providers, and airport operators. The DGCA’s emphasis on proactive safety management, including risk assessment, incident reporting, and continuous improvement processes, reflects international best practices in aviation safety oversight.

Environmental Sustainability and Compliance Under Indian Aviation Law

Carbon Emission Reduction

The Bharatiya Vayuyan Adhiniyam incorporates provisions promoting sustainable aviation practices, reflecting India’s commitment to environmental protection and carbon emission reduction. The legislation encourages the adoption of green technologies and sustainable aviation fuels, aligning with global initiatives to address climate change in the aviation sector.

The Civil Aviation Ministry, under the evolving framework of Indian aviation law, has launched several sustainability initiatives. These include promoting the use of sustainable aviation fuels, encouraging airlines to adopt fuel-efficient aircraft and operational practices, and supporting research and development in green aviation technologies.

Noise and Environmental Compliance

Enhanced environmental compliance requirements for airport operations and aircraft noise management have been implemented, reflecting growing awareness of aviation’s environmental impact. Airports are required to implement noise monitoring systems and take measures to minimize environmental impact on surrounding communities.

Future Outlook and Emerging Challenges in Indian Aviation Law

Technology Integration and Regulatory Adaptation

The rapid advancement of aviation technology, including artificial intelligence, autonomous systems, and electric aircraft, presents ongoing challenges for regulatory adaptation. The Bharatiya Vayuyan Adhiniyam provides a framework for addressing emerging technologies, but continuous regulatory evolution will be necessary to keep pace with technological developments.

The integration of unmanned aircraft systems into the national airspace system requires sophisticated regulatory oversight, air traffic management systems, and safety protocols. The Drone Rules, 2021, provide a foundation for this integration, but ongoing refinement will be necessary as the technology matures.

International Cooperation and Harmonization

India’s efforts to align its aviation regulatory framework with international standards through the Cape Town Convention implementation and the modernization of the Aircraft Act demonstrate a commitment to international cooperation. Continued harmonization with International Civil Aviation Organization standards and bilateral aviation agreements will be crucial for supporting India’s growing role in global aviation.

The development of mutual recognition agreements for aviation safety and security oversight with international partners will facilitate easier market access for Indian airlines and aviation service providers while ensuring maintain safety and security standards.

Conclusion

The period 2024-2025 has marked a transformative era in Indian aviation law, characterized by landmark judicial decisions, comprehensive legislative reforms, and significant regulatory developments. The resolution of major airline insolvency cases has established important precedents for creditor rights and insolvency proceedings, while the implementation of modern legislation has positioned India to address contemporary aviation challenges effectively.

The Go First and Jet Airways liquidations have provided crucial insights into the intersection of Indian aviation law and insolvency regulation, leading to enhanced protections for aircraft lessors and clearer procedures for airline restructuring. These cases have demonstrated the importance of balancing debtor protection with creditor rights, particularly in the context of international aviation finance.

The enactment of the Bharatiya Vayuyan Adhiniyam, 2024, and the implementation of the Cape Town Convention through the Protection of Interests in Aircraft Objects Bill, 2025, represent India’s commitment to modernizing its aviation legal framework and aligning with international best practices. These legislative initiatives promise to reduce financing costs, enhance investor confidence, and position India as an attractive destination for aviation investment.

The regulatory developments in ground handling services, consumer protection, and environmental sustainability demonstrate the government’s comprehensive approach to aviation sector development. The integration of digital platforms for grievance redressal and the emphasis on safety management systems reflect modern approaches to aviation oversight and consumer service.

Looking forward, the success of these reforms will depend on effective implementation, continued regulatory adaptation to technological developments, and ongoing harmonization with international standards. Given the sector’s rapid growth and innovation, Indian aviation law will require continuous refinement to ensure safety, efficiency, and global competitiveness.

The transformation of Indian aviation law in 2024-2025 provides a solid foundation for the sector’s continued growth and development. The enhanced legal certainty, improved creditor protections, and modernized regulatory framework position India to capitalize on the significant opportunities in domestic and international aviation markets while maintaining the highest standards of safety and service quality.

References

[1] Go Airlines (India) Limited v. Committee of Creditors, NCLT Order dated January 20, 2025. Available at: https://www.scconline.com/blog/post/2025/01/21/nclt-allows-liquidation-of-go-first-airways-scc-times/ 

[2] Delhi High Court Order in Go First Aircraft Deregistration Case, April 26, 2024. Available at: https://www.business-standard.com/companies/news/go-first-airways-liquidation-nclt-insolvency-bankruptcy-crisis-125012000326_1.html 

[3] NCLT Liquidation Order, Go Airlines (India) Limited, January 20, 2025. Available at: https://www.businesstoday.in/industry/aviation/story/nclt-orders-liquidation-of-budget-airline-go-first-461388-2025-01-20 

[4] State Bank of India & Ors. v. The Consortium of Murari Jalan and Florian Fritsch & Anr, Supreme Court of India, November 7, 2024. Available at: https://corporate.cyrilamarchandblogs.com/2024/11/jet-set-and-grounded-supreme-court-orders-liquidation-of-jet-airways/ 

[5] The Bharatiya Vayuyan Adhiniyam, 2024, Government of India. Available at: https://www.business-standard.com/industry/news/new-aviation-law-bharatiya-vayuyan-adhiniyam-to-take-effect-from-jan-1-124123100949_1.html 

[6] The Protection of Interests in Aircraft Objects Bill, 2025, Parliament of India. Available at: https://www.insightsonindia.com/2025/04/03/cape-town-convention/ 

[7] Civil Aviation Requirements for Ground Handling Services, DGCA, July 8, 2024. Available at: https://iclg.com/practice-areas/aviation-laws-and-regulations/india