India's Aviation Sector: Balancing Leasing And Insolvency

The National Company Law Tribunal (NCLT) recently gave its nod for the liquidation of Go First Airways.¹ This airline company is the second major airline that had to liquidate in the recent past, significantly affecting the airline industry. Go First Airways aimed to provide affordable air travel to the common middle class, a laudable move that gave it early success, but it could not handle the weight of its financial capabilities, leading to its insolvency. The aviation industry in India today is majorly dominated by Indigo and Air India and ranks third globally in terms of its size.²

The Indian aviation industry is a concentrated market, and therefore competition is cutthroat. In such a market, the exit of one player leads to further concentration of the market, thereby lessening the chances of revival from insolvency. Moreover, the sector is highly dependent on aircraft leasing, a mode of operation where the airline company need not purchase aircraft; instead,