DVB Bank's lawsuit to deregister two Airbus A320s in India highlights the troubles of funding aircraft in the country, which are beyond the financial difficulties of grounded Kingfisher Airlines.
"Not being able to deregister an aircraft is effectively putting us into the same position as not being able to repossess it, as it stalls all remarketing efforts. We cannot ferry the aircraft, nor can we do any heavy maintenance or modifications, leave alone deliver it to a new lessee or purchaser," Carsten Gerlach, senior vice president of aviation finance at DVB, tells Flightglobal.
DVB Bank has sued India's aviation regulator and Kingfisher Airlines in order to deregister the two A320s, which the bank financed back in 2006. The bank has filed a writ petition at the High Court in Delhi against the Directorate General of Civil Aviation (DGCA) and also Kingfisher Airlines. The case hearing is scheduled for 8 April.
"In such a situation, we cannot finance further aircraft registered in India, and the longer it takes to resolve this situation, the less likely it becomes that DVB will come back to this market anytime soon," he says.
Gerlach argues the DGCA should not insist on Kingfisher's consent, which is being replaced by the customary deregistration powers of attorney the bank is holding.
"The DGCA is actually obligated to deregister the aircraft regardless of any deregistration application due to the fact that the aircraft are no longer in Kingfisher's possession and control," he says.
The A320s are parked in Istanbul under DVB's control.
Also, he points out that Kingfisher's air operators permit expired on 31 December.
"Most aviation authorities would be more than happy to get rid of these aircraft in such situation to avoid all liability in case something goes wrong," he says.
As long as the registration continues, the DGCA remains responsible for the regulatory oversight over the aircraft, and it has no way of maintaining that, says Gerlach.
Kingfisher could not be reached for comment.