Indian regional carrier TruJet is currently at the risk of losing its air operator’s license. Rules state that regional airlines must at least have a fleet of five aircraft to maintain their license. However, unpaid leases mean that TruJet only has a single operational aircraft. Let’s find out more about the airline’s current woes and how it could affect a possible $1.9 billion investment.
Serious challenge
According to BusinessLine, TruJet could be in danger of losing its scheduled air operator’s license. Under DGCA rules, India’s aviation regulator, any regional airline must have five aircraft operational in order to maintain its license. Failure to do so would result in a suspension or revocation of the air operator’s license.
TruJet is currently locked in a battle with lessors, grounding nearly its entire fleet. Out of the seven ATR 72s it operates, two have been grounded due to mechanical issues, and four have been grounded directly by lessors. Only one ATR 72-500, registered VT-TMN and leased from Aergo Capital, is currently flying, according to ch-aviation.
The Hyderabad-based carriers seven planes come from three lessors, DAE Capital (three), Aergo Capital (two), and Elix Aviation (three). All three lessors have demanded that their planes be grounded until payments are made. While DAE and Elix’s planes are now on the ground, TruJet continues to operate one of Aergo’s planes.
Lease payments
The current dispute is a result of TruJet failing to pay its lease due to the respective lessors. This has meant the grounding of multiple aircraft as the airline struggles to survive in light of India’s devastating second wave. Instead, TruJet is demanding that the leases be renegotiated and payment plans changed before making any payments.
However, it seems unlikely that the lessors will choose to negotiate. With travel picking up globally, repossessing the plane might be a simpler and more lucrative decision for many. If the lessors decide to deregister the planes from TruJet, its license stands at serious risk of disappearing due to failing to meet fleet obligations.
The dispute is interesting given that TruJet just saw a huge investment from financial firm Interups to the tune of $1.9 billion. While most of this capital is reserved for an order of 108 aircraft, some is reserved for operations too. However, Interups Chairman Laxmi Prasad has made it clear that he is not interested in carrying on the current leases, saying,
“We have taken the stance that we will buyout but not continue with leasing unless they (lessors) freeze current obligations and agree with us starting a new payment plan…It’s a must that we negotiate this now as otherwise in legal terms it implies that we have assumed their confirmation of outstanding obligations.”
For now, the future of TruJet and its big plans seems up in the air as it battles to keep its air operator’s license first.
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