India to Relax Wet-Leasing Norms for Airlines

Why in the news?

The Indian government is set to relax wet-leasing regulations, allowing airlines to expand and launch new routes amid aircraft supply delays, benefiting carriers like IndiGo, SpiceJet, and Air India while supporting growth in the aviation sector.

India to Relax Wet-Leasing Norms for Airlines

About Policy Changes for Wet-Leasing Aircraft:

  • Relaxed Regulations: The Indian government is set to announce relaxed norms, allowing airlines to expand and launch new routes using wet-leased aircraft, addressing supply chain delays in aircraft induction.
  • Wet-Leasing Explained: A wet lease involves an arrangement where one airline provides an aircraft, along with crew, maintenance, insurance, and other services to another airline for a specific period.
  • Impact on Airlines: Airlines like IndiGo and SpiceJet can benefit, as they are facing challenges in expanding routes due to delays in aircraft deliveries.

Industry Concerns and Oversight:

  • Regulation by DGCA: Industry experts emphasize the importance of the Directorate General of Civil Aviation (DGCA) maintaining control over wet-leased aircraft to ensure safety and regulatory compliance.
  • Support for Aviation Growth: The policy is designed to ease business operations and promote the growth of the aviation network in India, especially as the country develops and new routes emerge.
  • Industry Growth Potential: Despite challenges like airline groundings and reduced flight capacity, passenger numbers continue to rise, signaling strong recovery and potential for further growth.

What is Wet Leasing?

  • Definition: Renting an aircraft with its operating crew and engineers.
  • Technical Term: ACMI (Aircraft, Crew, Maintenance, and Insurance).
  • Regulations: DGCA discourages wet leasing as the crew may not be approved by Indian authorities.
  • Cost: More expensive than dry leasing and typically short-term.
  • Why Do Airlines Lease Aircraft?
  • Avoid Large Payments: Leasing helps airlines avoid high upfront costs of buying planes.
  • Increase Capacity: Enables airlines to quickly expand capacity on specific routes, often temporarily.

Sources Referred:

PIB, The Hindu, Indian Express, Hindustan Times