In a move which would reduce the cost of acquiring new aircraft for Indian carriers, the Indian government plans to sign the Cape Town Convention, an international treaty designed to facilitate asset-based financing and leasing aircraft.

Ratifying the convention would help Indian carriers save over $200 million in aircraft acquisition costs in the short term and over $1 billion in the long term.

 

A senior official of the Ministry of Civil Aviation said the government was close to signing the treaty, which would also reduce the risk and debt level of the country.

 

In simple terms, the Cape Town Convention ensures a greater comfort level for aircraft makers or lessors in repossession of aircraft in the event of a default.