AWIN First Apr 05 , 2010
Neelam Mathews firstname.lastname@example.org
Southern India-based Paramount Airways, touted as India’s only business-class airline, may be in danger of closing because it has lost three Embraer-170s leased from Celestial Trading, a subsidiary of GE Commercial Aviation Services, for incomplete payment.
India’s Directorate General for Civil Aviation (DGCA) has already deregistered the three aircraft.
Meanwhile, domestic carriers such as Jet Airways quickly picked up the slots dropped by Paramount, which was operating short-haul flights connecting metropolitan areas with smaller-tier cities.
Another lessor — ECC Leasing, a wholly owned subsidiary of Embraer that holds the leases on the other two aircraft in Paramount’s inventory — has been fighting the case in court for the past six months and wants the DGCA to deregister these aircraft as well. The fifth aircraft is said to be cannibalized and not airworthy.
“Given Paramount’s history of default, I consider that the most likely outcome if relief is granted is that the parties will be back in Court in a few months’ time arguing about relief again in the context of different defaults. Indeed, such a hearing is already scheduled to take place in April at which Paramount’s alleged defaults in relation to the operation and maintenance of the aircraft will be addressed,” said the judge in the London court where the case is registered. That hearing is scheduled for April 19.
Paramount argued in court that the loss of aircraft would be catastrophic because there are no replacements available on the market. It would lose its DGCA license because its number of aircraft would fall below the minimum number of five required. This would result in the aircraft being grounded at significant inconvenience to thousands of passengers who have bookings with Paramount. It would also cripple the air transportation system in southern India, where Paramount is a market leader, the carrier said at the hearing. Paramount itself would be unlikely to survive and may well go into liquidation, it added. Attempts to contact the CEO were unsuccessful.
The three aircraft were leased in 2006 for eight years. The DAILY has learned that neither lessor is interested in carrying on with the lease agreement for the remaining four years even if the finances are settled. It is clear that Celestial has run out of patience with Paramount’s persistent defaults and would prefer to lease the aircraft to more reliable contractual partners.
-Neelam Mathews, email@example.com