SpiceJet Faces Legal Action for Alleged Breach of Engine Lease Agreement

SpiceJet, a leading airline based in Delhi, India, has found itself in a legal tussle with Engine Lease Finance BV, following allegations of breaching a lease settlement. The dispute centers around the use and condition of an aircraft engine leased by SpiceJet. The Delhi High Court has now intervened, ordering SpiceJet to permit the lessor to inspect the engine in question.

This legal action stems from a previous interim settlement reported by ch-aviation in October. Under the terms of this settlement, SpiceJet agreed to pay Engine Lease Finance BV over USD2 million by early 2024 and to return an aircraft engine by January 25. The lessor had initially filed a stay application due to SpiceJet’s default on nine engine lease agreements but withdrew it following the interim agreement. SpiceJet had returned eight engines but retained one, which is now at the center of the dispute.

The lessor accused SpiceJet of not only making partial payments but also of continuing to use the engine beyond the agreed-upon cessation date of January 15. Additionally, Engine Lease Finance BV raised concerns about SpiceJet “cannibalizing” parts of the engine, which would violate the terms of the lease agreement.

SpiceJet’s counsel responded in court, assuring immediate cessation of the engine’s use and promising to address other issues, including the allegations of part removal or swapping, in a comprehensive future response. The Delhi High Court, reinforcing the terms of the October interim settlement, has mandated SpiceJet to grant the lessor immediate and further access to the engine for inspection purposes before its handover.

This court order highlights the legal and operational challenges faced by airlines in managing leased assets and underscores the importance of strict adherence to lease agreements in the aviation industry. SpiceJet’s compliance with the court’s decision and the subsequent actions will be closely monitored as the case progresses.