India’s aviation regulator deregisters 3 Embraer aircraft of Paramount Airways over lease payment dispute

Three aircraft of Paramount Airways, based in Chennai, in the southern state of Tamil Nadu in India, have been deregistered by India’s civil-aviation regulator following the carrier’s disputes over payment of lease.

The all-business-lass Paramount Airways has a fleet of 5 Embraer aircraft, with 70-75 seats.

This is the second time since 2008 that the Directorate-General of Civil Aviation (DGCA) of India is deregistering Paramount Airways’ planes at the behest of the lessors, GE Commercial Aviation Services (GECAS), for having defaulted in payment of lease.

It may be noted that the Directorate-General of Civil Aviation had, in 2008, confiscated 3 aircraft from Kingfisher Airlines, the second biggest private airline India, for default in payment of lease.

After the being deregistered by the DGCA, following a judgment by a London court on the lease payment issue, the services of Paramount Airways have been disrupted.

The airline has stopped accepting any bookings, according to reports.

However, Paramount Airways Private Limited said in a statement that the London High Court has awarded it a “positive judgment” against the aircraft lessor, GE Commercial Aviation Services, over a pending dispute over deposit refunds and maintenance reserves and thus “putting an end to months of speculation.”

GE Commercial Aviation Services had moved the London High Court as well as India’s Directorate-General of Civil Aviation complaining about non-payment of dues by Paramount Airways.

However, the airline argued that it had deposited $15 million with GE Commercial Aviation Services – in which $5 million was by way of deposit refunds and the rest $10 million as maintenance reserves.

The dispute arose, Paramount Airways maintained in its statement, when it demanded reimbursement of the maintenance reserves created on different checks conducted and as result of the “lack of response” from GE Commercial Aviation Services.

Paramount Airways also alleged that GE Commercial Aviation Services, in its capacity as leasing firm, was “looking to deregister the aircraft due to the dispute.”

M Thiagarajan, managing director of Paramount Airways, claimed in the statement that the airline has “won” a legal case against GE Commercial Aviation Services in the London High Court.

Thiagarajan added that Paramount Airways has sent the Directorate-General of Civil Aviation all the relevant papers and that the deregistration would be “reversed” and that the company’s planes “are still flying.”

An official of Paramount Airways told reporters that that there was no disruption in the airline’s services and also that interim orders have been issued to air-traffic controllers (ATCs) across India in this regard.

Meanwhile, a top executive of the Directorate-General of Civil Aviation said the regulator would scrutinize the papers that Paramount Airways had submitted to it and appropriate action would be taken.

Paramount Airways, which operates scheduled services from its hub at Chennai International Airport, mainly targets business travellers. The carrier claims that it is the first airline in India to have used the new-generation Embraer 170/190 family series of planes.

Paramount Airways, which commenced operations in October 2005, was founded by the Paramount Group, a textile manufacturer, based in Madurai in Tamil Nadu.