It is now a common practice for Thai air operators to lease the commercial aircraft from foreign lessor and register the aircraft in Thailand. During the last 5 years, there have been cases where some Thai operators are in default of payment of rental fee and lead to the dispute where the lessor seeks to terminate the contract and request for the return of aircraft. The lessee usually argue that they do not breach the contract and deny the return of the aircraft. The dispute then develops to a lawsuit. The long judicial proceedings may in practice prevent the lessor or the registered owner of the aircraft from resuming the full use of the aircraft or enter into a new transaction with a new lessee. This delay tactic has been employed by the operators with unstable financial status. In some cases, the lessee may even delay the payment pending decision from the court.
Such action together with long proceedings and the unfavorable systems for returning of aircraft in case of breaching the leasing contract damage Thailand’s image in international aviation industry. The Civil Aviation Authority of Thailand (CAAT), has made effort in re-establishing the credibility in order to protect the good Thai operators from difficulty in leasing aircraft or paying unreasonably high rental fee in the future.
The termination of contract due to default of payment reflect the illiquidity of the lessee. In aviation business, the operating cashflow is vital since the aircraft needs to be well maintained to ensure safety before taking off and the periodical checks as specified by the manufacturer. The shortage of working capital will affect not only the service of individual operator but also the safety standard of the overall Thai aviation industry. Immediate deregistration of aircraft by CAAT has been a measure to tackle such malpractice.
Before deregistering the aircraft, CAAT will arrange a meeting with both the lessor and lessee and allows them to present all facts and evidences. If it becomes clear that the lessor legally terminates the contract and declares the intention not to continue further contractual relationship, CAAT will deregister the aircraft from Thai registration in accordance with the provision of Air Navigation Act to allow the lessor or actual owner to re-register it in other country.