Reading the fine print: Aircraft programmes in India deserve a detailed review

opinion

by CJI Expert

July 22, 2026

(L-R) Iain Houseman, president of ZenithJet and Lovejeet Singh, partner at Chandhiok & Mahajan Advocates and Solicitors.

The following article has been contributed by Iain Houseman, president of ZenithJet and Lovejeet Singh, partner at Chandhiok & Mahajan Advocates and Solicitors.

The Indian business aviation sector has witnessed significant growth over the past decade, with an expanding fleet of business jets.

Owners and operators of business aircraft in India routinely enter into engine and airframe maintenance programme agreements worth millions of rupees, often without adequate independent legal and technical review. These agreements, governed by complex contractual terms, warrant the same level of scrutiny as the aircraft acquisition itself. This article examines the legal, regulatory and commercial dimensions of aircraft maintenance programmes from an Indian perspective.

Engine and airframe programmes are essentially pre-paid maintenance contracts, but they are priced and structured to be profitable for original equipment manufacturer (OEM) and not optimised for the owner. They are sold as peace of mind, and they do provide genuine value, but the terms vary enormously depending on numerous factors. The sales pitch emphasises what is covered in the programme, whereas the fine print defines what is not covered, and that’s where owners get surprises.

Programmes such as Rolls-Royce Corporate Care, GE OnPoint, Pratt & Whitney Eagle Service Plan, JSSI and various other OEM programmes represent substantial financial commitments. For Indian operators, these programmes must be evaluated not merely as commercial arrangements but also through the lens of airworthiness compliance under the Indian Directorate General of Civil Aviation (DGCA) framework.

The Indian regulatory framework

As part of a formal application for grant of Air Operator Permit (AOP) or its renewal to operate non-scheduled air transport services, maintenance arrangements consistent with the nature and extent of the intended operation are a pre-requisite. The operator should have appropriate arrangements for ensuring continuing airworthiness as well as maintenance capabilities in consonance with DGCA requirements.

In addition, DGCA requires modifications/inspections to be carried out in aircraft in the interest of safety as a condition of the Certificate of Airworthiness of aircraft remaining in force. Owner/Operators are required to submit to the Regional Airworthiness Office a list of service bulletins complied with during the preceding one year at the time of issue/extension of Airworthiness Review Certificate (ARC). They are also required to submit a consolidated list of mandatory modifications/inspections item-wise indicating their compliance status.

Aspects to consider in aircraft programmes

Exclusions and carve-outs: Every programme has a list of exclusions and carve-outs. For instance, foreign object damage (FOD), ‘owner-induced’ damage, corrosion and certain component categories are commonly excluded. These exclusions can represent significant unbudgeted costs that only come to light when making a claim.

Escalation clauses: Rates typically escalate annually, often tied to a formula the owner typically don’t scrutinise.

Transferability: If you sell the aircraft, does the programme transfer to the new owner at the same rate? Given the current market for pre-owned aircraft in India, this aspect is particularly pertinent as favourable locked-in rates and clean transfer terms add materially to resale value.

Cancellation terms: What happens if you want early cancellation? Some programmes have penalties and others have buyout provisions that are negotiable at signing but impossible to change later.

Coverage geography: Certain programmes have restrictions on where support is provided or where maintenance must be performed. For an owner who flies internationally, this matters enormously.

Foreign exchange consideration: Maintenance programme payments by Indian operators to foreign programme providers constitute ‘current account transactions’ under the Foreign Exchange Management Act, 1999 (FEMA). Such payments are generally permissible, subject to applicable withholding tax obligations under the Income Tax Act, 2025. Indian operators must consider: (a) withholding tax implications on payments to non-residents; (b) applicability of Double Taxation Avoidance Agreements (DTAAs); (c) Goods and Services Tax (GST) implications on import of services under the reverse charge mechanism; and (d) compliance with Reserve Bank of India (RBI) reporting requirements for cross-border payments.

Commercial considerations: Negotiation strategies for Indian operators

Indian operators must consider distinct commercial considerations when evaluating and negotiating maintenance programmes. The following aspects warrant particular attention:

Buy-in fees and entry costs: Where an aircraft was not enrolled in a programme from delivery, subsequent enrolment typically requires payment of a buy-in fee. For Indian operators acquiring pre-owned aircraft, these fees can be substantial. The quantum of buy-in fees is negotiable, particularly where the aircraft has a documented maintenance history, recent shop visits or where the operator is enrolling multiple aircraft. Indian operators should obtain independent technical assessments of the aircraft’s maintenance status to support negotiations on buy-in quantum.

Enrolment timing and rate optimisation: The timing of programme enrolment significantly impacts the rate structure. Enrolling at delivery of a new aircraft typically secures the most favourable rates, as the OEM’s exposure is lowest. However, Indian operators acquiring aircraft through operating leases or finance leases must coordinate enrolment with the lessor’s requirements and ensure that programme terms are compatible with the lease structure. Enrolment timing should also account for DGCA permit renewal cycles.

Rate caps and escalation ceilings: Annual escalation caps are negotiable, particularly for operators enrolling multiple aircraft, committing to long-term contracts or representing high-utilisation operations. Indian operators should negotiate for (a) fixed-rate periods during the initial contract years; (b) caps on annual escalation; and (c) the right to renegotiate rates upon material changes in utilisation patterns.

First shop visit coverage and baseline inspections: The allocation of costs for findings at the first major inspection following enrolment is a significant negotiation point. Indian operators should negotiate for coverage of the total cost of parts, shop labour and Life-Limited Parts (LLPs) required to perform a comprehensive overhaul in case of first shop visit.

Credits for prior maintenance: Where an aircraft has undergone recent maintenance events, the operator may be entitled to credits against programme entry fees or reduced hourly rates reflecting the remaining life on maintained components. Indian operators frequently leave significant value on the table by failing to claim credits for recent shop visits. Comprehensive maintenance records and independent technical review are essential to maximising entry credits.

AOG support and coverage geography: For Indian operators flying domestically and internationally, the geographic scope of aircraft on ground (AOG) support is critical. Programmes vary significantly in their AOG response commitments within India and across the Asia-Pacific region. Operators should negotiate for (a) defined response time guarantees for AOG events at major Indian airports; (b) coverage for ferry flights to approved maintenance facilities; (c) access to regional spare parts pools; and (d) contractual remedies for failure to meet AOG response commitments.

Minimum utilisation commitments: Most programmes impose minimum annual flying hour commitments, requiring payment for a specified number of hours regardless of actual utilisation. For Indian operators whose flying patterns may be seasonal or variable, negotiating realistic minimum hour thresholds is essential.

Considerations specific to the Indian market

DGCA documentation requirements: The DGCA requires specific documentation for maintenance performed on Indian-registered aircraft, including certificates of release to service in prescribed formats. Programme agreements should obligate the programme provider and its approved maintenance facilities to furnish documentation in formats acceptable to the DGCA, and to cooperate with DGCA audits and inspections of maintenance records.

Coordination with lessors and financiers: A significant proportion of business aircraft in India are acquired through operating leases or secured financing arrangements. Maintenance programme enrolment must be coordinated with lessor or financier requirements, including (a) lessor approval of programme terms; (b) assignment of programme benefits as security; (c) step-in rights for lessors upon operator default; and (d) return condition requirements that align with program coverage. The tripartite relationship between operator, programme provider and lessor requires careful contractual structuring to avoid gaps in coverage or conflicting obligations.

Conclusion

Aircraft maintenance programmes represent a critical intersection of regulatory compliance, contractual risk allocation and commercial strategy for Indian operators. Indian operators must approach these agreements with the same rigour applied to aircraft acquisition transactions. This requires (a) independent legal review of contractual terms against the Indian legal framework; (b) independent technical assessment of the aircraft’s maintenance status and the adequacy of programme coverage; (c) commercial benchmarking of rates, escalation provisions and coverage scope against market comparable’s; and (d) ongoing contract management to ensure that the value paid for is the value received.

The most effective time for such negotiations is before the agreement is executed, when all terms are negotiable and the programme provider is commercially motivated to secure enrolment. However, even for operators already enrolled in programmes, periodic review of contractual terms, claims history and coverage adequacy against evolving regulatory requirements can identify significant opportunities for cost recovery and improved coverage.