“The ruling reduces the bargaining power of airport operators because it confirms that detention rights under the Airports Authority of India Regulations do not create a security interest,” said Suhael Buttan, Partner at SKV Law Offices. “By classifying airport dues as unsecured operational debt, the tribunal places them at the lowest recovery tier.”
Stressed airlines may now be less willing to pay advance deposits or accept stricter credit terms because they know airports cannot gain priority in insolvency by claiming a lien, according to Buttan. As a result, he said, airports have weaker negotiating power and may find it harder to insist on upfront payments to continue operations.
The ruling came in the ongoing liquidation proceedings of Jet Airways, where the Mumbai bench of the National Company Law Tribunal on 13 February largely upheld the liquidator’s decision restricting the claims of Adani-owned Mumbai International Airport Ltd (MIAL) and GMR-operated Delhi International Airport Ltd (DIAL).
MIAL had claimed over ₹860 crore for parking, hangar and related charges after Jet’s aircraft remained grounded at Mumbai airport for years. Of this, about ₹510.75 crore was admitted, while the rest was rejected. DIAL claimed around ₹352 crore plus GST, but only about ₹244 crore was admitted.
The Airports Authority of India (AAI) joined as an intervenor, supporting MIAL. It said it receives about 38% of the airport’s revenue, which ultimately goes to the public exchequer, giving it a financial interest. The AAI urged the tribunal to treat the airport’s dues as priority costs in the insolvency resolution process (CIRP) and to ensure the aircraft were not sold without clearing the outstanding payments.
The tribunal, however, held that both airports are unsecured operational creditors. While parking and storage charges during the insolvency period will qualify as priority insolvency resolution process costs, most other dues, including interest and certain escalated charges, will rank below secured lenders in the repayment hierarchy.
The airports had challenged the liquidator’s decision to treat their unpaid dues as operational debt rather than as secured claims. They argued that under airport regulations, the right to detain aircraft for unpaid dues amounted to a legal lien or security interest. The tribunal rejected this argument, holding that detention rights do not create a security interest under the IBC.
The bench clarified that airport regulations confer only the power to detain aircraft for non-payment and do not create a legal charge. Once liquidation begins, all claims must be processed strictly under the Insolvency and Bankruptcy Code’s (IBC’s) waterfall mechanism.
Ports, railway terminals will take note
Under Section 53, insolvency and liquidation costs are paid first, followed by secured creditors and workmen’s dues, then employee dues and unsecured financial creditors. Government dues and other operational creditors rank lower, and equity shareholders are paid last if funds remain. By placing airports among operational creditors, the ruling pushes most of their claims down the priority ladder.
Lawyers say the decision increases credit risk exposure for airport operators. “Airport dues can be substantial, and if recovery in insolvency is uncertain, operators are effectively extending unsecured credit to stressed airlines. That risk is now more visible,” Buttan said.
According to Hardeep Sachdeva, senior partner at AZB & Partners, “This will force airports to tighten their commercial stance, moving away from reliance on post-facto recoveries and towards upfront or consistent periodic payments, bank guarantees, or cash-and-carry models.”
Insolvency experts say the impact could extend beyond aviation. Ports, rail terminals and logistics hubs could also be treated as unsecured creditors in insolvency cases unless the law clearly grants them a recognized security interest. Simply having the power to detain cargo or vessels does not automatically make them secured under insolvency law.
“The reasoning can extend beyond aviation. Ports, rail terminals and logistics hubs that provide services without a statutory charge or perfected security could be treated the same way. The message is simple: if you are not secured, insolvency law will not prioritize you,” said Raheel Patel, Partner at Gandhi Law Associates.
Mint’s queries emailed to MIAL, DIAL and Jet Airways’ liquidator Satish Kumar Gupta did not elicit a response until press time.
The dispute over airport dues has been closely linked to the sale of three grounded Jet Airways Boeing 777-300ER aircraft that had been parked at Mumbai airport since 2018. In 2022, Malta-based Ace Aviation agreed to buy the aircraft for ₹400 crore, but the sale was delayed due to litigation over unpaid dues. In October 2025, the National Company Law Appellate Tribunal (NCLAT) directed the liquidator to keep the sale proceeds in an escrow account until the dues dispute was decided by the NCLT. The tribunal has now clarified that MIAL is not a secured creditor.
Jet Airways stopped operations in April 2019 due to mounting debt and was admitted into insolvency in June 2019. A revival plan by the Jalan Kalrock consortium, approved in 2021, failed due to delays and funding gaps. In November 2024, following Supreme Court directions, the airline was pushed into liquidation, with its assets to be sold and proceeds distributed according to the IBC hierarchy.
The insolvency regime has so far struggled to revive a collapsed airline in India. After Jet Airways failed to restart operations despite an approved plan, Go First also entered insolvency in 2023 and later failed to secure a viable revival, eventually being ordered into liquidation.
