AHMEDABAD- The Indian government’s initiative to position India as a key aircraft leasing hub is poised to receive a significant boost, as two major airlines, IndiGo (6E) and Air India (AI), are establishing leasing units in GIFT City, Gujarat.
IndiGo, with approximately 1,000 aircraft in its order pipeline, announced on Monday its intention to create a leasing unit to finance its aircraft, with an investment of Rs 30 crore.
Air India IndiGo Leasing units at GIFT City
IndiGo will provide a corporate guarantee of up to $996 million to support its payment obligations. It is anticipated that IndiGo will initially lease approximately 10 Airbus A320neo aircraft through this leasing subsidiary.
Now owned by Tata, Air India has already established an aircraft leasing subsidiary within the special economic zone known as IFSC Gift City.
The carrier’s six Airbus A350-900s, scheduled to start arriving later this year, will be procured under the entity named AI Fleet Services IFSC Limited for financial leasing.
Earlier this year, Air India placed an order for 470 aircraft from Boeing and Airbus. The company has an authorized capital of Rs 50 crore and a paid-up capital of Rs 300 million.
Global Leasing Hub
The government’s objective is to develop GIFT City into a global leasing hub similar to Dubai, Ireland, and Singapore.
To attract global players, various financial benefits, including tax incentives like the waiver of Goods and Services Tax (GST) and Capital Gain Tax, have been announced by Finance Minister Nirmala Stitharaman.
Dipesh Shah, Executive Director of Development, mentioned that with prominent airlines like IndiGo and Air India establishing leasing subsidiaries, this will enhance the SEZ’s reputation among global players.
Up to this point, GIFT City has successfully executed leases for 109 smaller aircraft and helicopters within the Special Economic Zone.
“GIFT IFSC provides a level playing field for offering aircraft leasing services,” he commented. “The initiatives taken by IndiGo and Air India will likely encourage other airlines to do the same,” Shah added.
Approx 90% Market Share
The Directorate General of Civil Aviation (DGCA) has published the July 2023 domestic traffic figures. Both IndiGo (6E) and Air India (AI) are now close to having around 90% market share in the Indian Aviation Industry.
In July 2023, IndiGo carried more than 76 lakh passengers, which eats up 63.4 percent of the pie.
While Tata-owned Airlines, including Air India (AI) and Air India Express (IX), Vistara (UK), and AirAsia India (I5), carried close to 31 lakh passengers. This combined has a market share of 25.8 percent.
Subsequently, these two airline groups carried around 1 crore passengers in July 2023 by adding up the total numbers. They combined have a market share of 89.2.
Further, Air India has been granted in-principle approval to import 470 aircraft, while IndiGo has been approved 500 aircraft.
Feature Image by Harsh Tekriwal (@avgeekwithlens) • Instagram photos and videos
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