Air India Launches Aircraft Leasing at GIFT City
GIFT City’s popularity has skyrocketed in recent years. Now, Air India is taking this momentum even further by launching its leasing subsidiary at the International Financial Services Centre (IFSC). This new venture, AI Fleet Services IFSC Ltd., comes with a hefty INR 7,253 crore investment. Currently, Air India arranges aircraft leasing through locations like Singapore, Ireland, and Hong Kong.
Air India’s First Aircraft Leasing Plans
Later this year, Air India will receive six A350-900s, leased through AI Fleet Services IFSC Ltd. The airline’s CFO, Vinod Hejmadi, and Company Secretary, Kalpana Rao, will take senior roles at the leasing entity. AI Fleet Services IFSC Ltd. will have an authorized capital of INR 500 million and paid-up capital of INR 300 million. Along with the six A350s, this entity will also provide aircraft to Air India and its subsidiaries, offering operating and finance leases.
A Massive Aircraft Order
Earlier this year, Air India placed an order for 470 aircraft with Boeing and Airbus. While the airline will directly purchase some planes, it will mostly acquire them through sale/lease-back agreements. The A350-900s will be the first deliveries, originally intended for Russian airlines.
GIFT City’s Economic Impact
According to a meeting on August 7th, the IFSC Special Economic Zone approval committee forecasts INR 16.85 billion in service exports over five years. The committee also expects INR 16.75 billion in imports, resulting in a modest net foreign exchange gain of INR 93 million. The project’s estimated cost stands at INR 72.53 billion.
GIFT City’s Supportive Environment
Dipesh Shah, the Director of Development at IFSC, highlighted that GIFT City provides a level playing field for aircraft leasing services. “We’ve already registered 22 leasing firms and over 100 Indian assets. We welcome AI India’s initiative and hope it sets a precedent for other airlines,” Shah said. The special economic zone is actively attracting airline leasing clients, offering enticing tax benefits, including a ten-year exemption from business profits tax, no capital gains tax, no stamp duty, and no GST on transactions executed through the entity.
Incentives at GIFT City
Inspired by Dublin’s thriving leasing hub, GIFT City offers multiple incentives for businesses. These include a decade-long tax break on business profits, exemption from capital gains tax, stamp duty, and GST for transactions carried out via the entity. For over two and a half years, the Indian government has encouraged aviation companies to establish operations in GIFT City.
GIFT City’s Potential in Aircraft Leasing
India’s aviation market has grown into the largest in the world, unlocking up to $100 billion in aircraft leasing opportunities in the next 20 years. According to Primus Partners, 80% of India’s commercial fleet is leased, far surpassing the 53% global average. The firm also predicts that India’s demand for aircraft will reach 2,100 units in the next two decades. With a supportive aviation ecosystem, India could tap into this massive $100 billion opportunity.Air India aircraft leasing GIFT City
The Need for Action
Primus Partners emphasises that leasing assets abroad leads to an outflow of Indian capital. The firm urges the government to improve the regulatory environment to foster a domestic leasing industry. “GIFT IFSC is well-positioned to become India’s aircraft leasing hub,” the report concluded. The global aircraft leasing industry is valued at over $150 billion, and Primus Partners recommends specific measures to enhance the sector.
Invest in GIFT City
GIFT City has become a hotspot for commercial investment, offering a prime opportunity for investors to be part of this transformative city. For expert investment advice, contact Rumi Global Properties, your trusted commercial property consultant.
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