Indian leasing company, ModAir Aviation has inducted its fourth aircraft through IFSC GIFT City. In the next ten days it would induct its fifth aircraft and sixth aircraft.
According to sources at IFSC, this transaction would cost the leasing for $2-3 million and these aircraft will be used by flying training organisations.
businessline had reported that Air India had become the first commercial airline to set up a leasing unit at IFSC Gift City in Gujarat. The airline’s six A350s, which are slated to be inducted into the Tata-owned airline’s fleet, will come through the said leasing firm AI Fleet Services IFSC Limited under a financial lease, said sources. The estimated project cost is ₹7,253 crore.
India’s largest low-cost carrier IndiGo, too, set up shop at IFSC Gift city to financially lease aircraft. The company said that it aims to invest ₹30 crore. In February 2021, the International Financial Services Centre Authority (IFSCA) issued a framework for aircraft leasing in India. So far, 22 leasing firms have set up shops, and 100+ assets are leased in India. Vman Aviation was the first one to start operations.
Easy recovery of assets
Today, the lion’s share of global aircraft leasing is done through Ireland and China. India hopes to get a piece of it through IFSC. Recently, the Ministry of Corporate Affairs has issued a notification stating that certain provisions of the Insolvency and Bankruptcy Code will no longer apply to aircraft, their engines, airframes, and helicopters. This development is expected to have a significant impact on the aviation industry in India, making it easier to recover assets even when an airline goes through insolvency.
Legal entities dealing in this aircraft financing and leasing regime have estimated that the impediment being caused by the present legal regime of IBC, which is hampering the repossession of the aircraft by the lessors, is costing Indian airlines an extra $1.2-1.3 billion more.
businessline had reported quoting sources this was done for two reasons – to boost aircraft leasing through IFSC Gift City and to reinstate India’s position from negative to positive by the Aviation Working Group.
After the moves made by the Indian government, AWG has reinstated India’s ranking. India is committed to keeping lessors’ confidence in the aviation market intact by reducing their risks, the Ministry of Civil Aviation said recently.