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Interglobe Aviation, the parent company of India’s largest airline, IndiGo, has received approval from IFSC Gift City to establish an aircraft leasing venture. Over the next five years, the company aims to invest approximately ₹11,500 crore in the IFSC aircraft leasing segment. The funds will come from promoter investments, according to the company’s application to the IFSC.
IndiGo plans to operate under the name ‘Interglobe Aviation Financial Services IFSC Private Limited,’ focusing on operating leasing, financial leasing, and other related services for aircraft. The company has outlined its operations to include leasing of aircraft ground support equipment and aviation training simulation devices.
The services will encompass lease arrangements, sale and leaseback, purchase, novation, transfer, assignment, asset management, and various transactions related to aircraft and aircraft engine leases.
Rental services
During discussions with Gift City authorities, four representatives from IndiGo mentioned that the end customers for their services would be the DTA entity of their Group company. The company clarified that operating leasing of aircraft would involve rental services for various types of aircraft, including passenger and freight aircraft.
The estimated Free on Board (FOB) value for the export of services over a five-year period is projected at ₹11,563 crore, resulting in a Net Foreign Exchange (NFE) of ₹6,090 crore after a foreign exchange outgo of ₹11,502 crore. IndiGo highlighted that the initial investment in indigenous aspects would be ₹8 lakh and would be funded through promoter contributions.
The proposed premises for the leasing company will span 15 square meters. Key personnel involved in the setup include Krishan Bhargava, SVP of aircraft acquisition, financing, and treasuring at InterGlobe, and Vineet Mittal, VP Finance, financial planning, and analysis at the company. Both Bhargava and Mittal have extensive experience with Interglobe, having been with the company since 2007 and 2005, respectively.
IndiGo, with an order book of 980 aircraft, had previously announced its intention to establish a presence in IFSC Gift City in September.
The company stated that the setup would be subject to necessary approvals, involving corporate guarantees and an investment of up to ₹30 crore in one or more tranches. In August, it was reported that Air India was the first commercial airline to establish an aircraft leasing venture at IFSC Gift City, with an estimated project cost of ₹7,253 crore.
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