He also views the Protection and Enforcement of Interests in Aircraft Objects Bill as a major move that could boost leasing
Major mergers, fleet expansions, regional network expansions, and significant infrastructure upgrades, such as Navi Mumbai and Noida International Airport’s opening are anticipated in India’s aviation industry in 2025. Scheduled Indian and international airlines transported 64.5 million passengers on international routes between January and November 2024, while domestic airlines transported 146.4 million passengers on 1.02 million scheduled flights. The need for more wide-body aircraft is also highlighted by this spike in demand for air travel, and it is crucial to address persistent supply chain issues to maintain the growing momentum. Boeing’s 2024 Commercial Industry Outlook for South Asia predicts that by 2042, India will have over 2,700 new aircraft delivered, making it the region’s fastest-growing commercial aviation industry.
“Given the present situation and future outlook, treating aircraft as infrastructure assets would be an effective step, as it would help address financing challenges. Currently, aircraft do not have infrastructure status in India, forcing airlines to rely on standard commercial loans, often at higher interest rates, for new acquisitions. Since aviation is a capital-intensive industry, this may strain carriers financially, especially when fleet expansion is crucial to meet rising passenger demand,” says Jaideep Mirchandani, Group Chairman of Sky One.
On news reports regarding the Union Government’s consideration of granting infrastructure status to aircraft as an asset, Mr Mirchandani says that such a move could further boost the aviation sector.
“If the Civil Aviation Ministry officially grants infrastructure status to aircraft, it would be a welcome step, transforming how airlines finance fleet expansion. The key advantage would be access to more affordable loans under the Priority Sector Lending (PSL) scheme, regulated by the RBI, which requires banks to allocate a portion of their lending to critical sectors driving economic growth. This would allow airlines to secure loans at lower interest rates, significantly reducing their financial burden,” he adds.
The Sky One Chairman also believes that the government’s move to greenlight the Protection and Enforcement of Interests in Aircraft Objects Bill is a significant development, which will have a major positive impact on aircraft leasing in India.
“The Bill, once approved by Parliament, will lower the leasing and financing costs of aircraft for Indian carriers. It can also be seen as a step closer to the ratification of the Cape Town Convention, which is crucial for the smooth movement of aircraft assets. The delay in ratification has been cited by many creditors as a reason for increased leasing costs. Further, it will boost lessors’ confidence in the Indian market and reduce lending costs, ultimately helping lower airfares,” adds Mr Mirchandani.
He says that increased aircraft leasing at India’s GIFT City will be possible with the ratification. “The legal framework surrounding the repossession of aircraft had remained a major concern for lessors. The new Bill can remove these apprehensions. We are already observing some leasing entities registered with GIFT City, who will benefit from increased leasing activities. This could eventually lead to more affordable travel,” he concludes.
