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India's Aircraft Leasing Sector at a Crossroads

2018-11-01 14:06 Thursday


It has been reported that policymakers in India are considering a proposal to develop the country's aircraft leasing sector, yet they also acknowledge that key strategic issues need to be addressed before the policy is implemented.

aircraft leasing

As one of the fastest-growing aviation markets in the world, India's aircraft leasing sector is undergoing rapid development. Recent aircraft orders have surpassed 1,000, with a total value of nearly $50 billion, placing India in third place behind the U.S. and China. Most of the aircrafts are leased from offshore lessors.

A recent study projected that the global aircraft leasing market is expected to grow at a 4.75% CAGR over the next five years, and will exceed $6 billion USD by 2023. Ireland, Singapore, the U.S., Hong Kong and Japan are five major centers for for aircraft leasing. Ireland's aircraft leasing sector is supported by a comprehensive taxsubsidy, which reduces costs for both lessees and lessors. Furthermore, to boost aircraft leasing  and increase profitability, several countries have slashed corporate tax rates for aircraft lessors, which has created thousands of jobs and brought millions of dollars in additional revenue.

India's commercial fleet is expected to exceed 5,000 aircrafts in the near future, inspiring further government action.

However, there is also concern about the state of aircraft leasing in India. It remains unclear if Indian airlines can garner profits from leasing aircraft. The leaseback model has worked well in other countries, but is still unproven in India.

Furthermore, due to the absence of related legislation and policies, airlines are still skeptical that they can achieve profitability through leasing aircraft.

Devesh Agarwal, an aviation expert, said that the top priority for the Indian government is to create the right environment for the aircraft leasing industry to thrive in the country.

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