There is some good news for the Indian aviation industry, which is reeling under falling passenger traffic, rising ATF, Jet airways Fiasco. The 2nd NDA government had announced setting up of the Aircraft leasing corporation on the lines of the Chinese government sponsored Industrial & Commercial Bank of China which floated a commercial aircraft leasing company, the first one in Asia. The government’s ambitious initiative was announced during the annual budget statement of the government, that was presented in the country’s parliament on 5th July 2019.
The announcement came as a breath of fresh air for the country’s airlines that were reeling under the shortage of aircraft after the seizure of more than 70 aircraft of Jet fleet by the lessors and the grounding of another 21 aircraft of Max category.
More than 80% of the Aircraft operated by the airlines in the world are the leased ones.
- Airlines do order the planes with the aircraft makers, but mots of them are acquired through Sale and lease back mechanism.
- Leasing is the viable option for airlines, as the cost of purchasing a plane will tie down the precious capital of the Airlines.
- Ireland is the home of Aircraft Leasing Industry with more than 55 Aircraft leasing companies operating out of Dublin & Shannon.
- Aircraft leasing industry created more than 7000 jobs in the tiny country with close to a Billion Dollar contribution to the local economy.
- Air Lease Corporation is the biggest of the lot of the Aircraft leasing companies in Ireland.
Higher Aircraft leasing costs linked to the expensive Dollar Terms is one of the factors for the downfall of the many private Airlines in India like, Jet Airways and Aircosta. Government of India now wants to set up a dedicated Aircraft leasing company through budget provision and the active participation of the Private equity players and lenders. The proposed entity will be expected to lease the aircraft to the operators in Rupee terms so that Airline operators will be insulated from the brutal fluctuations of the foreign currency in the turbulent times of world trade wars.