Gandhinagar: Axis Bank, one of the largest private sector banks in India, has become the first Indian bank to execute an aircraft financing transaction through its International Banking Unit (IBU) at GIFT City IFSC. The deal was completed for AI Fleet Services Ltd (AIFS), the leasing arm and wholly owned subsidiary of Air India (a Tata Group Company). This marks a breakthrough in India’s aviation finance sector, traditionally dominated by multinational banks, and reinforces GIFT City’s role as an emerging hub for aircraft leasing and financing.

The deal involves a long-term USD Loan for the purchase of 34 training aircraft, which will be deployed at Air India’s upcoming pilot training institute in Amravati, Maharashtra. This facility is set to become one of India’s largest pilot training hubs, contributing to the country’s expanding aviation infrastructure.

Sanjay Sharma, Chief Financial Officer, Air India said, “Air India has embarked on a five-year transformation journey Vihaan.AI, placing an order for 570 aircraft, and GIFT City will be important for financing of these aircraft. In FY 2023-24, our leasing arm AI Fleet Services Ltd (AIFS) executed eight finance lease transactions worth more than USD 1 billion while the recent transaction for 34 training aircraft was one of the first transactions where an Indian bank has been involved in a long tenor, US dollar aircraft financing. We are glad to see GIFT City maturing further and emerging as an aircraft leasing and financing option for airlines as Indian aviation takes strides.”

India’s aviation sector is projected to require approximately USD 30 billion in funding over the next decade for fleet modernization and expansion. Historically, Indian airlines have relied on multinational banks for aircraft loans due to the lack of a strong domestic financing framework. Axis Bank’s entry into this space provides a new pathway for Indian carriers, enabling them to tap into Indian banking expertise for their fleet expansion needs.

Rajiv Anand, Deputy Managing Director, Axis Bank said, “This pioneering aircraft financing deal, structured end-to-end by our GIFT City IBU Team, is a strategic step towards creating a robust aviation finance ecosystem within India. By leveraging its presence in the IFSC ecosystem, our GIFT City franchise has demonstrated capabilities to offer home grown financing options that strengthen India’s position in the global aviation landscape.” 

By financing this transaction, Axis Bank is reshaping the aviation finance ecosystem by providing Indian airlines with access to home-grown funding solutions and strengthening India’s financial self-reliance in global aviation.

GIFT City is emerging as India’s Aircraft Financing Hub. For the first time in India’s banking history, all key stakeholders in the transaction—Lender, Borrower, Law Firm, Facility Agent, and Security Agent are GIFT City entities. The Government of India has been actively promoting GIFT City as a strategic alternative to global aviation finance centers, and Axis Bank’s leadership in this space is a significant step toward realizing that vision.

Key Highlights of the Transaction:

·             – First Indian Bank to Finance an Aircraft Deal – A breakthrough in domestic aviation finance

·             – Strengthening India’s Aviation Financing Capabilities – Paving the way for more Indian banks to support fleet expansion needs

·             – Supporting Pilot Training Infrastructure – Financing 34 training aircraft to enhance India’s pilot training capacity

·             –  Providing Indian airlines with homegrown financing options

·             – Reinforcing GIFT City’s Position – A milestone in establishing India as a global hub for aviation finance and leasing

·             – ‘One Axis’ Approach in Aviation Finance – Axis Trustee acted as Facility Agent and Security Trustee, making it an integrated financial solution from Axis group.

Meanwhile, Kinjarapu Rammohan Naidu, Union Minister of Civil Aviation, Govt. of India, today said that the GIFT City is competing with global financial markets and global financial centers like Singapore and Dubai. “GIFT City will give India’s aviation sector the further required confidence, commitment and collaboration to develop a competitive aircraft leasing hub,” he added.

Addressing the ‘India Aircraft Leasing & Financing Summit’, organized by FICCI, Mr Naidu further stated that aircraft leasing is a key financial innovation that India’s growing civil aviation sector needs. “Fueled by the UDAAN scheme and doubling of India’s airports in 10 years, India has become the 3rd largest domestic aviation market in the world,” he emphasized.

The Minister also stated that by 2047, the government is planning to build 350 airports out of which 34 will function as mega airports handling 2 crore passengers annually. In the next 5 years, we are planning to build 50 more airports. “The UDAAN scheme is also extended for another 10 years which will connect 4 crore passengers in the country along with creating 120 new destinations in India. He urged to create a strong eco-system for aircraft financing and leasing in the country to become globally competitive. “GIFT City represents a transformative opportunity to bring home the values created by India’s civil aviation industry,” added Mr Naidu.

Bhupendra Patel, Chief Minister of Gujarat said that GIFT City has today established itself as the Fintech hub of India; at such a time, this Summit will prove to be important for the development of the aviation sector and Aircraft Leasing & Financing and towards India’s self-reliance in the aviation sector.

The Chief Minister further added that due to the changes in the aviation sector in the last ten years under the leadership of Hon’ble Prime Minister Mr Narendra Modi, a strong aviation ecosystem has been created in India today. “Our government is determined to make Gujarat the leader in the aviation sector. We are committed to providing the necessary production capacity, adequate infrastructure and encouragement to the industry for the development of the aviation sector,” he emphasized.

V Vualnam, Secretary, Ministry of Civil Aviation, Govt. of India said that the government is committed to provide a stable regulatory framework. “The Indian carriers are looking at doubling their aircrafts they will acquire in the next 5 years from 800 to around 1500 aircrafts,” he added.

Remi Maillard, Chairman of FICCI Civil Aviation Committee and President & Managing Director, Airbus India and South Asia said that Indian civil aviation sector is a key contributor to India’s economic growth what an enabling policy framework has done for India’s aviation industry, it now seeks to do for aviation financing through the GIFT-City initiative. “Developing a robust leasing and financing infrastructure can only help India cement itself as an integrated aviation destination not only in the region but also the world. GIFT City’s role in facilitating aerospace transactions has already begun, and Indian airlines and helicopter operators have begun leasing through GIFT City, a trend that will only continue and expand in the coming years,” he added.

K Rajaraman, Chairperson, International Financial Services Centres Authority (IFSCA) said that the Indian civil aviation market is growing rapidly with a projected demand of 2,200 aircrafts by 2040 requiring a capital outlay of around USD 125 bn. “Recognizing the future growth trajectory of Indian civil aviation sector and economic growth potential of India, the government has worked towards building a robust aircraft leasing eco-system in India,” he added.

Hasmukh Adhia, Chairperson GIFT said that GIFT City stands as a testament to India’s ambition to emerge as a leading global financial hub and is an example of sustainable urban development combined with economic prosperity. DeshGujarat

DeshGujarat