Aircraft leasing: India must tackle key issues for viability

Since the Indian government has started exploring the need to establish a home-grown leasing option for Indian airlines, a host of issues need to be sorted out before it becomes a reality, aviation consulting and research firm Centre for Asia Pacific Aviation (CAPA) said.

“An Indian aircraft leasing sector is an idea worth exploring. But key strategic issues will need to be addressed,” CAPA said in a report titled ‘Prospects for an Indian aircraft leasing sector.”

The idea to have domestic aircraft leasing companies has gained currency since Indian commercial airlines have placed orders for more than 1,000 planes worth $50 billion, the third largest aircraft order book in the world behind the U.S. and China, according to the report.

Dollar rentals

The vast majority of these aircraft will be taken on lease from offshore lessors and the lease rentals are mostly paid in dollars, it said. “By 2050, India’s commercial airline fleet is expected to exceed 5,000 aircraft. An industry of this scale will require an increasingly capable and sophisticated home-grown aviation ecosystem,” CAPA said.

In anticipation of the long-term requirements of the country’s aviation industry, the Government of India is exploring measures to enable the development of aircraft lessors resident in India. “Developing a viable Indian aircraft leasing industry will be a long-term undertaking. However, given the growth outlook for the sector, it is an initiative that deserves consideration,” CAPA said in the report.

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