Infra status for aircraft will augment India’s aviation growth, says Jaideep Mirchandani

• He also views the Protection and Enforcement of Interests in Aircraft Objects Bill as a major move that could boost leasing

JAMMU: In 2025, India's aviation sector is set for some major mergers, fleet expansions, regional network growth and major infrastructure developments like the inauguration of Navi Mumbai and Noida International Airports. Meanwhile, from January to November 2024, scheduled Indian and foreign operators carried 64.5 million passengers on international routes, while domestic airlines operated 1.02 million scheduled flights, transporting 146.4 million passengers.

This surge in air travel demand also highlights the need for more wide-body aircraft and underscores the importance of mitigating ongoing supply chain challenges to sustain the growth momentum. According to Boeing’s 2024 Commercial Market Outlook for South Asia, India will lead South Asia to become the fastest-growing commercial aviation market, with over 2,700 new airplane deliveries expected by 2042.

“Given the present situation and future outlook, treating aircraft as infrastructure assets would be an effective step, as it would help address financing challenges. At present, 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 add financial strain on carriers, 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.