Akasa Air CEO Vinay Dube said GIFT City could provide the aviation sector with new financing options for leasing aircraft.
This shift toward indigenous leasing is significant because it would allow Indian airlines to access capital in rupee terms. By reducing reliance on foreign-denominated loans, carriers can minimize their exposure to volatile foreign exchange risks that often impact operational costs.
Speaking with CNBC TV18, Dube said GIFT City offers opportunity for the aviation sector to access financing for leasing aircraft in new jurisdictions [1]. He said there is potential for creating indigenous leasing companies that operate within the Gujarat-based international financial services center.
Such a framework would allow airlines to manage their fleets more sustainably by aligning their debt with the currency in which they earn their revenue. This structural change could stabilize the financial health of growing carriers as they scale their operations within the domestic market.
Akasa Air is currently in a phase of significant expansion. Dube said the company is flying 34 aircraft today [2], with 192 more on order [2].
The scale of these orders underscores the necessity for diverse and stable financing mechanisms. As the airline integrates more aircraft into its fleet, the ability to secure leasing agreements in rupees would provide a hedge against the fluctuation of the Indian rupee against the U.S. dollar.
Dube's focus on GIFT City suggests a strategic move toward utilizing India's own financial infrastructure to support its aviation ambitions. By leveraging the special regulations of the financial hub, the industry could move away from a heavy dependence on overseas leasing hubs.
“GIFT City offers opportunity for the aviation sector to access financing for leasing aircraft in new jurisdictions.”
The push for rupee-denominated leasing via GIFT City represents a strategic effort to 'de-dollarize' the capital expenditure of Indian aviation. Because aircraft are typically leased in U.S. dollars, Indian carriers are vulnerable to currency depreciation, which increases the cost of debt regardless of passenger demand. Establishing a domestic leasing ecosystem would lower this systemic risk and potentially lower the cost of capital for new entrants and expanding airlines.
