Air India and IndiGo, the two major players in the Indian aviation market, are diversifying their businesses by setting up leasing units in the country. Both airlines aim to take advantage of the growing aviation sector in India, as they compete for market share and passengers.
Air India was the first to establish a leasing unit at IFSC Gift City in Gujarat last month. The airline, which is backed by the Tata Group, has a number of aircraft on order, including six Airbus A350s. These A350s are expected to be leased through Air India’s subsidiary, AI Fleet Services IFSC Limited, under a financial lease agreement. The newly established firm will exclusively focus on leasing operations for Air India and its subsidiaries.
IndiGo, the largest airline in India, is following suit and setting up its own leasing unit at IFSC Gift City. The company plans to issue corporate guarantees of up to $996 million to secure the payment obligations of its wholly-owned subsidiaries. IndiGo will also make an investment of around $3.6 million in the unit. The airline acknowledges that the aviation sector in India is experiencing significant growth and believes there is a need to build an ecosystem around it, including financing aviation assets such as aircraft and engines.
These developments come as both Air India and IndiGo dominate the Indian aviation market, with a combined market share of nearly 90% in July. Both airlines have placed record-setting aircraft orders this year, signaling their ambitious plans for the future. Air India has a massive order of 470 airplanes from Airbus and Boeing, while IndiGo is set to receive almost 1,000 aircraft from Airbus’ A320neo family in the next decade.
As the Indian aviation sector continues to expand, these leasing units will provide additional avenues for Air India and IndiGo to manage their growing fleets. By diversifying their businesses and tapping into the leasing market, the two airlines aim to strengthen their positions and capitalize on the opportunities presented by the booming aviation sector in India.
Overall, the establishment of these leasing units highlights the strategic moves being made by Air India and IndiGo to adapt to the changing dynamics of the Indian aviation industry. With their ambitious expansion plans and focus on leasing operations, both airlines are positioning themselves to thrive in the evolving market.
