Axis Bank executes aircraft financing deal from GIFT City IFSC unit

Axis Bank did not disclose the size of the loan. File
| Photo Credit: Reuters

Axis Bank said it has become the first Indian bank to execute an aircraft financing transaction through its International Banking Unit (IBU) at GIFT City IFSC. The bank did not disclose the size of the loan. 

The deal was completed for AI Fleet Services Limited (AIFS), the leasing arm and wholly owned subsidiary of Air India (a Tata Group Company). It 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. 

Traditionally India’s aviation finance sector, has been dominated by multinational banks. GIFT City now seems to be emerging as India’s aircraft financing hub. For the first time, 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 centres. 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. As India’s aviation industry scales new heights, we remain committed to providing dynamic and customised financial solutions,” he said.

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 Limited (AIFS) executed eight finance lease transactions worth more than $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, U.S. dollar aircraft financing,” he said.

“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,” he added.