In a significant development, six aircraft rental companies, including one based in Ireland – the global aircraft rental hub – have been granted licenses to operate from GIFT City in Gujarat. Officials said seven other entities have applied for licenses to start operations. The development comes within six months of the Centre’s announcement of a regulatory framework to make GIFT City a hub for aircraft leasing.
Current demand for leased planes comes from flying clubs, air taxis and companies that rent business jets. âSix licenses have already been issued to companies to conduct aircraft leasing activities by the International Financial Services Center (IFSC). Seven other companies have already applied for licenses which are currently under review. Each of these companies has trained a special purpose vehicle to operate from here. Five of the licenses granted are Indian companies, while the sixth is a subsidiary of an Ireland-based company, âa senior GIFT City official told The Sunday Express.
Acumen Aviation, headquartered in Ireland, was licensed in July 2021. This company is an important addition to the aircraft leasing business in India, as Ireland alone is estimated to have 60% of the global market. of the rental.
The other players in GIFT City are JetSetGo Aviation, Vman Aviation Services, Wels, Rensar Aviation and Millennium Aviation.
According to IFSCA officials, the Union’s Ministry of Civil Aviation is encouraging the creation of new flying clubs in the country. âThese flying clubs require a number of training planes. These planes are not made in India. Currently there is a huge demand for training aircraft from these clubs, âsaid a state government official.
Demand for leased aircraft also comes from air taxi operators. For example, the agreement for a second plane to be rented through GIFT City by Vman Aviation is for an air taxi service in Bangalore. Third, demand is also coming from companies interested in leasing business jets, âsaid the IFSCA official.
While the Airbus H125 helicopter leased from Vman has yet to be delivered, the Hawker 800 XP plane leased by JetSetGo Aviation became the first aircraft to be leased through GIFT IFSC in August 2021.
The initial challenge encountered by the first aircraft rental companies of GIFT IFSC was the lack of an airport. âThe IFSC itself did not have an airport. Leased planes must therefore land somewhere when they arrive in India. So initially MIHAN SEZ in Nagpur was chosen as the spot because it was an airport with a SEZ. So when a newly hired plane lands, it can enter the parking lot that is part of the SEZ. All airports are customs-only areas so we have now asked the government to allow newly leased aircraft to land anywhere in the country. This will make it easier to rent planes.
The IFSCA published the regulatory framework for aircraft leasing in February 2021.
As part of one of GIFT CIty’s regulatory requirements, all companies must create a Special Purpose Vehicle (SPV) to operate from the IFSC. âPreviously, in order to lease planes, Indian companies had to register their companies in rental centers like Ireland. Now they can easily do it from GIFT City, âsaid the manager of GIFT City.
Among the various measures proposed by the government to promote aircraft leasing, lessors benefit from tax deductions on their income for 10 years, while the government of Gujarat also grants exemptions from stamp duty. âThere were a lot of system changes that had to be made in order for aircraft rental to work in GIFT City. Without these changes, we wouldn’t even have thought of competing with large aircraft rental centers like Ireland, âadded the manager.
Edot – Ease of Doing Business
With the rise of commercial aviation in India and with more than 190 million passengers using the plane as a form of transport before the Covid-19 pandemic, GIFT City looks set to become a major center for aircraft rental . Until now, Indian entities involved in this sector had to register in foreign hubs like Ireland to conduct activities related to aircraft rental, but the rental activities becoming operational on the GIFT City campus, these entities simply need to train a special purpose vehicle, as mandated under the regulatory framework, to conduct their business. These entities must also maintain a minimum capital of USD 20,000 or its equivalent in freely convertible currency at all times.