Axis Bank's Groundbreaking Deal in GIFT City

In a landmark move, Axis Bank has become the first Indian lender to execute an aircraft financing deal through its International Banking Unit at GIFT City IFSC. This significant achievement involved extending a long-term US dollar loan to AI Fleet Services, Air India’s leasing arm, for the purchase of 34 training aircraft. These aircraft are destined for Air India’s upcoming pilot training institute in Amravati, Maharashtra.

Shifting Dynamics in India’s Aviation Finance Sector

This deal represents a pivotal shift in India’s aviation finance sector, traditionally dominated by foreign lenders. By structuring the transaction entirely within GIFT City, Axis Bank not only underscores the hub’s growing role in global aviation finance but also aligns with the Indian government’s push for financial self-reliance. The Indian aviation sector is projected to require USD 30 billion for fleet expansion over the next decade, highlighting the strategic importance of such initiatives.

A Collaborative Effort Towards a Stronger Aviation Finance Ecosystem

For the first time, all key stakeholders in the deal—the lender, borrower, law firm, facility agent, and security agent—are GIFT City entities. Rajiv Anand, deputy managing director at Axis Bank, emphasized the deal's role in creating a robust aviation finance ecosystem in India. Sanjay Sharma, chief financial officer at Air India, also highlighted the importance of GIFT City in financing the airline's ambitious transformation plan, Vihaan.AI, which includes an order for 570 aircraft.

Providing Domestic Carriers with Alternative Funding Options

Historically, airlines have depended on multinational banks for aircraft financing. Axis Bank’s entry into this space provides domestic carriers with an alternative funding option, marking a significant step towards diversifying the aviation finance landscape in India.