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Coming in six weeks: JetSetGo's aircraft leasing arm, possibly India's first

The new leasing company may start off its business with two aircraft, a small but vital start both for GIFT City and for India, which till now doesn't have a single lessor.

March 02, 2021 / 04:19 PM IST
The airline is in talks to buy six aircraft, at least two of which may be leased through the upcoming unit.

The airline is in talks to buy six aircraft, at least two of which may be leased through the upcoming unit.

 
 
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Private charter provider JetSetGo's aircraft leasing unit will begin operating from GIFT City in the next six weeks, possibly making it the first Indian lessor.

The country, despite having the second largest aircraft order in the aviation industry, is yet to have its own aircraft leasing company.

"We are waiting for the final paper work to get over. Our aircraft acquisition programme is already underway," JetSetGo Founder Kanika Tekriwal told Moneycontrol.

The airline is in talks to buy six aircraft, at least two of which may be leased through the upcoming unit. "Charter services in the country have picked up very well ever since domestic flights resumed in May 2020. Right now, demand is higher than supply," Tekriwal said, pointing to the timing of the new initiative.

The private jet aggregator at present has a fleet of 12 planes and four helicopters.

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That is a shot in the arm for the Indian government that has been pushing GIFT City as a global financial centre. JetSetGo is one among six companies who have shown initial interest in setting up leasing units in GIFT City. These include SpiceJet, Acumen Aviation, VMan Aero and Investec.

This is after Finance Minister Nirmala Sitharaman had announced tax benefits for aircraft lessors setting up base at GIFT City. Till now, Indian airlines lease aircraft from lessors in Ireland, Hong Kong, and Singapore. Earlier this week, IndiGo, which has among the largest fleet expansion plans in the world, signed an agreement with Singapore-based BOC Aviation, which is controlled by Bank of China, for eight new aircraft.

Long-term vision

The leasing subsidiary is part of JetSetGo's long-term plans, which include expanding operations in India and other markets, including the Middle East.

The service provider plans to buy pre-owned aircraft in the US and Europe through its leasing subsidiary, which allows it the flexibility to tap customers both in India and overseas.

"There is an increasing preference for private charters among HNIs in India. Many more companies are opting for charters for their chief executives. Given the present disruption in flight services, charters give a high degree of flexibility," said Tekriwal.

She added that the company will continue to focus on the upper end of the market, with larger play in either mid size or the larger long range private jets. The pre-owned jets could come anywhere from $2 million to $15 million.

JetSetGo will fund these asset buys through through a combination of internal accruals, customer security deposits under long term charter contracts and debt raised through debentures secured through underlying aircraft specific cash flows. "We have begun initial discussions with equity investors and international leasing companies. But these are still in early stages," Tekriwal added.

The firm also wants to zero in on urban mobility. But the model here will be unlike that followed by the likes of Uber and Ola, says Kanika. "Aggregation models of Uber and Ola are asset light. Urban air mobility will possibly only take off through aggregators through asset heavy business models," said Tekriwal.
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Mar 2, 2021 04:19 pm

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