India’s Air India Secures US$215 Million GIFT City Aircraft Financing

Air India’s US$215 Million Aircraft Financing Signals Asia-Pacific Aviation Finance Shift

Mohd Hanif Ismail - : Oct 27, 2025 - : 9:13 pm

In a landmark development for aviation finance in the Asia-Pacific region, India’s national carrier Air India Limited has secured a US $215 million refinancing facility for six Boeing 777‑300ER aircraft, via its GIFT City-based subsidiary AI Fleet Services IFSC Limited....

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The transaction, executed on Oct. 27, was advised by international law firm Watson Farley & Williams (“WFW”) on behalf of lenders Standard Chartered Bank and Bank of India (via its IFSC Banking Unit in GIFT City).

What makes this deal significant is that it is reportedly the first time an Indian airline financing arrangement has been structured directly via the GIFT International Financial Services Centre (GIFT IFSC) located in Gujarat International Finance Tec‑City (“GIFT City”) — India’s emerging smart city and international financial services hub — rather than via the more conventional Ireland-based structures. According to WFW’s press release, this “first-of-its-kind” structure underlines rising confidence in the Indian regulatory environment and signals the Domestic Indian banking sector’s growing participation in aviation asset finance.

Strategic Context and Asia-Pacific Implications

With India ranking as the world’s third-largest domestic aviation market and forecast to require significant aircraft addition over the next decade, this transaction takes on both symbolic and practical importance. The deal leverages the regulatory incentives available at GIFT City: the International Financial Services Centres Authority (IFSCA) has instituted a robust framework for aircraft leasing and financing through Indian-IFSC registered units.

By routing the financing through AI Fleet in GIFT City, the structure reduces dependence on offshore leasing hubs (notably Ireland) and enables cost-saving opportunities and greater domestic finance participation. The involvement of Bank of India as domestic lender is especially noteworthy: it reflects a shift in Indian banks’ appetite for aviation financing, supported by improved regulatory clarity and growing asset class maturity in India’s aviation ecosystem.

For the broader Asia-Pacific aerospace industry, the deal underscores several trends. First, it highlights how India is deepening its financial sector to support its aviation growth strategy — this in turn has upstream implications for aircraft manufacturers, lessors and servicers targeting the region. Second, it signals that India is increasingly capable of hosting asset-finance structures that previously were the preserve of Western jurisdictions. Third, for lessors and financiers outside India, the transaction may herald a future where greater localisation of aviation finance becomes more feasible in regional markets.

Regulatory Milestones and Market Confidence

The deal sits against the backdrop of regulatory reform in India. For example, the IFSCA’s “Framework for Aircraft Lease” and subsequent polished guidelines have made GIFT City increasingly viable for aviation asset finance. In parallel, the Indian government’s push to develop GIFT City as a global aviation-finance hub was underlined in a March 2025 press release where the aviation minister stated that “GIFT City will give India’s aviation sector the further required confidence … to develop a competitive aircraft-leasing hub”.

In its commentary, Richard Williams, Partner and Head of the Singapore-based Asset & Structured Finance team at WFW, described the structure as “ground-breaking” for India. He emphasised the strong vote of confidence in Indian aviation and the recently developed regulatory framework.

Implications for Fleet Strategy and Financing Ecosystem

For Air India, the USD 215 million refinancing of six Boeing 777-300ERs supports its strategy to optimise its wide-body fleet servicing the India-distant international routes. By securing a term-loan for seven years via the GIFT City route, the airline leverages a more competitive structure which could yield cost benefits across its long-haul operations.