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Thursday, 22 November, 2018, 15 : 30 PM [IST]

MoCA to introduce rupee-based transaction mechanism for aircraft leasing by Jan 2019: Jayant Sinha

The Ministry of Civil Aviation (MoCA) is likely to introduce a rupee-based transaction mechanism for leasing aircraft to protect India's airlines against currency volatility, said Jayant Sinha, MoS Civil Aviation.

Sinha, in an interview with CNBC-TV18, said that the Ministry has been working on the rupee-based transaction mechanism and that an announcement is likely to be made regarding the same by January, 2019. "Aircraft leasing is a very important and an exciting area that we are pursuing, we have been working on that for more than a year and a half now and our hope is that in January, we can announce a rupee transaction for leasing," he said.

The policy intervention comes at a time when the aviation sector in India is grappling with severe financial troubles due to adverse factors of high oil prices, weak rupee and low fare levels, with top airlines posting net losses in the September quarter.

Sinha further stated that airlines currently have a huge exposure towards dollar because lease rentals, which are largely paid in dollar, formulate a substantial part of an airline's expenditure as most airlines prefer taking an aircraft on rent rather than outright purchase.

"When they (airlines) lease an Airbus, when they lease a Boeing 737, they are actually paying in dollars to the lessors. Of course, bulk of their revenues is coming in rupees so they have this huge exposure on dollar," Sinha added.

The motive is to reduce the dollar burden and help the airlines not get vulnerable due to a weak rupee or a strong dollar, he mentioned.

(Source: CNBC-TV18)

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