Aviation sector watches tariffs but leasing set to rise, BA

The latest wave of reciprocal tariffs announced by the United States is unlikely to immediately affect India’s booming civil aviation sector but may spur increased leasing of aircraft, according to Jaideep Mirchandani, Group Chairman of Sky One.

Speaking on the potential consequences of the tariffs, which place a 26 per cent duty on imports from India — higher than the 20 per cent on the EU and 24 per cent on Japan — Mirchandani pointed out that the true challenge lies not in passenger volumes but in the supply chain and cost structure.

“Countries like India are likely assessing how these tariffs will affect specific industries. In aviation, beyond the volume of exports and cargo movement, the focus will be on whether these tariffs disrupt supply chains and raise costs. This is especially important given the large aircraft orders placed by Indian carriers with US aerospace major Boeing,” Mirchandani said.

He noted that while tariffs could push up acquisition costs for lessors, airlines would likely absorb the downstream effect through higher leasing demand rather than direct aircraft purchases. “But in a trade environment shaped by tariffs, the cost of imported goods, including aircraft and their components, would rise. This could lead to higher inflation, prompting the apex bank to maintain high interest rates to control price increases,” he added.

Mirchandani also highlighted the possibility of currency pressures if India’s exports to the US were to decline, making the rupee weaker and overseas travel costlier, indirectly influencing airfares and long-haul expansion plans. However, he believes the leasing model will offer airlines a strategic cushion. “As borrowing becomes more expensive, leasing aircraft would increasingly emerge as the preferred option,” he said.

The unfolding tariff dynamics, he concludes, may reshape financing preferences within India’s aviation industry but are unlikely to slow passenger demand in the near term.