Flying in a private aircraft is not just about being rich
It’s the ultimate symbol of a successful life — travelling in your own private jet. Besides the flexibility it offers with regards to time, travelling in a business jet also comes with the luxury of flying to destinations otherwise unconnected by regular airlines.
So it’s not surprising that everyone is keen to use them — top executives, film stars, sportspersons, celebrities. In India, the list is growing. Bhupesh Joshi, Director and Chief Executive Officer of Club One Air, says his company has signed up first generation entrepreneurs, new IT czars, real-estate tycoons and jewellery houses as clients for his business jets. And Club One Air is just one of the many business jet operators in the country. Estimates suggest that there are over 100 business jets and 150 helicopters operating in India.
A world of difference:
Jayant Nadkarni, President, Business Aircraft Operators Association (BAOA), best explains the difference between flying in regular airline and in a business jet: “Say that if an airline has an Airbus 320 or Boeing 737 aircraft, which is (akin) to a bus, imagine that business aviation is a taxi or a car (where) you hire the entire aircraft or you to fly in it on your own. A bus has select times but a taxi gives you complete flexibility.” BAOA was formed in March 2011 and it now has 81 members.
Joshi of Club One Air says business jets offer the best choice of destinations. His company operates to almost 100 airports, while scheduled airlines link only 47 airports. “Earlier this segment was catering to luxury or personal requirements. But that is not the case any longer. Now we are flying to remote areas as there is no connectivity,” says Joshi. He points out that new industrial townships coming up in Gujarat, Madhya Pradesh and Jharkhand see executives using business jets. “This is purely because there is no connectivity. This growth is actually now supporting the need of the industry.”
The BAOA agrees. It says business jets have boosted the economy of places earlier ignored. “Raigarh flourished in the past 10 years due to the airport being used by business aviation. Whereas another city on the same railway line has hardly seen any industrialisation,” says Nadkarni.
Given these advantages of using business jets, Joshi adds that it is difficult to do a cost-benefit analysis of using business jets versus flying commercial. “Jets are generally 30-40 per cent costlier than first-class, which is not available in India.”
New players, new segments:
The sector is attracting new players as well. Some like Jetsmart plan to tap the potential of idling private jets.
Jetsmart’s promoter Dubai-based investor Abrar Ahmed smelt a business opportunity in capitalising on the downtime as well as return journeys when business jets usually travel without any passengers. Almost 30 per cent of the business jets and helicopters fly empty after dropping off passengers.
The company promises to offer connectivity to over 1,200 destinations within the country, including Vellore-Mumbai and Kozhikode-Chennai. A one-way seat on an aircraft for a distance of about 1,200 km — or for flying time of two hours — is expected to be about ₹60,000.
Rajeev Wadhwa, Group Chief Executive Officer and Chairman, Baron Aviation says a lot of ferry flights (private aircraft returning empty to their base) “are getting monetised” these days.
“Many times we have mapped up with social networking sites and have looked at birthdays and anniversaries and told potential customers that there is an empty charter on a special day in their lives. This is working,” he points out. Experts and industry watchers agree that there is significant potential in the segment. Dhiraj Mathur, Partner-Leader, Aerospace and Defence at Pricewaterhousecoopers, says: “Unfortunately till now business jets have been looked at as a rich man’s toy. But in actuality, it is a return on investment.”
Mathur says medical evacuations are huge opportunities for the use of business jets.
However, even with such optimism the Indian business jet market compares poorly with its international counterparts. For instance, despite the huge opportunity, the number of hours that business jets fly in India is lower than the international average. “The base business aircraft are measured by the number of hours they fly per month. In the international market, 75-80 hours of flying a month is the minimum going up to 100 hours. In India the average is 35-40 which is on the higher side. This is achieved by probably the top five-six guys. The remaining are at 25-35 hours,” Joshi adds.
If one includes helicopters, turbo props (propeller aircraft) and business jets, then India is ranked 14th in the world in business jets despite being one of the world’s fastest growing economies and having the third-highest number of billionaires, according to a Wall Street Journal report in 2015, says Nadkarni.
Further, most operators agree that charter rates in India are about 25-30 per cent lower than in Europe. Joshi says their smallest aircraft costs $3,000-$5,000 an hour, or about ₹3 lakh, plus taxes and charges. While in Europe, it is 4,000-6,000 euros (₹3 lakh to ₹4.52 lakh), in the US is about $6,000 to $8,000 an hour (approximately ₹4 lakh to ₹5.40 lakh an hour).
The sector has other problems as well. Lack of proper infrastructure, especially in terms of airport space, is one. “Utilisation is unfair in the country. In Mumbai, there is a lot of demand but there is not enough space to park the aircraft at the airport. In Delhi demand is not that much although space is available at the airport,” says Wadhwa. Besides, what hurts the prospects of the industry is that the cost of running an aircraft has gone up but charter rates per hour have not. “If it cost about ₹3,50,000 an hour to charter a Challenger Bombardier which can seat up to eight passengers eight years back, it still costs the same. In the last eight years we have not seen a northward increase in charter prices,” Nadkarni says.
This sentiment is also echoed by Wadhwa who says that a Cessena CJ2, which was chartered out at ₹140,000 per hour about four years ago, is now available at ₹145,000 to₹150,000 per hour.
However, even with all these problems, there is optimism about its growth as players see huge potential. And with Budget 2016-17 announcing over 100 new airports, the players are sure that it will help them expand their businesses.