The market for charter jets in the country is going through a rough patch, thanks to high maintenance cost and stringent government policies. However, innovations and a change in import duty can bring in the much needed respite.
Nearly eight years ago, when Mukesh Ambani of Reliance Industries, India’s richest man as stated by the recent Forbes report, gifted his wife a private luxury jet for her 44th birthday, it indeed made headlines. The Airbus 319 Corporate Jet was reported to cost over INR 4 billion (USD 60 million) having a sky bar, fancy showers, master bedroom and what not. Such is the allure of billionaires in India and business jets alike. Riches and private jets go hand in hand. Having a private jet is a sym- bol of the wealth you own. And for a country having nearly 100 billionaires, the love and passion of owning jets as personal toys never goes unnoticed.
India and its business jets
According to the list compiled by Forbes, China almost has double the billionaires than India, however, when it comes to the number of private jets, India still beats the former. Ambani is the unprecedented hero in this fragment. He owns three private jets – Falcon 900EX, Boeing Business Jet 2 and the Airbus 319 Corporate Jet (the one he gifted his wife). While Falcon, designed by Dassault Aviation of France, is more compact, Boeing business jet can fly up to 78 passengers. Then there’s Ratan Tata, the ex-chairman of Tata group, a Mumbai-based conglomerate. Though Tata’s philanthropist work speaks volumes about his low profile lifestyle, he doesn’t shy away from keeping a personal jet at his disposal. He’s known to fly his Dassault Falcon 2000 himself and make a statement in the sky. Chairman of engineering and construction group for energy and infrastructure Punj Llyod, Atul Punj, is another Indian business tycoon who owns a Gulfstream IV that is powered by twin Rolls-Royce Tay 611-8 engines and is said to cost him nearly INR 2 billion (USD 33 million). Likewise there are a handful of other businessmen who own private jets to fly in the luxury of sky and time such as Reliance’s Anil Ambani – Bombardier Global Express XRS, Raymond’s Gautam Singhania – Bombardier Challenger 600 and DLF’s KP Singh again with a Gulfstream IV.
Apart from owning private jets, there’s a commercial market for this segment, wherein private jets are provided by companies as a luxury service. In India a couple of such companies are TajAir, Business Jets India and Deccan Air. These companies can work on two models – aircraft management company or a fractional ownership one. For example, TajAir provides only the aircraft it owns, maintains and operates. So far it has Dassault Falcon 2000, Dassault Falcon 2000LX and Piaggio P.180 Avanti II in its fleet of aircrafts. The fleet of private jets offered by these companies can fly you anywhere depending on the parking space and refuelling of the aircraft. Most of the charter jets can fly upto 6-9 hours non- stop before getting refuelled. Anybody who has the luxury of unlimited money at his disposal can choose to take these services for a number of events – corporate meetings, marriages or simply a luxury holiday.
For the Indian business jets market, infrastructural limitations pose a great challenge. As David Vellupilai, managing director, Airbus Corportae Jets, adds “Today, India like many countries is little constrained by the infrastructure. For example, it doesn’t have enough landing and takeoff slots. Like in the UK, London Heathrow is already busy, it is almost impossible to get a landing and take-off slot.” Emphasising the significance of good infrastructural facilities Vellupilai says, “Aviation business is a little bit like chicken and egg. It needs the infrastructure – the airports, the business aviation terminals, and the maintenance facilities. If it exists then it attracts corporate jet customers. Vice versa, if the customer demand exists, the infrastructure develops.”
Not only infrastructural challenges, Indian private jet market also faces a downturn because of the heavy import duty levied since 2007, which is a staggering 21 pc. In the recent past the market of business jets has been witnessing a slowdown. What is being touted as the first plunge in 25 years, the market dwindled by 2 pc in 2015. Similar is the case with China where the business jet fleet grew only by 6 pc last year – slowest in 10 years, as stated by Embraer SA, one of the largest business jet manufacturers.
Industry insiders report that Business Jets India owned by Tata sons is planning to wrap up its operations in the country. Club One Air, India’s oldest and largest air charter company that offers both fractional ownership and charter services, has also witnessed a negative net worth for the year 2015 as per the documents filed.
In comparison to the heavy import duty, when a plane is imported for charter operations under a non- scheduled operators license (NSOP), it attracts a tax of only 2 pc. This entices individuals and companies to buy aircraft under NSOP and then divert it for personal use. To tackle this prob- lem government plans to put a cap on NSOP and also lower the wide variance between the import of private jets and the tax paid under NSOP. Such moves by the government will definitely give a boost to the corporate jet market. Emphasising on government’s support Vellupilai adds, “Whenever a govern- ment is friendly towards business, it helps to ensure economic growth. This benefits everybody in the society from top to bottom. We see potential for many companies and billionaires in India to use corporate jets.” Elabo- rating further on the significance of corporate jets, he says, “Although the taxpayers in India want the govern- ment to spend money on hospitals and roads rather than corporate jets, the same taxpayers will also criticise if a head of state falls asleep at a state banquet or if a minister fails to negotiate the best trade deal. You can’t have it both ways. Governments in big countries, can justify corporate jets. It’s a false economy not to have them.”
However, the recently announced Union Budget for the fiscal 2016 by the finance minister Arun Jaitley, doesn’t offer much for the aviation industry, apart from reviving 160 underserved airports that will boost the regional connectivity.
Capitalising the jets
Making the process of renting out a charter jet for special occasions hassle free, Kanika Tekriwal, 27, came up with an idea of a market place for private jets. JetSetGo – the online aggregator – gives you a service of booking a charter very much the same way as Uber or Ola offer for booking a cab in the country. The Delhi-based start-up acts as a platform that brings together the available charter planes by multiple aircraft operators and gives the freedom from the tedious process of booking through traditional brokers and operators, that generally involves a great deal of time, which anyone with unlimited money is always short of. Launched in 2014, JetSetGo already has around 77 aircraft listed on its portal and turned profitable in September last year. Since it majorly taps the empty leg charter space, it is able to offer great discounts to its customers, who approach this market place for a range of activities from proposing the loved one in the sky, to a pre-wedding shoots, a birthday party, shuttling between the venues, product launches and the list is endless. Charting a plane saves time and gives the comfort of unwinding while still travelling, increasing the productivity to manifolds.
With the young blood of the country fuelling the business jet industry with innovative ideas along with a little ease on part of the government, India might be able to pull out from the sluggish phase and scale to a better standing globally.