India Inc flies high, on private jets

Against 255 commercial planes, corporate aircraft number 271, and this could double in three years

BANGALORE: It’s India Inc’s newest toy. Once you have enough moolah to own a Lamborghini Gallardo, a Maybach, a Maserati Quattroporte and a Ferrari, you have to reach for the skies. And corporate India’s big boys are doing just that. They are splurging on their own private aircraft like never before.

And how! According to the Directorate General of Civil Aviation (DGCA), there are more private aircraft flying around than regular commercial aircraft run by scheduled airlines. At last count, there were 271 corporate jets and turboprops compared to 255 aircraft owned by various commercial airlines.

Optimists say that in three years, the number of private aircraft could double, thanks to the fast pace of growth.

If Mukesh Ambani can own a Global Express BD-70 costing anything from $20-50 million, depending on what you put into it, can brother Anil Ambani be satisfied with ordering anything less than an A319-13-ACJ, which costs upwards of $50 million (over Rs200 crore) a pop?

As for liquor baron and showman Vijay Mallya, buying aircraft is just the beginning. Having bought the high-end A319-13-ACJ, he is said to have spent another $40 million (Rs 160 core) on retro-fitting and (fireproof) upholstery.

It’s not all about showmanship, of course. “In the world of big business, time is money and the corporate jet is a vital tool that can help my company save time,” says Mallya, who uses his aircraft as office-cum-home. Apart from the A319-13-ACJ, he also owns a GulfStream, a Hawker and a Boeing 727.

Like Mallya, other corporate houses that are expanding operations and locating themselves in different geographies are boarding corporate jets to improve efficiency and stay ahead of the competition. This has pushed up the demand for corporate aircraft in India, which is said to be currently growing at over 50 per cent annually. At this rate, the current crop of 271 corporate aircraft will be more than 600-700 strong by 2010.

“The story for high-end corporate jets has only just begun in India. There is strong demand in this segment, which needs to be tapped. We are expecting it to fully take off in the next three to four years. Today, we are setting up base for that big boom,” says Bombardier vice-president and chief country representative Srinivas Duvvuri.

Today, three of Bombardier’s corporate jets – Learjet, Challenger and Global Express — have either been ordered or are flying the Indian skies. “There is strong interest for five to six more aircraft, whose confirmation should come soon,” says Duvvuri.

Sniffing the same kind of opportunity, Hawker BeechCraft Corporation (HBC), which has a significant presence in turboprop business planes (BeechCraft), is now gearing up for the corporate jet market.

It recently appointed InterGlobe Enterprises Ltd as the exclusive representative for its corporate product — the Hawker — in India, Nepal, Sri Lanka, Bangladesh, Maldives and Myanmar.

“The demand for business jets is coming from high net worth individuals (HNIs), state governments, and public sector utilities (PSUs). We will begin operations from July 1, but there is already a pipeline of inquiries for the jet,” says InterGlobe Enterprises managing director Rahul Bhatia. Bhatia expects to sell around nine Hawker aircraft in the first year.

Of the 270 private planes in India listed by the DGCA, 50 per cent are owned by non-scheduled airline operators (charter service providers) and the rest is with corporate houses, governments and HNIs. “The demand among companies which have multi-dimensional and multi-location operations is growing fast as these jets are seen as a strategic mobility tool,” says Duvvuri.

An executive from the Essar Group, which owns three aircraft and two helicopters, agrees. “These planes help us improve productivity and save time. The BeechCraft and the GulfStream that we have help us to transport our executives from Mumbai to our factories at Hazira and Jamnagar (in Gujarat), which are not very well connected by scheduled flights. We operate our 13-seater BeechCraft between Mumbai and Hazira on Mondays, Wednesdays and Fridays. On other weekdays, it goes to Jamnagar,” says the Essar executive.

If every major business house in India already owns private aircraft, Duvvuri sees more companies going in for multiple aircraft in the future – as Essar already has. “Today, I see genuine demand for one to three aircraft from every major corporate, but this will grow manifold in future,” says Duvvuri.

Given the fast-growing number of domestic millionaires, experts are predicting that India will have the largest number of private jets in the world in the next 10 years.

Even though it is difficult to get an exact estimate of how many corporate planes will be sold in the next few years, manufacturers roughly project 400 aircraft to be delivered over the next three years at an average price of Rs80-100 crore ($20-25 million).

There are, however, some sceptics like Capt Yashraj Tongia of Yash Air Ltd, who feel that insufficient landing facility and high operation and maintenance costs could ground the whole revolution in the corporate jet market.

“There are not enough airstrips in India. Also, aviation turbine fuel is very costly in India. Its operating cost is roughly Rs70,000 per hour. This is excluding the pilot and cabin crew expenses. Groups like Reliance, DLF and Birla spend close to Rs1 crore per pilot,” says Tongia.

But with a group turnover exceeding Rs1,16,000 crore, that’s not going to worry Mukesh Ambani too much.