Private jet and chopper operators are aiming for the sky as the rupee continues to slide against the US dollar. Making the most of the dollar’s ascendancy, several of these operators are selling charter aircraft and helicopters in the international market and laughing their way to the bank, earning handsome profits.
The move could have an impact during the upcoming elections as politicians rent choppers for campaigning.
“Many operators are selling their aircraft. It’s going to be a nightmare for political parties,” said Mandar Bharde, managing director of Mumbai-based MAB Aviation. Captain Prashant Oak, director (operations), AK Aviation, agrees. “It will definitely lead to a scarcity of charter aircraft and helicopters,” he said. The election period sees a surge in aircraft demand by more than 25 per cent.
A leading corporate group, which is also into charter aviation, sold its entire fleet of six aircraft some months ago.
Though the profit amount it earned remains a secret, the deal was “worth it”, sources said.
The trend of selling aircraft to make money began sometime last year, industry insiders told dna. Deccan Charters Ltd one of the first charter aviation companies in the county sold at least six of its aircraft last year. It even led to employees dragging the company to court over non-payment of dues.
The number of non-scheduled operators has come down from 147 to 125, said Bharde. Industry insiders said over 30 aircraft have been sold in the past year or so due to several factors, including unreasonable restrictions on part of the government, poor economy and the increasing dollar valuation. Kingfisher Airline’s charter aviation division is also out of service since its parent concern went into trouble last year.
Given the prices being quoted in the market, it is almost difficult for companies to buy private jets in the current scenario. For example, AK Aviation was interested in buying an aircraft three months ago, but did not due to various reasons.
Today, the aircraft costs Rs70-80 lakh more. “Now that we want to revive the company and intend to buy an aircraft, but the dollar rate is playing spoilsport,” said Captain Oak. The company sold an aircraft last year because it got a good bargain in strained financial conditions.
Similarly, a 2004 made Bell 407 helicopter is being sold for $1.9 million today because of the dollar rate valuation. A year ago, its value was 15-20 per cent less. Aviation experts said the valuation of an aircraft depends on factors such as its age, flying hours and maintenance condition. However, the value does not depreciate much like other movable assets.
Not everyone agrees that aircraft are being sold to make money. “It could be sheer coincidence or maybe these companies want to get new aircraft by discarding old ones. In fact, some leading politicians are on a buying spree,” said Rajan Mehra, former head of Qatar Airways and currently MD (India), Universal Aviation, a leading firm providing trip support to jets.
The impact of companies selling aircraft will be evident during the election season. Experts said the current rate of hiring a basic jet or helicopter is around Rs85,000 plus service tax per hour of flying. However, with the shortage of aircraft almost certain, some firms have already started charging around Rs1 lakh apart from service tax per hour. “The rates go up for luxury and bigger jets,” a source said.