BUSINESS AVIATION IN INDIA

India is one of the strongest markets for private jets with strong economic growth, expanding business interests and increasing number of billionaires. The private jets market in India constitutes 12 percent of the global market and is bigger than Asian markets in China and Japan. India has the maximum number of private jets in Asia, around 140 against China’s 93 and Japan’s 76; this is expected to double by 2020. As per the Business Aviation Association of India, there are 680 business aviation aircraft including private jets, helicopters, turboprops and piston engines and this number is expected to reach 2000 by 2020.

Current Scenario

In India, the business aviation sector has been the most neglected sector in the civil aviation industry due to increasing Government focus towards the commercial aviation business. There are no separate guidelines for business aviation and no concept of Fixed Base Operators (FBOs), helicopters or separate business aviation terminals. The maximum utilization of business aviation is in corporate charters, followed by offshore operations through helicopters. However, realizing the benefits of business aircraft with their accessibility to remote areas and areas not covered by scheduled airlines along with their easy access to small airstrips and helipads, these are becoming popular among corporate travellers.

With the economy booming and private industry flourishing, private jets have become a regular mode of transport for industry heads in India. In order to save time and to realize value for money, companies are moving towards buying their own jets. Big industrialists having private jets include the Hinduja brothers, G.M. Rao, G.V.K. Reddy, Shishir Bajaj, Anil Ambani, Mukesh Ambani, Vijay Mallya, Rahul Bajaj, Sajjan Jindal and Ratan Tata, among others.

Top Management (CEOs, CFOs) of companies use private jets more than the managerial level. However, non-business travellers who fly for medical / leisure activities do not travel much by private jets; they prefer commercial airlines.

Business Model

There are three main options for private jet users – they can purchase a jet, lease/hire a jet or buy a share in a fractional membership scheme.

The eventual decision to buy or lease the aircraft depends on the frequency of flying and the financial wealth of the company. Buying a jet makes economic sense for those who fly over about 400 hours a year. However, its maintenance is a very tough job and will require investment in hiring the staff required for operation. Pilot salaries, fuel cost, plane maintenance and storage are some of the major cost areas. On the other hand, its maintenance is a very tough job and will require investment in hiring the staff required for operation. Pilot salaries, fuel cost, plane maintenance and storage are some of the major cost areas. On the other hand, leasing a private jet is considered to be the best business model when it is required for personal usage. Leasing a jet does not involve a lengthy process and huge cost as seen in purchasing a private jet. In the leasing process, a company or individual can take the private jet on lease from the leasing companies on a contract basis that varies as per the client needs. In general, leasing offers a number of compelling cash management and risk benefits over ownership.

The third alternative, that is, the fractional membership ownership scheme is gaining equal importance in the Indian private jet market along with leasing. The fractional ownership model offers an individual or company the option to purchase a share of an aircraft, which can be as little as 1/16 of an aircraft, offering approximately 50 hours of flight time per year, to 1/2 of an aircraft depending on the needs of the operator. In addition, the management company provides all scheduling, flight planning, staffing, catering, maintenance, communications, and insurance services. A fractional owner just has to call the dispatcher and request for a flight.

In India, most of the private aviation aircraft are purchased by the companies/Individuals rather than leased. Purchasing an aircraft provides long-term benefits to the companies rather than short-term gains. However, risks are equally involved in the purchasing of the aircraft.

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