Indian aerospace: India's jet set

The global business aviation boom has not passed India by, but can the country's infrastructure cope with the flourishing demand?

If anything reflects the potential of India's corporate jet industry, it has to be this: the country had 36 billionaires at the end of 2006, compared with China's 15, and the combined wealth of its richest 40 people is four times that of its neighbour at $170 billion. It is statistics like these that bring a wide smile to Viren Gupta's face. "With so many rich people and the economic growth likely to continue, it is a good time to be in the corporate jet industry," says the chief executive of Mumbai-based Multi-Track Aircraft Charters and Leasing, which specialises in the business aviation market.

The rise of India as a major economic player has corresponded with its companies and tycoons discovering the benefits of corporate travel. The number of business jets is expected to double to 300 by mid-2008, and the government gave almost 30 companies the nod to import around 100 aircraft in the last five months of 2006 alone.

Several companies are making their first foray into the market. DLF Group, a real estate company, has reportedly bought a Gulfstream business jet and a Sikorsky S-92 helicopter, motorcycle manufacturer TVS Motors has a new Beechcraft Super King Air B200, and consumer electronics producer Videocon purchased a Beech King Air 350.

Others are looking to expand their fleets. Oil and gas major Reliance Industries, India's largest private sector company, is reportedly adding an Airbus A319CJ, a Bombardier Global Express XRS and a Dassault Falcon 900EX.

"There is a big demand to link major Indian cities, but also for Indian entrepreneurs to be part of the globalisation, and then travel worldwide," says Thierry de Poncins, international sales director at Dassault Aviation. "Corporate transport will become a key issue for these big groups, within an international growing market. If you look at the deals integrating Indian corporations during the last year, you understand how India is becoming a key player in globalisation."

The burgeoning economy has attracted multinational companies, which already use business jets in their home countries and are setting up operations in India. As a result, some estimate that India's air charter industry will grow by around 30% annually. "Companies that operate in sectors such as oil and gas, retail, manufacturing, farming, mining and construction are some of the major demand drivers," says Manav Singh, managing director of New Delhi-based Club One Air, a fractional ownership and charter company. Karan Singh, chief executive of IndoPacific Aviation, a company that deals in leasing and buying aircraft, concurs. "People have realised that an aircraft is no longer a toy for the rich, but a business tool," he says.

The charter and leasing companies are also planning to expand their operations to keep up with demand. Club One, for example, is adding five jets and two helicopters and ultimately plans to have a fleet of five aircraft in every major Indian city. "Our vision is to network the length and breadth of the country with business jets and helicopters," says Manav Singh.

Manufacturers are understandably optimistic, and strengthening their presence through dedicated sales teams and permanent offices in the country. But they also have a word of caution, pointing out that the market holds more promise in the longer term than in the next few years.

"We see strong correlation between the markets in India and Brazil. It's important to remember, however, that it has taken us over 30 years to grow that market to its current level," says Robert Stangarone, vice-president for corporate communications at Cessna. "While India maybe is somewhat quicker, we are still looking at a minimum 20-year horizon for significant market development."

Train the next generation

Some of the challenges that the industry faces include a shortage of trained pilots, a creaking infrastructure struggling to keep up with the rapid aviation growth, and the lack of knowledge about the requirements of corporate jets. These are likely to get worse before getting better, say observers.

"Pilot shortages are becoming a major problem," says Gupta. "About 10 years ago, when we started, India had a good pool of pilots to choose from. In fact, some of the pilots were even having problems finding well-paid jobs and were considering a switch in career. The situation has totally reversed now. Almost anyone with a flying licence gets snapped up by the airlines almost immediately, and the smaller companies like ours have to fight even harder to attract and retain pilots. Salaries are going up, and more young people are considering it a viable career."

India produces roughly 300 pilots a year, and there are plans to boost numbers through new flying schools. Companies like Boeing are helping in the effort. "We are giving a grant of $10 million to flying schools in India to help them get the resources that they need," says Boeing's senior vice-president for sales Dinesh Keskar. "There are plans to raise the retirement age to beyond 60 to boost numbers, but the key lies in training more people."

The poor infrastructure irritates those in the market. Insufficient runways, overcrowded terminals, overworked air traffic controllers and insufficient maintenance, repair and overhaul (MRO) facilities are just some of the bugbears. "Most traffic comes from four major centres - Mumbai, Delhi, Bangalore and Chennai. Those are also international airports, which means there is a lot of competition for space for hangars and other facilities," says Gupta. "Delhi and Mumbai are being upgraded, but it's not going to be enough. We need improvements in so many things and it will take a long time for that to happen."

This is partly due to a lack of understanding about the needs of corporate travel, in particular the need for fixed-base operations (FBO) and the time taken to get landing permits. "FBOs are the lifeline of corporate travel. Chief executives and VIPs want to be whisked through a separate facility to their meetings and then back to their jets a few hours later. But these are non-existent in Indian airports," says one South-East Asia-based charter operator. "These are high value passengers who use corporate jets for the ease and convenience that they offer, but India does not cater for this."

Various rules governing the movement of aircraft in India, some of which date to the 1940s, are also a problem. For example, it takes about a week for foreign-registered aircraft coming into India to get clearance - an anachronism in Asia where most countries now require only about a day or two in notice.

"To make it worse, government offices are closed on Saturdays and Sundays. The business traveller decides on a trip today and flies off tomorrow - India's rules do not allow that," points out one frustrated domestic operator. "These bureaucrats have a fixed mindset, but that does not work in the corporate jet industry."

Another operator says that the government has to realise the link between business aviation and the country's economic boom. "There is revenue from the landing charges and airport charges the people who come here stay in expensive hotels and travel a lot, and any business deal that they clinch directly leads to greater growth for the country's economy. The red tape has to be eased, if not completely removed, for the country to grow even further."

Yet, despite the problems, the prospects for aviation remain tantalising. More people are looking to buy aircraft, especially since the hourly flying cost of a self-owned jet ranges between Rp35,000 ($800) and Rp200,000 against Rp50,000-350,000 for a chartered aircraft. Many companies offering charter services are, as a result, looking for a slice of the lucrative management business. "Those who used to charter aircraft four or five years ago are now buying the jets. More people are now chartering jets and they will buy aircraft in a few years. The pool will keep getting bigger and the pie will grow," says Gupta.

The potential for growth is promising, given that India is starting from a small base and the manufacturers are eager to get into the market. Dassault hopes to sell up to five aircraft annually for the next 10 years. "Compared with the size of the Indian subcontinent, the corporate-jet fleet is marginal when you consider the USA or Europe," says de Poncins. "India has a long tradition of excellence in aviation, so the ingredients are all there."

Source: Flight International