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Executive Aircraft and Charters Business in India

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India: Fuelling growth:

     China and India have been instrumental in spurting a growth in Aircraft manufacturing and generally Aviation, in recent times. Most of the Airplane orders at the Paris, Dubai and Singapore Air Shows were from Asian countries dominated by India and China. Singapore Air Show had the who’s who of the Indian Corporates, looking at various types of Executive jet and turbo prop Aircraft to buy.
     A majority of air travelers in India have traditionally been business travelers with the leisure segment taking second place. But, with the advent of the Low fare Carriers, the latter market has also picked up. Since India is a developing economy, there is scope for many new things to be introduced in the market. The corporate/Executive Aircraft travel market has always been there, with a few companies operating their Aircraft, on what is known as, an NSOP (Non-Scheduled Operator Permit), catering to a small charter market.
     A few big name companies owned and operated their own Aircraft for their own executives and some of them got themselves an NSOP and offered their airplanes on charter, to put the unused capacity/availability of the Aircraft to good use. Charter revenue at that time was not considered significant, but helped pay some expenses towards maintenance and pilot salaries. This market has since boomed, due to the boom in nearly all sectors of the Indian economy, fuelling the demand for business travel by executive Aircraft.

     Why do top executives prefer executive Aircraft travel these days and don’t make use of scheduled Airlines such as Indian (formerly Indian Airlines), Jet Airways and other carriers that have First/Business class sections of the cabin? They do, actually. However, the problem is that most Airlines fly to major cities with some connections to the smaller cities. There are lots of cities and towns that have an Airport and are not connected by any Airline and some Airports that have intermittent and unreliable connections. Many Industries are located in far flung backward districts of the country and business houses need to travel to these locations and often travel back the same day. The only way this is possible is to fly your own Aircraft or charter one. Of course, the comfort and overall convenience and the prestige factor, all adds up when using an executive Aircraft. Of course chartered Helicopters and Airplanes are convenient for Politicians visiting their constituency during elections and this is described later in this article.
     Unlike the United States and Europe, this market has not matured yet. There are some reasons for it, as mentioned further in this article. However, the market is growing and things are improving. Aircraft are being acquired and the whole industry will surely overcome all obstacles and come of age soon.

Infrastructure bottleneck:

     Let’s examine some data provided by the Airports Authority of India, the nodal agency that owns, operates and maintains a number of Airports, Civil enclaves and so on. It seems there are 126 Airports in India. Out of the 126, 11 are International Airports, 89 domestic Airports and 26 defence Airports with Civil enclaves! The mess is greater understood when you begin to realize that not all the Airports mentioned above are well equipped and serviceable. There are a sizeable number of Airports (around 35 in number) that are “non-operational” and have skeletal watch staff, such as and including Mysore Airport, our home town dirt strip that has been featured in another article on this website.
     Then there are only 39 runways (not 39 Airports, but 39 runways) with an ILS and night landing facilities. This is a pathetic picture and let me tell you that not all the time is the ILS working at these runways. So, a bulk of the Airports cannot be used at night or during reduced visibility conditions.

Financial and regulatory bottlenecks:

     At the outset, let me make it clear that the financial bottleneck does not pertain to shortage of capital available in the Country for purchase of Aircraft. Most Companies have enough funds and more, to be able to buy executive Airplanes and operate them on a long term basis.

     However, the lack of adequate Bank support, specialized in the area of Aviation/Aircraft financing is a deterrent to some smaller companies that could have fuelled a greater boom. That’s not to say that Banks in India have not done transactions where purchase of an Aircraft has been facilitated. However, these Banks have not really made Aircraft acquisition and their financing as a specialized segment and different Banks have different norms. Also, Indian Banks, like the others, are not known for their lightning speed decision making and funding. Projects may take many months before an approval.
     The other bottleneck is that Companies in India have to obtain an NOC from the DGCA (Directorate general of Civil Aviation), whether for an NSOP operation as a Charter operator or for importing in the Private category. Then there is the task of DGFT (Directorate General foreign Trade) that has to give a clearance and finally the RBI (Reserve Bank of India) that needs to approve any remittance/transaction above the limit of United States Dollars One Million to an overseas seller. Since most of the available executive Aircraft are overseas, whether factory new or used, one has to go through all these exercises. They don’t make it easy, do they?

New Concepts:

     Time sharing of executive Aircraft is a new idea and one that is just starting to take off, albeit slowly. There has been one success story, although a limited one, in this business. Like elsewhere, this business operates on; say six companies or high net-worth individuals coming together and buying a share in an Airplane and a single company goes into the entire paperwork process and offers management of the Aircraft with respect to the operations and flight department and also providing hangar services and maintenance.
     Then there are companies being formed, that offer to put the owners Aircraft on their NSOP and offer these Aircraft, when not used by the owner, on the charter market. While none of these are new concepts in the developed World, it certainly is, in India. Technical support for these Aircraft is another growth area since few companies offer maintenance support that are of World Class. Investment in this segment of the business is also going to pick up, what with well known names coming into the market soon.

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