Charter jets, choppers new market for pre-paid cards

Some firms have introduced pre-paid cards facilities that enable HNIs to fly in private jets at cheaper rates

A file photo of VIP jets meant for private or corporate use. Photo: EPA
Mumbai: With even the rich hesitating to buy, or fly in a private jet or helicopter in a slowing economy, some private companies have begun offering such clients pre-paid annual membership cards that enable them to fly in private jets at cheaper rates.
On 4 September, for instance, aircraft company Baron Luxury and Lifestyles Pvt. Ltd launched a Global Jet card that luxury fliers can use within the country or abroad.
“With the (rupee) dollar value touching all-time high, it may not be the appropriate time to buy an aircraft. However, Baron Eaglemembership provides an ideal choice for customers to avail all the benefits of owning an aircraft at a fraction of ownership cost,” saidRajeev Wadhwa, chairman and chief executive at Baron Luxury.
There are around 700 private planes, including jets and helicopters, in the country. In a slowing economy, many of them are underutilized and some even lie idle at airport hangars. Companies like Baron Luxury lease aircraft from such owners.
Typically, the aggregator-aircraft owner arrangement works on a 10:90 revenue share basis, considering that the aircraft owner bears the cost of fuel, manpower and related expenses, according to industry estimates.
Wadhwa said his company has 27 aircraft of different sizes and 5,000 hours to offer to its members. The company has priced annual membership for its silver card at `25 lakh, `50 lakh for the gold and `2 crore for the platinum. The company claims it will refund any unused portion.
The Global Jet card will be “by invitation only”, according to Wadhwa, and will allow members to fly private to most international destinations.
“We have 5,000 hours of flying on offer for a year. Anything less than 2,500 hours will land us in losses and anything more than 2,500 hours of flying will help us in making operating profits,” Wadhwa said.
Wadhwa, however, did not disclose the details of owners but a promoter of a Mumbai-based chemicals manufacturer, who did not wish to be named, appeared happy with the deal.
“I have a chemical plant in Vapi (Gujarat) and I stay at Napean Sea Road. I used to visit my plant once in 10 days and it would always be a painful, long, boring journey. I always had to get up early and take my breakfast somewhere on a roadside dhaba,” he said.
Now, he charters a helicopter, “which picks me up from Mahalaxmi and drops me in Vapi in just 60 minutes”. “It has added a great lifestyle status to my business,” said the promoter, who uses a flying card programme of Baron.
“Aggregation of underutilized private planes used to happen in a most informal way in the past. Now it’s getting more organized. It augurs well during an economic slowdown,” said Rohit Kapur, president of the Business Aircraft Operators Association (BAOA).
Kapur added it helps an aircraft owner to get a chance to increase the utilization of his planes while others who have decided to defer aircraft acquisition owing to slowdown get a chance to fly a plane without owning it. “It’s a win-win situation for flyers, aggregators and aircraft owners,” Kapur said.
Another private jet company, Invision Air, part of the Invision Group, launched a similar jet card membership programme early this year. It is designed for regular users of private jets with the entry level membership (silver) starting at 25 hours per year costing `33.75 lakh and the top-tier (platinum) at 100 hours per year costing `1.2 crore plus taxes. Vinit Phatak, managing director at Invision Air, said he will offer 14 planes of different types to customers by way of aggregating idle planes, though the company owns two planes.
“We found an essential element for a successful jet card programme is to own a few aircraft ourselves and have 100% control on their deployment. This ensures high service level and availability demanded by this level of clients,” Phatak said. “When one is dependent only on aircraft from other operators, it is difficult to provide a consistent level of service quality to the members.”
He, too, did not disclose details of the owners but said his company is in the process of taking an entire fleet of planes on lease. Another private aircraft company Club One Air has a similar model. It invites owners of private jets, who are finding it difficult to meet requirement on size.
Baron Luxury’s Wadhwa said his company has no plans to own aircraft but will stick to its model of aggregation to avoid debt on its balance sheet. To avoid conflict between owners and customers, Baron Luxury has developed an online calendar application that the operators will update in real-time. The calendar is updated with whoever confirms the flights first to avoid conflict, said Wadhwa.
Meanwhile, lobby groups of private jets are in dialogue with the Directorate General of Civil Aviation (DGCA) to sort out the issue as the aviation regulator in August banned international flights by non-scheduled operators.

Chhabria turns to designing jet interiors, yachts

Mon, Mar 05 2012. 11 41 PM IST
2012-03-06--Mint-Chabbria turns to designing interiors of JetsMumbai: For almost two decades, Pune-based Dilip Chhabria, founder and proprietor of DC Design Pvt. Ltd, has been best known for styling cars for India’s rich and vehicles for specialized applications. He is now employing a three-pronged strategy to expand his business by refurbishing and designing interiors of executive jets and helicopters, designing yachts and, for the first time, mass producing his company’s locally developed and designed sports car—Avanti.
“Customers are willing to pay a premium for our designs. I want the businessman in me to take the upper hand over the designer in me as age catches up,” said the 58-year-old car stylist.

Three avenues: Dilip Chhabria. Photo: Hemant Mishra/Mint

To begin with, his Pune-based design house has joined hands with Air Works India Engineering Pvt. Ltd, India’s leading aircraft maintenance firm, for the aircraft venture. Both the firms hope to finalize their plans in a month’s time.

DC is entering the aviation segment after a hiatus of six years. In 2004, it had designed interiors for Hindustan Aeronautics Ltd’s eight-seater helicopters. Chhabria said the new venture is a logical extension of what his firm has been doing for 19 years.
With all the refurbishment and interior jobs for the jets and helicopters being currently undertaken by firms in the US, Europe and Australia, the segment offers immense potential to an Indian company, which can do the same job at two-thirds of the cost and offer international quality, said Vivek Gour, managing director of Air Works.
Refurbishing an aircraft overseas typically costs $1-5 million (Rs 5-25 crore), he said. With interior jobs being labour-intensive and accounting for more than half the cost, India is well positioned in this regard, said Gour. Chhabria added that India has top-quality craftsmanship in leather, wood work and upholstery.
There are as many as 157 executive jets and 125 executive helicopters in India currently, according to Gour. With high net-worth individuals and firms seeking to acquire more, the market is expanding at 15% per annum, he added. The venture with DC plans to target conglomerates—including the Tata group, Reliance Industries, Reliance Group, JK Industries—most of which already own planes and helicopters, apart from overseas customers.
The Air Works network, which includes regulatory and safety authorities, will help in targeting customers. DC will offer infrastructure support and soft skills in design and aesthetics.
“As the DC studio has been catering to the same high net-worth individuals with their premium design offerings, they are well aware of their tastes. This will help us,” Gour said.
The two plan to showcase their capabilities at various air shows in India and abroad, starting with the one at Hyderabad that begins on 15 March. The firms plan to start with refurbishment, graduating to complete interior jobs.
“Airlines in India are moving towards low-fare and no-frills mode, but India’s high growth story in recent years has created a market segment with increasing disposable incomes and a need to travel more efficiently within India,” said Vinit Phatak, founder and managing director at private jet company Invision Air Services Pvt. Ltd. “The high-end market segment is not being addressed. And there is a perfect opportunity for private jet business.” Earlier this month, Phatak launched Invision Air’s operations in India with two Phenom 100s made by Brazil’s Embraer and four more on order. Six of the larger Phenom 300s are also on order, with the first of them planned for delivery in mid-2012.
Meanwhile, encouraged by the response it got for its locally designed and developed two-door sports car Avanti at the auto expo in New Delhi in January, DC Design, for the first time, is planning to mass produce the car, and has outlined an investment of Rs 60 crore. Priced at Rs 30 lakh each, the firm has received bookings for 300 units and is setting up a manufacturing unit in Talegaon near Pune.
The idea is to be a mass producer in the niche segment, and monetize the brand for which buyers are willing to pay a premium by building scale, Chhabria said. “The bespoke (customization) job we have been doing is very intensive in nature. We might as well use that time and energy to create scale,” he said. However, “DC Design will always take up jobs that automobile manufacturers will not or cannot do because of scale and skill”.
Once the firm is able to demonstrate its capability through the Avanti, DC plans to join hands with a mass car maker and use one of its platforms and offer specialized body design solutions. “Every organization has to grow, look for newer opportunities. The challenge has always been how to go to the next level,” said Chhabria.
According to him, the experience the firm has drawn over the years from designing cars, coaches and caravans will come in handy. “To me, the car represents the ultimate in limitation of design, creativity and size. If you can master that, you can master anything in the world,” he said.
DC expects to get its first order for the yacht design in another three months.
P.R. Sanjai contributed to this story.
shally.s@livemint.com

Opening Bell, February 27

Mon, Feb 27 2012. 08 46 AM IST
2012-02-27 - LiveMint Opening Bell, February 27Mumbai: Elections results will determine the direction of the markets in India. The results of the Uttar Pradesh (UP) polls for which Rahul Gandhi has been campaigning for months will be very crucial, reports Economic Times. If the Congress wins UP, Punjab and Uttarakhand, an alliance with the Samajwadi Party will be a dream scenario for the market. This is because the Congress may be able to pass big ticket reforms without any hurdles. If Congress does not win UP, there will be a hung assembly or president’s rule.
On Friday, US Markets ended on a subdued note over concerns of rising oil prices, reports MarketWatch. The Dow Jones Industrial Average ended flat at 12,982.95, the S&P 500 Index gained 0.2%, to 1,365.74, and the Nasdaq Composite was up 0.2%, to 2,963.75. Rising tensions over Iran’s nuclear program pushed the price of crude to a nine-month high, at $109.77 a barrel on the New York Mercantile Exchange.

Asian markets were trading mixed on Monday morning. Japan’s Nikkei  Stock Average was up 0.6% as the yen weakened against the Euro on  hopes of a larger euro-zone bailout package. Hong Kong’s Hang Seng was  flat and China’s Shanghai Composite was trading marginally higher,  reports MarketWatch.

 In India, the UK based Vedanta Resources will merge its Indian subsidiaries into a single unit to cut costs and improve cash flows, reports Mint. Vedanta merged non-ferous metal producer Sterlite Industries with iron ore minor- Sesa Goa on Saturday. The board has approved 3:5 share swap ratio. After the share transfer, Sesa Sterlite would be listed in India and as American Depositary Shares on the New York Stock Exchange. Vedanta will own 58.3% in Sesa Sterlite post-restructuring.
As Kingfisher Airlines is headed towards collapse, the government will find itself in a very awkward situation. The government will face political heat if tries to rescue the debt-ridden private carrier and if does not save the airline, it will hurt the state run banks, reports Reuters. Kingfisher Airlines which is struggling with fewer flights and pilots and outstanding dues to lessors, needs $400 million to keep flying.
Hero MotoCorp will be in the focus after the company said that it would buy a minority stake in Erik Buell Racing (EBR), US Motorcycle Company, reports Economic Times. While the amount of stake buyout is not known, it will give Hero MotoCorp technological support and it can also use the partnership to get a foothold in the overseas market.
ONGC will also be watched after the company said that it is spending Rs 26,000 crore to develop ten oil and gas clusters to ramp up crude production by upto 4 million tonne per annum by 2013-14, reports Business Standard. ONGC is also looking at setting up an LNG terminal of its own.
State Bank of India (SBI) will slash interest on education loans by up to 1 percentage point, reports Business Standard. Interest rates on education loans range from 12.25% to 14.50%, depending on the college tuition and the duration. The education loan book of SBI makes up 7% of or Rs 1.75 lakh crore of retail loan portfolios and has increased by 14.17% in the December quarter compared to last year.
While airlines are facing turbulent times, the private jet business is setting goals to fly high, reports India Real Time, by Wall Street Journal India. Mumbai-based company, Invision Air Services Pvt Ltd is launching its jet-for-hire service for the super rich who are willing to fly on jets without necessarily owning them.