These may be turbulent times for India’s commercial airline industry but the private jet business is still aiming to fly high. In contrast to general airlines which are cutting back on flights, now a Mumbai-based company is launching its jet-for-hire service. This targets mainly the second rung of India’s rich and powerful.
Think of it as “practical luxury,” says Vinit Pathak, co-founder of Invision Air Services Pvt. Invision is the latest in a string of small air charter companies that have sprung up in India over the last six years.
Some of India’s ultra-rich, from Mukesh Ambani to Vijay Mallya, already own uber-luxury jets –the kind that boast king-sized bedrooms and showers. In 2007, when the Indian economy was in full boom, Mr. Ambani reportedly gave his wife a jet worth at least $60 million as a birthday gift.
But Invision is not targeting the super rich. Instead, they are looking to India’s next level of wealthy, those who want to fly on jets without necessarily owning one. They are typically high-ranking executives of big companies and owners of mid-sized companies and businesses. It’s targeting, for instance, executives who have to visit far-flung factories or retail stores across India in locations that are not necessarily well-connected.
Top players in this small industry include Tata Group’s Taj Air Ltd., Bangalore-based Deccan Charters, which have been around since the 1990s, and Religare Group’s Religare Voyages Ltd. which was founded in 2006.
Some of the high-end jets-for-hire available from these companies can fly as far as London and Beijing without needing to refuel.
Although India’s jet industry is still small, till recently it has been growing fast. Over the past five years, India has emerged as a key buyer of private jets in the world. India has around 140 private jets, the highest in Asia and far ahead of China’s 93, according to a 2011 report by consulting firm Frost & Sullivan.
Many of the jets in India are owned by companies that use them to fly their executives around the country and abroad.
Although demand for new jets has cooled down in recent months, amid a slowdown in the economy, jet-charter providers say users of their services haven’t been affected too much.
“The number of corporations/individuals who are now opting for private air charter for conveniences also aspiration is growing at a fast pace and this is expected to continue,” Sandeep Bhatt, chief executive officer of Religare Voyages, said in an email.
Invision’s co-founder Mr. Pathak says that some individuals who had signed up as members of its jet service following a soft launch in March, haven’t changed their usage patterns. “The segment that we are catering to is not as sensitive” to costs, says Mr. Pathak.
Invision’s four-seater jet costs 150,000 rupees ($3,061) per hour to rent, and is cheaper for members who commit to flying a certain number of hours over a period of time. Religare’s jets cost 200,000 rupees ($4,081) or more per hour, but helicopters are cheaper.
Jet charter companies say that they are not plagued by some of the problemshurting general airlines like Kingfisher Airlines Ltd. and Air India Ltd. While high fuel costs affect everyone, the jet companies say they don’t have equally high overheads and operational costs.
For instance, they only fly when they have full payment for the flight, whereas a commercial airline has to fly its designated routes even if it has only a handful of passengers.
Still, several obstacles remain to the growth of business aviation in India. A major one is poor infrastructure, particularly lack of dedicated airports for the aircrafts. “That is a challenge that somehow does not seem to be getting addressed,” says Kapil Kaul, chief executive for south Asia at the Center for Asia Pacific Aviation.
Also, commercial jet companies have been “unsuccessful in developing new models such as fractional ownership due to lack of investment in required scale, support, software, professional delivery,” according to a 2011 report by Mr. Kaul’s firm. As a result, many large companies have resorted to buying their own jets.
Borrowing money to maintain operations and expand the existing fleet remains a problem and, given the heavy investment required, companies need huge financial backing to survive in this business. Mr. Pathak of Invision, is hoping for some financial backing from angel investors.
But everyone, including Mr. Kaul, is upbeat about the potential for private jets in India. His firm estimates that India will buy another 600 business jets by 2020.
The demand for jet services also seems to be strong, say companies, as more businessmen and wealthy individuals, particularly in smaller Indian cities, are becoming aware of these services. “We think the boom is just beginning,” said Mr. Bhatt of Religare.
Besides business usage, he said there is scope for growth in the leisure travel charters, which makes up just 30% of Religare’s business right now, primarily from foreign tourists in India. “Leisure really has no boundaries – it could be London one day, a flight to a private island in the Caribbean on another day or a charter flight to take the blessings of the Dalai Lama in Dharamshala,” said Mr. Bhatt.
Or Berlin – if you are Bollywood actor Shah Rukh Khan. Last week he tweeted he had to borrow friend Mukesh Ambani’s jet to reach the Berlin Film Festival in time.
Time for your own jet, Mr. Khan?