Indian man standing on the steps of a jet

India's Fast Growing Aviation Market Spurs Private Jet Startup Boom

October 2016

A A A

India’s domestic aviation sector became the world’s fastest growing aviation market last year by growing at a rate of over 20.3 %. This sector is the ninth largest in the world and, according to a passenger forecast issued by The International Air Transport Association (IATA), it is stated to become the third largest aviation market by displacing the one in UK by the year 2026. The forecast predicts that the Asia-Pacific region will be a source of more than half the new passengers over the next 20 years.

As part of this sector’s growth story, the private jet market in India is also experiencing a revival in fortunes. After the economic downturn of 2009-10 this comeback, however, is gradual as there have been constraints that make India a tough market to survive for the private jets’ owners. Infrastructural challenges and high cost of operations associated with owning an aircraft add to the woes of the owners. When you own a plane, there are fixed costs on the aircraft, pilot, maintenance and other miscellaneous aspects. Unless you clock around 800 to 900 hours of flying time a year – 90 hours a month – owning a jet is not practical. The other challenging issue in India is in the form of its regulatory policies. You can either own the jet under private ownership or you can include it in the company books by taking a non-scheduled operators permit. But under a non-scheduled operators permit, there is a minimum number of aircraft that you have to own, which means you need to buy more planes. Also in India high fuel costs, rising airport charges and the duty structure for importing planes from abroad are a bit of a downer for people looking to acquire planes.

Atiesh Mishra, director of operations at TAJ Air says, “The present aviation scenario is restricting growth of our charter business… There is no space to expand the aircraft fleet in Mumbai airport. Airports at Ahmedabad and Delhi have similar stories”.

However sensing an opportunity in this industry, a slew of startups such as BookMyCharters, JetSetGo and JetSmart have taken flight by offering more choices in the private jet market. These startups are registering demands from not only major Tier-I cities like Delhi, Chennai and Hyderabad, but also smaller Tier-II and Tier-III cities such as Kadapa (Andhra Pradesh), Belagavi (Karnataka) and Tiruchirappalli (Tamil Nadu) to name a few. Sachit Wadhwa, co-founder of BookMyCharters says, “Today, the charter market is only at seven locations, including the four metros. The idea is to take it to the next level, where people beyond metros are also looking at this application.”

Out of the three startups mentioned above, BookMyCharters enables instant bookings. On the other hand, customers of JetSetGo can view aircraft types and get price estimates of the flights it aggregates. JetSmart aggregates planes, but bookings can only be made on flights returning empty. These private jet charter firms are similar to that of online travel aggregators such as MakeMyTrip and Yatra that allow users to compare prices and schedules before booking tickets. Users can also select aircraft types and add amenities. One of the impacts of these startups has been on the availability of greater number of charter planes. BookMyCharters lists 40 aircrafts on 22,000 routes at 149 locations in India. A recent search for a Mumbai-Delhi flight on JetSetGo threw up 90 planes of varied sizes and price range.

JetSetGo gives individuals access to 75 private jets and helicopters in India with the ease of booking the flight online. An updated version of its mobile app is also being designed to meet the demands of affluent customers. “If you didn’t own a private jet, you ended up calling 10 operators, 30 brokers and everyone was misleading you,” says Kanika Tekriwal, founder of JetSetGo. For India’s moneyed, chartering a private jet is now a breeze compared to a few years ago when the market was fragmented, opaque in its dealings and dominated by brokers and middlemen. Taking advantage of private jets that return without passengers, JetSetGo sells tickets at highly discounted fares. If one had to charter the same aircraft from Kolkata to New Delhi, it would cost double the amount. In some instances, the discount could be as high as 80 percent.

These startups offer fares that are significantly cheaper than those quoted by brokers. Those who can afford private planes earlier relied on brokers who typically represented three to four private plane operators, most of whom don’t own more than one or two aircrafts. Negotiations among operators, brokers and customers on price and availability would eventually drag on for more than a few days.

Other than the type of services, one can also differentiate amongst these startups based on models of aircrafts. For instance the fleet of aircraft that BookMyCharters offers ranges from the small Pilatus PC 1247, with a single turboprop engine to the Dassault Falcon 2000 twin-engine business jet. Delhi-based JetSetGo has a program called JetSteals that provides travelers seats on private jets for domestic trips, with prices ranging from $69 to $674. According to this deal, the price for individual seats on a lower range private jet model like a Beechcraft 200 would be $69, mid range private jets like the Hawker would be approximately $300 and for the higher range models like the Falcon or the Challenger, the price range could go up to $674. Typically, private jets that most Indian startups use – Gulfstream, Bombardier Global Express or Dassault Falcon – can only do six to seven-hour journeys. Globally, the challenger series from Bombardier and Dassault Falcons dominate the skies for short-haul flights, while Gulfstream rules the long range.

Operating as uber of the skies is not a task for the faint hearted, as most of these startups connect owners of private jets to potential customers via an online platform – they do get impacted by decisions of corporate houses to purchase a certain type of aircraft. More companies now dream of owning aircrafts and partly helping them offset the cost is the possibility of outsourcing their jets. This is a departure from the trend of private jets in India being owned and operated by big business houses or by a handful of dedicated air charter companies. In terms of ownership, the most popular private jets currently in India are the Cessna Citation CJ2 and the Embraer Phenom 100 – primarily due to their low cost of ownership and more economical operating costs. The highest charter demand is for CJ2 aircraft, followed by midsize private jet types like the Citation XL and Hawker 800 which are regularly used for tourist and executive air travel requirements. Large-cabin, long-range jets like the Gulfstream G550 and Dassault Falcon 2000LX also find favor with the top brass of multinational corporations with international travel requirements.

 

Source: Netz Capital

Source: Netz Capital

The growth in popularity in the private jet market is testimony to India’s growth — the fastest among major economies — and increased corporate activity, which has directly led to a spurt in corporate travel. As getting a flight ticket is proving to be no longer a hassle for last-minute travelers with busy schedules. A private jet gives businesspersons the comfort and the space to work and unwind, and also helps them get in and out of airports quicker, saving them the long wait to board a commercial flight. These efficiencies, especially the time saved, helps in increasing their productivity.

With the private jet industry now on the cusp of a turnaround, luxury experiences are gaining currency but the majority of chartered flights continue to be engaged for business needs. This industry is witnessing a growth trajectory that is restricted by the purpose the chartered jets serve. Most of the people chartering aircrafts are travelling to cities that are not well connected by commercial airlines; while about 10 to 15% of charter flights in the country are devoted to pure luxury experiences. It’s not just pure luxury but rather practical luxury that is still attracting people to invest in jets.

However overcoming this constraint in future it is anticipated that the private jet market will double in size in the next five years, and in a recent business aircraft forecast, Bombardier estimated that India’s fleet will increase from just 125 private jets in 2012 to 1,415 in 2032.

 

This article was written by Karan Kashyap from Forbes and was legally licensed through the NewsCred publisher network.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may be used as a generic term to reference the corporation as a whole and/or its various subsidiaries generally.  This material does not constitute a recommendation by BNY Mellon of any kind.  The information herein is not intended to provide tax, legal, investment, accounting, financial or other professional advice on any matter, and should not be used or relied upon as such.  The views expressed within this material are those of the contributors and not necessarily those of BNY Mellon.  BNY Mellon has not independently verified the information contained in this material and makes no representation as to the accuracy, completeness, timeliness, merchantability or fitness for a specific purpose of the information provided in this material.  BNY Mellon assumes no direct or consequential liability for any errors in or reliance upon this material.