Business Aviation - Slow But Steady

Business aviation has long been the most neglected sector of the Indian aviation industry. While some constructive measures have been introduced over the last few years, these are scarcely enough for the sector to flourish.

2009 was a year of reckoning for business aviation. Some markets, especially the largest North American and European ones, saw business jet orders savagely slashed as individual and corporate wealth went up in smoke. Overnight, private jets were branded as wasteful and inefficient—a rather unfair assessment of a simple productivity tool, as those in the industry know. Companies and individuals shamefacedly scrambled to sell their planes but as finance dried up, more and more jets began to chase fewer and fewer parsimonious buyers. Consequently, around mid-2009 practically a third of the global business aircraft fleet was on sale. Even discounts of up to 30 per cent, especially in the light and medium jet categories, seemed insufficient to clinch deals.

Unlike in the West, business aviation in India did not take too hard a hit. But upbeat sales estimates were belied as fewer aircraft were bought. Financial services, real estate, automobiles, petrochemicals, and more—all sectors seemed interested in cutting costs and conserving cash rather than splurging on ‘maybe’ jets. Air charter and fractional ownership enterprises also suffered. And many names on the long list of aspiring business aviation operators realised that discretion was the better part of valour and bided their time. Will this year be better?

Good News, But...

The fortunes of business aviation are generally considered to be closely linked with those of the wider economy. The recent prediction by the Centre for Monitoring Indian Economy that economic growth is likely to return to pre-crisis levels in the next fiscal is, therefore, cause for cheer. GDP growth is expected to jump to 9.2 per cent in 2010-2011 from 6.9 per cent in 2009-2010. Clearly, the country’s expanding economy, demographic dividend, and need for time-saving travel are factors likely to create enormous demand for corporate aviation. However, numerous operational and cultural hurdles remain, and setbacks are only to be expected.

For instance, two years ago BJETS ordered 50 business jets and announced ambitious plans to become the region’s first fractional ownership firm, operating from Singapore and India. But the company probably discovered that fractional ownership is a smaller business than it first thought and its growth plans have stalled. According to industry insiders, perhaps half the air taxi and charter operators in the country have fallen on hard times over the past year or so. The industry seems ripe for a stimulus.