Spreading the pie across India
WORDS / Neelam Mathews
Income trends hold the key to how consumption patterns unfold in India. Here, it’s all about the aspirations of a growing upper-middle class and High Net Worth Individuals – and is a reason why the market for the smaller four- to eight-seater jets and turboprops accessible to millionaires (not billionaires) is also increasing.
India has 7,730 Ultra-High Net Worth individuals. 109 are billionaires with a combined wealth of $925 billion, according to the Wealth-X 2012 study. Meanwhile there are 6,150 Indians worth between $30 million and $100 million, and nearly 900 that are worth between $100 million and $200 million, with a combined net worth of at least $420 billion.
A recent research report with a 10-year forecast released by Hawker Beechcraft Corporation (HBC) reveals India is showing a slow, but sustained growth in business aircraft. There are currently 261 business turbine aircraft registered in India, according to JETNET, LLC, which is approximately 27 percent of Asia’s total.
“We did a quick snapshot over a longer period,” reveals HBC’s Regional Sales Director, India, Todd Hattaway. “We expect business to take 12-18 months to start picking up. It is frustrating as it takes 3-4 times longer here – around nine months – to get [import] clearances.” High import customs duties are also hurting wallets, but despite all the bottlenecks, “this is a market worth fighting for,” Hattaway believes.
As the numbers of first generation, mid-size entrepreneurs increase beyond the metros and into second- and thirdtier cities, smaller jets are being bought as an entry level into Business Aviation by this community. “It is easier (for firsttime entrepreneurs) to put less money in smaller jets on a trial basis to test the waters than it is to place block investment at the first try into a larger jet,” Invision Air managing director Vinit Phatak told BizJet Advisor. “Today, corporate jets are seen increasingly as smart investments by jewellery chains like Kalyan and Joyalukkas." .
“India is a very important market for Embraer Executive Jets and one where we have had the privilege of developing the Entry Level jet segment…” concurs Jose Eduardo Costas, Vice-President Marketing and Sales, Asia Pacific for Embraer Executive Jets.
Retail to Boost Jet Need
The growing awareness of small private jets can be seen in the recent procurement of Hawkers and Phenoms. Invison Air is India’s newest charter operator with an order for six Phenom 100s and six Phenom 300s, and Phatak believes the recent opening of the retail sector to multi-nationals will reap benefits to companies such as his, as sourcing of goods will require teams to fly all over India, particularly to airfields with shorter runways where access for larger aircraft is impossible, but where his smaller Phenoms can land.
Some of the world's biggest supermarket chains, including Walmart, Carfour and Tesco will enter India and are likely to invest around $10billion over the next three to five years in operations such as transportation and storage. Since the rules mandate foreign retailers spend half their investment on building supply-chain infrastructure, and source 30 percent of manufactured goods from local small and medium-sized companies, business can only move upwards.
The precedent has already been set. “Walmart has one of the largest private jet fleets of any company in the US. As the company grows in India, it will need its senior executives to get work done faster,” Phatak observes. Given the poor air connectivity to remote areas within India, a business trip that might take three days to complete around a commercial Airline schedule, can often be completed in a day using a business airplane.
Sameer Gaur, MD & CEO of Jaypee Sports International (part of the $4billion Jaypee Group with interests in real estate, civil engineering, power and hotels) says his King Air 200 turboprop gets him to remote areas very efficiently. “You fill it, shut it, fly it and forget it,” he told BizJet Advisor. (Gaur is also the man behind India's $400 million Formula One Grand Prix and is the owner of the Buddh International Circuit race track on the outskirts of Delhi.)
Lowering the Bar Further?
Slowly but surely, Entry Level jets will be making their presence felt in the subcontinent. Plans for India are currently being finalized by UK-based Ruchir Gupta (of Indian descent) who has launched Speedflight, an owners' club for business jets with an Entry Level Eclipse 500 jet. “I am looking for shareholders or endusers in any configuration really - charter or shared. The main goal is to keep the Eclipse 500 flying,” Gupta explains. His entrepreneurial activities have resulted in the purchase of three-star hotels in Wembley and Farnborough in the UK.
Gupta feels the Eclipse is the ideal fit for the niche India businessman. “The biggest issue is educating the (Indian) customer not familiar with the type.” To date, industrialists in smaller cities have expressed interest, as well as Kapil Dev, a former India cricket captain. “We are also targeting celebrities and politicians.”
Gupta believes in today’s tight economy, a niche will be available to him as some owners consider stepping down from more expensive models. What Gupta likes most about his Entry Level jet is its value. “It has a small cabin, limited range and payload, but it’s cheap to run. With an average trip of 1 to 1.8 hours (most people don’t fly further) who cares about less cabin room?” Indeed, the jet runs to the schedule of its owner just as efficiently as a larger jet would on shorter journeys, but for a lower hourly cost.
Major initiatives are on the way that are expected to boost the smaller jets market – and as they do, the Business Aircraft Operators’ Association (BAOA) is hoping permission will be given by the government to permit air charter companies to align their fares with the scheduled Airlines. “This will give a smooth connection to those heading to remote areas with short runways,” BAOA President, Rohit Kapur concludes. “It will also permit charter companies to advertise their fares and schedules which they are not permitted to do at the moment.”
WORDS / Neelam Mathews
Income trends hold the key to how consumption patterns unfold in India. Here, it’s all about the aspirations of a growing upper-middle class and High Net Worth Individuals – and is a reason why the market for the smaller four- to eight-seater jets and turboprops accessible to millionaires (not billionaires) is also increasing.
India has 7,730 Ultra-High Net Worth individuals. 109 are billionaires with a combined wealth of $925 billion, according to the Wealth-X 2012 study. Meanwhile there are 6,150 Indians worth between $30 million and $100 million, and nearly 900 that are worth between $100 million and $200 million, with a combined net worth of at least $420 billion.
A recent research report with a 10-year forecast released by Hawker Beechcraft Corporation (HBC) reveals India is showing a slow, but sustained growth in business aircraft. There are currently 261 business turbine aircraft registered in India, according to JETNET, LLC, which is approximately 27 percent of Asia’s total.
“We did a quick snapshot over a longer period,” reveals HBC’s Regional Sales Director, India, Todd Hattaway. “We expect business to take 12-18 months to start picking up. It is frustrating as it takes 3-4 times longer here – around nine months – to get [import] clearances.” High import customs duties are also hurting wallets, but despite all the bottlenecks, “this is a market worth fighting for,” Hattaway believes.
As the numbers of first generation, mid-size entrepreneurs increase beyond the metros and into second- and thirdtier cities, smaller jets are being bought as an entry level into Business Aviation by this community. “It is easier (for firsttime entrepreneurs) to put less money in smaller jets on a trial basis to test the waters than it is to place block investment at the first try into a larger jet,” Invision Air managing director Vinit Phatak told BizJet Advisor. “Today, corporate jets are seen increasingly as smart investments by jewellery chains like Kalyan and Joyalukkas." .
“India is a very important market for Embraer Executive Jets and one where we have had the privilege of developing the Entry Level jet segment…” concurs Jose Eduardo Costas, Vice-President Marketing and Sales, Asia Pacific for Embraer Executive Jets.
Retail to Boost Jet Need
The growing awareness of small private jets can be seen in the recent procurement of Hawkers and Phenoms. Invison Air is India’s newest charter operator with an order for six Phenom 100s and six Phenom 300s, and Phatak believes the recent opening of the retail sector to multi-nationals will reap benefits to companies such as his, as sourcing of goods will require teams to fly all over India, particularly to airfields with shorter runways where access for larger aircraft is impossible, but where his smaller Phenoms can land.
Some of the world's biggest supermarket chains, including Walmart, Carfour and Tesco will enter India and are likely to invest around $10billion over the next three to five years in operations such as transportation and storage. Since the rules mandate foreign retailers spend half their investment on building supply-chain infrastructure, and source 30 percent of manufactured goods from local small and medium-sized companies, business can only move upwards.
The precedent has already been set. “Walmart has one of the largest private jet fleets of any company in the US. As the company grows in India, it will need its senior executives to get work done faster,” Phatak observes. Given the poor air connectivity to remote areas within India, a business trip that might take three days to complete around a commercial Airline schedule, can often be completed in a day using a business airplane.
Sameer Gaur, MD & CEO of Jaypee Sports International (part of the $4billion Jaypee Group with interests in real estate, civil engineering, power and hotels) says his King Air 200 turboprop gets him to remote areas very efficiently. “You fill it, shut it, fly it and forget it,” he told BizJet Advisor. (Gaur is also the man behind India's $400 million Formula One Grand Prix and is the owner of the Buddh International Circuit race track on the outskirts of Delhi.)
Lowering the Bar Further?
Slowly but surely, Entry Level jets will be making their presence felt in the subcontinent. Plans for India are currently being finalized by UK-based Ruchir Gupta (of Indian descent) who has launched Speedflight, an owners' club for business jets with an Entry Level Eclipse 500 jet. “I am looking for shareholders or endusers in any configuration really - charter or shared. The main goal is to keep the Eclipse 500 flying,” Gupta explains. His entrepreneurial activities have resulted in the purchase of three-star hotels in Wembley and Farnborough in the UK.
Gupta feels the Eclipse is the ideal fit for the niche India businessman. “The biggest issue is educating the (Indian) customer not familiar with the type.” To date, industrialists in smaller cities have expressed interest, as well as Kapil Dev, a former India cricket captain. “We are also targeting celebrities and politicians.”
Gupta believes in today’s tight economy, a niche will be available to him as some owners consider stepping down from more expensive models. What Gupta likes most about his Entry Level jet is its value. “It has a small cabin, limited range and payload, but it’s cheap to run. With an average trip of 1 to 1.8 hours (most people don’t fly further) who cares about less cabin room?” Indeed, the jet runs to the schedule of its owner just as efficiently as a larger jet would on shorter journeys, but for a lower hourly cost.
Major initiatives are on the way that are expected to boost the smaller jets market – and as they do, the Business Aircraft Operators’ Association (BAOA) is hoping permission will be given by the government to permit air charter companies to align their fares with the scheduled Airlines. “This will give a smooth connection to those heading to remote areas with short runways,” BAOA President, Rohit Kapur concludes. “It will also permit charter companies to advertise their fares and schedules which they are not permitted to do at the moment.”
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