Business Model Waiting to be Exploited

A business model adopted by Qatar Airways would possibly be a convenient solution of the problems faced by Air Charter companies in India

Issue: 9 / 2018By Air Marshal B.K. Pandey (Retd)Photo(s): By Qatar Airways
High End Business Jets: Gulfstream G650ER Executive Jet of Qatar Airways on the opening day of EBACE 2018

For travel by air in India, whether for business or leisure, one has the option to fly on board a commercial airliner or hire a business aircraft from an Air Charter Company. The hired aircraft could be a business jet, turboprop aircraft or even a rotary wing platform. In all, currently there are 54 Air Charter Companies operating in India. These companies are hiring out a variety of fixed and rotary wing platforms. In the fixed wing regime, at present, there are more than 250 business jets of which around 130 aircraft are owned by the leading business houses and do not operate under the control of Air Charter Companies. The remaining 120 or so are available for chartering by the public. There is a also a possibility for large groups to hire a twin turboprop airliner such as the ATR 72 or the Q400, or for that matter, even a regional jet. However, while there are Air Charter Companies abroad that provide such a facility for group travel, this is not available in India as Air Charter Companies here have not been making any attempt to foray in this domain.

BUSINESS AVIATION IN INDIA

Although the Indian civil aviation industry recovered from the debilitating economic downturn of 2009-10, growth in the business aviation segment has been very slow as there are a number of factors that serve as impediments to its growth. Apart from challenges related to infrastructure, ground handling and somewhat crippling regulatory provisions, the business aviation segment of the industry is afflicted with high cost of maintenance and operations which is further aggravated by extremely low volume of business. As Air Charter Companies have just a few aircraft on their inventory, it is very difficult if not impossible to make their business financially viable. Although predictions about the future of business aviation in India are optimistic, there is certainly the need to explore newer business models to place this segment of the industry on a better footing. One such business model that could be analysed and possibly adopted by the Indian civil aviation industry to mitigate the adversities faced by the business aviation segment, is one that is followed by international carriers Qatar Airways as well as All Nippon Airways or ANA of Japan. Along with their fleets of regular airliners of varying capacity, these international airlines of repute also operate a business aviation wing with high end business jets. This enables the airlines to serve the needs of both categories of air travellers – those who opt to fly on board a commercial airliner and those that prefer to fly on board a business jet.

QATAR EXECUTIVE

Operating since January 1994, Qatar Airways with its headquarters in Doha, is the national carrier of Qatar. With a fleet of more than 200 aircraft on its inventory, the airline operates a hub-and-spoke network linking over 150 international destinations across Africa, Central Asia, Europe, Far East, South Asia, Middle East, North America, South America and Oceania. It was during the Airshow in Paris in the year 2009 that the airline first announced the formation of a subsidiary named as Qatar Executive. This company is meant to operate business jets and this venture was a part of the ongoing robust global growth strategy of Qatar Airways and the airline’s continued commitment to the business travel community of not only the Middle East; but in the rest of the world as well. Based at Hamad International Airport, business jet services by whollyowned business jet fleet offered by Qatar Executive, is available for worldwide charter. As of now, the business jet fleet has the following 11 aircraft on its inventory: Four Global 5000, one Global XRS, three Challenger 605 and three Gulfstream G650ER.

Having an Air Charter Company as a subsidiary of an airline, would significantly enhance the market potential in the business aviation segment as the parent airline will be able provide far better financial support

In less than a decade since its establishment, Qatar Executive has attained a leadership position in air charter services that the company provides to individuals, business community, corporate tycoons and senior functionaries in the government. In May 2015, Qatar Executive made public its plans to purchase up to 30 aircraft from Gulfstream Aerospace Corporation, which includes firm orders and options. This new acquisition would bring the strength of aircraft on the business jet inventory to a level that could match the inventory holding of some airlines in India. The fleet of 30 business jets to be procured by Qatar Executive is planned to be a combination of the G500, the G600 and the flagship G650ER. All these are new, wide-cabin aircraft from Gulfstream. With the financial backing of its parent company Qatar Airways, it would have been easier for Qatar Executive to build up a large fleet of the latest, high-end business jets which in turn would help in making operations by the subsidiary company financially viable as well.

ANA BUSINESS JET COMPANY

The other international carrier with business model that is similar to that of Qatar Airways, is ANA of Japan. Founded in 1952 with just two helicopters, today, ANA is the largest airline in the country on the basis of fleet size, revenue and number of passengers carried. It has 260 commercial aircraft on its inventory and provides connectivity to 85 destinations and carries about 52 million passengers per year. In October 1999, the airline became a member of Star Alliance. ANA controls as many as 64 subsidiaries and as recently as on April 27 this year, the Japanese carrier announced the launch of a new subsidiary named as ANA Business Jet Company Limited, a joint venture with Sojitz Corporation, to offer charter flights by business jets.

On March 28 this year, ANA and Honda Aircraft Company had announced the signing of a Memorandum of Understanding (MoU) for a strategic partnership to support the expansion of the business jet market around the world with the help of the HondaJet, a technologically advanced business jet from Honda Aircraft Company of Japan. ANA will introduce current business jet users and its commercial flight customers to the HondaJet by maximising the utilisation of the aircraft in its charter and feeder flights connecting them to the existing broad network at major travel hubs in North America and Europe. Honda Aircraft will support working with global charter operators to provide exceptional coverage for ANA’s customers and establishing a framework for ground support functions at a variety of ANA’s transit locations.

The HondaJet is the fastest, highest-flying, quietest, and most fuel-efficient business jet in its class. This platform incorporates several technological innovations in aviation design, including the unique Over-The-Wing Engine Mount (OTWEM) configuration that dramatically improves performance and fuel efficiency by reducing aerodynamic drag. The aircraft is equipped with the most sophisticated glass cockpit available in any light business jet, a Honda-customised Garmin G3000. This is the first commercial aircraft designed by Honda and lives up to the company’s reputation for superior performance, efficiency, quality and value.

BUSINESS MODEL FOR INDIAN CIVIL AVIATION INDUSTRY

A business model similar to the one adopted by the two international carriers that has been described above, would possibly be a convenient solution of the problems faced by Air Charter Companies in India. Having an Air Charter Company as a subsidiary of an airline, would significantly enhance the market potential in the business aviation segment as the parent airline will be able provide far better financial support. With much higher level of resources, the parent airline will be able to make much larger investments, have larger fleets, provide easier and more efficient marketing, will have access to wider clientele, can provide better maintenance support, encounter fewer problems related to infrastructure and will be able to provide easier and better ground handling for the business jets. The management of the parent airline will also be in far better position to cope with regulatory onslaughts. Business aviation will no longer have to fend for itself and be engaged in a perpetual struggle against the wide range of adversities that currently plague this segment of the industry.