Private charter travel was a concept very sparingly used in India till a few decades ago. Most of it was spoken of in connection with the super rich of the country like the Tatas, Birlas and a few others, some of whom have their own private jets. Or one saw the Indian film industry use small planes and helicopters either as part of the scene or to transport film crew to distant locales. And then there is the breed of politicians who have used charter service not just for electioneering but also for routine visits to their constituencies. Over the years, the sector opened up to a broader section of Indian demographics—companies, high net-worth individuals and others started seeing the benefits of charter travel, either for work,for leisure or for pilgrimage.

The growth of the private jet market in India has been closely linked to the charter business. The private jet market has started showing signs of slow recovery after the major economic debacle in 2008-10. And now with India becoming a manufacturing hub and increasing economic momentum, the demand for private jets has also been witnessing an upward trend, though not commensurate with the potential. One of the drivers for the upward trend has been the growing number of high net-worth individuals who value time and privacy while travelling. According to a Forbes report, there are over 45 billionaires in India and a healthy number of millionaires. India’s ever-growing middle class has been estimated to be somewhere around 250 million and their aspirations are always rising.

New Growth Centres

Another factor that is generating interest in aviation is the transformation of Tier-II and Tier-III cities which are expanding exponentially. It is not just the mega cities such as Delhi, Chennai, Mumbai and Bengaluru that are attracting investments, the Tier-II and Tier-III cities are coming on the radar, reflecting India’s international business interests expanding beyond the metropolis. Today, customers looking for chartered services come from different fields and with varying requirements. It could be an iron ore mining baron, an executive of an oil company, diamond traders, politicians, film and media companies, event management companies or medical evacuation who have been requisitioning services of air charter companies.

Today, the world over, there is increased awareness regarding value of time and also the compulsion to keep up with the fast pace of life. Indian executives are no exception. The growing demand for connectivity to smaller cities and remote areas is also fuelling the growth of charter operators. The choice of customers with regard to the aircraft is varied, giving rise to different categories of acquisitions by air charter companies, depending on their business model. According to media reports, the highest charter demand is for Cessna Citation CJ2 aircraft followed by jets such as the Citation XL, Hawker 800, King Air B200; Gulfstream G200; Phenom 100, Phenom 300; Falcon, etc, which have been extensively used by tourists and executive air travel requirement. Large cabin long range jets like Gulfstream G550 and Dassault Falcon 2000 LX have been favoured by multinational corporations for international travel.

All this translates into a rosy picture for the private operators. Many players are entering the market. The number of non-scheduled operators, many of them charter, is 126 as of September 1, 2015. There are a total of 356 aircraft including fixed-and rotary-wing and also hot air balloons in the list of non-scheduled operator’s permits (NSOPs) of the Directorate General of Civil Aviation (DGCA).

Hurdles to Cross

All this data looks very promising, but not without hurdles. Infrastructure issues like airports not having separate terminals for charters except Delhi and Mumbai continue to bog down the sector. Issues of availability of skilled manpower especially first pilots or commanders and highly volatility in fuel prices have had negative impact on charter operations. Then there is bureaucratic red tape as well as high airport charges that are not commensurate with the business. The sector has not catapulted to the next level as undue delays in aircraft acquisition have stymied the growth to a certain extent. For instance, charter firms are finding it difficult to get hangar space and parking lots with privately operated airports, such as the ones in Mumbai and Delhi that give preference to scheduled airline operators that pay more. Unlike in other nations, India does not have dedicated landing space and repair units for small aircraft operators. Countries like Singapore and Indonesia, the US, UK and France have satellite airports catering to small aircraft operators.

There is no dedicated facility of heliports for helicopters. Therefore, all are operating out of Delhi airport. Business jets have to wait till civil airplanes land or takeoff. Helicopters have to wait on the ground for at least 30 to 40 minutes against ten minutes at an airport dedicated for rotary-wing operations.

High Import Duties

Aircraft that fall in the private category including charter operators, have to pay import duties adding up to 19.6 per cent, including a 2.5 per cent basic customs duty. In comparison, airline operators only pay a customs duty of 2.5 per cent and are exempted from duty components like a countervailing duty and a special additional duty imposed on private airplane operators.

There have been several instances of charter companies running from pillar to post to get the NSOP from DGCA. And the DGCAs Air Operator Certificate Manual, a 267-page rulebook also called CAP 3100, lays down 36 checklists for each operator. Each lists additional compliance tasks and resultant checks. CAP 3100 has translated into long delays in getting permits and huge losses for both, the new entrants and the existing players. The DGCA introduced CAP 3100 to comply with a safety audit by the International Civil Aviation Organisation (ICAO). According to an NSOP aspirant, CAP3100 has also led to a massive increase in operating costs. It requires an NSOP to create 11 compulsory posts. Hiring of this scale makes operations unaffordable for a small operator with one or two aircraft.

However. the government is inclined to solve problems faced by charter operators. The DGCA has amended its proposal to bar jet operators from commercial flying if they do not have a three aircraft fleet. It has come up with a new rule reducing the minimum requirement of planes to one. This has also been done to increase air connectivity.

Chetan Khurana, Charter Sales Manager at Chapman Freeborn India, believes that charter aviation has a bright future in India provided the government pitches in and takes serious steps to safeguard its future growth. The operators should be allowed high rate of utilisation of available fleet which would reduce costs. The government should take decisive steps to improve infrastructure, nurture healthy competition, rationalise taxes and airport charges and adopt such other liberal policies to boost the growth of this sector.

Taj Air, the air charter company owned by the Tata Group, wants to expand its operations and add one more aircraft to its fleet of three, but has been forced to do a rethink. “The present aviation scenario is restricting growth of our charter business,” Atiesh Mishra, Director of Operations, Taj Air, has been quoted in the media. “In fact, we want to ramp up our operations in business aviation. But thanks to infrastructure constraints and high taxation, many corporate houses are limiting their operations. There is no space to expand aircraft fleet in Mumbai airport. Airports at Ahmedabad and Delhi have similar stories.”

Private Jets Up for Sale

At least 15 to 20 planes owned by business houses, charter services and individuals are up for sale, as the high cost of operations and lack of adequate infrastructure make the general aviation sector a tough market to crack. Apart from charter operators, some companies that own private jets are also choosing to give them up for a variety of reasons. “I know that several companies are selling their planes. These companies are keeping the sale process confidential as it is embarrassing for them,” Bharat Malkani, Chairman of Max Aerospace and Aviation Ltd, told the media.

Despite all these hurdles, Bombardier in its forecast has anticipated that the private jet market will double in size in the next five years, stating that India’s fleet will increase from just 125 private jets in 2012 to 1,415 in 2032.