As of December 2013, in the books of the Directorate General of Civil Aviation (DGCA) there are 365 registered aircraft in the general aviation segment in India. Of these, 185 are helicopters and about 10 hot air balloons. Thus in effect, there are about 170 business aircraft operating in India. However, forecasts by different agencies all promise of a booming business aviation industry in the years to come. Centre for Asia Pacific Aviation (CAPA) India has pegged sales of new business jets, helicopters, turboprops and piston engines of up to $12 billion over the next decade. As much as 75 per cent of the value of these sales is expected to come from business aircraft. Since 2005, India’s business jet fleet has grown from a meagre 26 to 170 and is expected to soar further. The current general aviation industry in India is valued at $220 million and is expected to be worth $320 million by 2017.

With India Inc expanding its footprints across the globe and the rising number of billionaires, the business jet market of the country is set to nearly double in the next five years. India currently has 55 billionaires with approximately $190 billion worth of assets. A high portion of billionaires are business jet owners worldwide and the same trend continues in India. A March 2013 report from Forbes estimated a record number of billionaires at 1,426 worldwide, a 16 per cent increase over Forbes’ 2012 estimate.

Although the economic growth rate of India has slowed down to under five per cent, there are signs that it will gain momentum after the general elections in April-May 2014. One forecast is that in the next 20 years, GDP in India is forecast to grow at an average of 6.8 per cent per year. The belief is that, in the background of several scams, the governments in future will tread cautiously and also keep the development agenda in mind, thus coming out with policies that will spur economic growth. There is emphasis on transparency and good governance which is expected to have a positive impact on the economy.

Global consultancy firm PricewaterhouseCoopers (PwC) in a report has indicated that one of the drivers for general aviation, more so business aviation, would be the need to connect the metros to Tier-II and Tier-III cities where a number of industries are coming up, taking benefits of setting up operations in backward regions. And multimodal transportation would be key to the growth of these cities.

The domestic general aviation market is on the threshold of catapulting itself into the global arena. It is expected to grow at ten per cent per annum to cross $4.5 billion by financial year 2017. It is estimated that in the same time frame, around 120 business jets, 150 small aircraft and 180 helicopters will be added to the existing fleet. India has the second largest business jet market in the Asia-Pacific region after China which reportedly has a fleet of over 220. Reports indicate that the fleet per population of 100 million is expected to grow from 13 to 119 over the next two decades. The country is due to take delivery of 1,340 business aircraft in the next 20 years, a compounded annual growth rate of about 13 per cent.

At present the domestic general aviation market is small and underdeveloped compared to its global peers, with a meagre 15 per cent of the total aircraft movement. Compared to the United States, which has the largest number of general aviation planes at around 2,55,000 operating from across 5,110 airports, India has around 150 active airports, though of late, there are efforts to ‘connect’ and ‘upgrade’ them. “However, India is an emerging market for private jets with the rising economic growth, expanding business interests and increasing number of billionaires,” the report says.

On-Demand Air Travel

While the large corporate houses and other ultra-high networth individuals are getting hooked on to air travel by privately-owned jets, there is a growing trend of on-demand air travel by certain class of people who depend on charter operators. On-demand air travel operators extend the benefits of business jet travel to users who would otherwise find acquiring an aircraft cost prohibitive. This market consists of air charter operators and fractional ownership, though the latter concept has not caught on in India.

Hurdles Galore

Due to the various regulatory issues and high taxation, the growth of business aviation is stunted in India. The bureaucracy still considers business aviation a luxury and not a business tool for executives and entrepreneurs who value time. A big stumbling block is space at airports. Almost all the airport development is centred around passenger travel with little interest given to air cargo, general aviation and maintenance, repair and overhaul (MRO), and all of them need space which is generally not factored in when airport development is planned or even if it is, the space allocated is ‘token’. General aviation suffers from lack of parking and hangar space. There have been suggestions that disused or low-traffic secondary airports should be allocated to general aviation.

Aircraft Makers Expand Presence

Quoting report of a working group on civil aviation, PwC states that over $4 billion investment is expected to be made in the general aviation during the Twelfth Five Year Plan. In anticipation of the growing opportunities in the general aviation segment, aircraft-makers like Cessna, Gulfstream, Beechcraft, Embraer Executive and Bombardier are either setting up offices in the country or expanding their existing businesses.

Beechcraft

Beechcraft is leading the market in business aviation in India. About 55 per cent of India’s airstrips are too short or unimproved for larger business jets to land. However, smaller aircraft can operate out of these and it is here the King Air opens up significantly more destinations across India than many other business aircraft. “We believe there is great potential in the Indian business aviation market and that we will see the same scenario in India as in other countries – that growth in international trade and further development of trading partners will lead to an increase in demand for business aviation. We accept that there are some hurdles which need to be overcome to make operations more streamlined in India, but we are encouraged by some of the discussions that are taking place in this area,” states Richard Emery, President, Beechcraft, Asia-Pacific.

Bombardier for Review of High Taxes

High taxation and high cost of aviation fuel have been adding to the problems of the aviation industry. Torbjorn Karisson, Bombardier’s Vice President for Commercial Aircraft Sales in Asia- Pacific, has said that India needs to review the tax structure to make it business viable for small airlines and operators. “India has the highest fuel cost and taxes in the world and if not it is among the top two or three” which hits the profitability of smaller airlines, said Karisson.

“What we are seeing in India is that people are valuing time more. This is also a general trend in Asia,” Karisson mentions and is optimistic of Bombardier’s prospects in India, saying it would aim to capture a significant share of the 600 small aircraft required by the country over the next 20 years, especially catering to the smaller towns. Bombardier has over 40 aircraft and business jets operating in India.

Dassualt Eyeing Long-Term Prospects

Dassault Falcon is also excited about the opportunities here in India. Private investment in the country’s aviation infrastructure and growing support by the Indian authorities are making this dynamic market even more attractive. About 20 Falcons are currently operating from airports in Delhi, Mumbai, Bengaluru, Chennai, Pune and Hyderabad. Several additional aircraft are on order for delivery to Indian customers over the next two years. Almost half of the new aircraft orders are for Dassault’s flagship Falcon 7X, the first business jet certified with a fully-digital flight control system. “We remain encouraged by the potential for long-term growth in business aviation in India,” states John Rosanvallon, President and CEO of Dassault Falcon.

“Business jets are now seen in the region as a powerful tool to enable quick and convenient access to customers within the country and worldwide. The dramatic growth of the economy and the experience of travelling on commercial airlines have all contributed to the expansion of the market over the last few years.” The performance of the Falcon fleet is especially valued in the Indian subcontinent, where short airfields, elevated runways and high temperatures are common. To support the growing Falcon fleet, Dassault has opened spares distribution centres in Chennai and Mumbai, complementing regional facilities in Dubai and Singapore and installed a technical field team in Mumbai. Last year it reinforced its Delhi office and plans for a further expansion are in the works.

Gulfstream Expanding Business

In the last five years, Savannah-based Gulfstream has more than tripled its in-service fleet, from 74 aircraft to more than 230 in the Asia-Pacific region. More than a third of those are located in an area that includes Singapore, Malaysia, Indonesia, Thailand, India, Pakistan, Australia and New Zealand, providing a robust base for additional growth. The Gulfstream fleet in India has grown from five aircraft in 2001 to over 20 now.

Gulfstream last year signed an exclusive spare parts consignment agreement with aviation services provider Air Works India Engineering Pvt. Ltd. Under the agreement, Gulfstream positions frequently needed aircraft replacement parts at Air Works’ warehouse in Bengaluru, while Air Works arranges for parts warehousing, customs clearance and delivery to customers.

The OEMs are here for the long haul and intend to grow as the business aviation market matures here.