Although the number of corporate jets in the country is still relatively low, the major business aviation manufacturers that currently dominate the global scene, like Bombardier, Cessna, Dassault Aviation, Embraer, Gulfstream and Hawker Beechcraft, are all bullish about the Indian market

Isn’t an executive jet a good-looking, power-packed machine? But beauty and performance come at a price—as any business aircraft owner will tell you. It is a price that many prosperous and up-and-coming Indian entrepreneurs are ready to pay.

According to JP Morgan North American Equity Research’s business jet monthly report for September, global business jet deliveries are expected to remain flat this year at about 549 aircraft. This is a depressing 47 per cent below the peak attained in 2008. But the good news is that sales could rise by 20 per cent to more than 650 next year.

In India, too, the picture is rather rosy. Till a few years ago, only the country’s super-rich could afford to own an aircraft. In 2003, there were just 350 private aircraft of all kinds in the country. That figure has practically doubled, and could easily double again within the next 10 years. Although the number of corporate jets in the country is still relatively low, all the major business aviation manufacturers that currently dominate the global scene, like Bombardier Aerospace, Cessna Aircraft Company, Dassault Aviation, Embraer, Gulfstream Aerospace and Hawker Beechcraft, are bullish about the Indian market. According to the US-based consultancy Firestone Management Group, there were 136 business jets registered in India as on March 15 this year, 95 of which were less than 10 years old. This constitutes the largest business jet fleet in Asia. Hawker Beechcraft was ranked first with 35 private jets (26 per cent of the total). It was followed by Cessna, Bombardier, Dassault and Gulfstream in that order.

Purchase Procedures

Most corporations perceive business aircraft as an invaluable productivity-enhancing tool. However, many governments, including that of India, appear to view private planes through the rich-versus-poor prism and seem to believe that these machines are essentially toys of the wealthy. Government officials see no compelling reason or urgency to simplify import licensing procedures or to lower duties and taxes, or, to promote dedicated business aviation infrastructure. Anyone hoping to acquire a business jet, therefore, should be prepared to encounter hurdles at every stage, not least because a business aircraft represents a sizeable investment. For most individuals or company executives it is still a once-in-a-lifetime decision.

And the costs do add up. Besides the initial purchase price, insurance, fuel, maintenance, airport and navigation fees, catering, crew, and hidden items—all must be factored in before taking the plunge. Not everyone needs to own an aircraft to enjoy the benefits of business aviation. At the most basic level, jet card or block charter arrangements should ideally suit customers who envisage a requirement of 100 hours or less of flying per year. Then there’s fractional jet ownership—similar to the familiar time sharing plans of tourist resorts—which offers mobility, convenience, flexibility and privacy without the high cost of full ownership, and without having to get too involved in maintenance or operational issues. Leasing is an attractive alternative in case of lack of ready cash if annual utilisation is expected to be above 250 hours of flight time, preferably even 300 to 350 hours. It enables the cost to be spread across many years and allows the operator to fly at a relatively economical price. At the end of the lease period, the lessee has the option either to return the aircraft, renew the lease or purchase the plane.

However, becoming the exclusive owner of a sleek and powerful new business jet obviously has its charm. But importing an aircraft into India can take several months. The tedious process includes obtaining approvals and completing import licensing requirements with the Directorate General of Civil Aviation (DGCA), the Reserve Bank of India (RBI) and the Customs Department among other agencies. Private aviation compliances are treated on par with those of scheduled airlines. So acquiring a small personal jet can be as complicated as buying a Boeing B747. Finance is accessible only if prior approval has been obtained from the RBI. When the aircraft does finally fly in, its anxious owner has to contend with hefty customs duty and other taxes, besides high sales tax on aviation fuel. Although non-scheduled operator permit (NSOP) holders are exempt from customs, aircraft imported for private use attract over 25 per cent duty. And since prices of imported aircraft are generally quoted in US dollars, the outlay goes up if the value of the rupee drops against the dollar. There’s anecdotal evidence that a few deals have fallen through due to the time and tension involved in the whole affair.

However, manufacturers like Cessna, responsible for the iconic Citation series, are always ready to assist prospective customers via its finance captive Cessna Finance Company (CFC). Mahindra and Mahindra (M&M) may also use its nonbanking financial arm—Mahindra & Mahindra Financial Services (Mahindra Finance)—to back sales of its aircraft. Mahindra Aerospace is seeking to establish itself as a leading aircraft manufacturer globally like Embraer of Brazil. It plans to build general aviation and business turboprop aircraft of up to 18-seat capacity and sell 25-30 of them per month. The five-seat Mahindra-National Aerospace Laboratories (NAL) C-NM5 turboprop aircraft completed its maiden flight on September 1 and hopes to meet Federal Aviation Regulations (FAR) Part 23 norms in about six months. International type certification is the ultimate goal for the light utility plane, expected to cost around $4,00,000 ( Rs. 1.8 crore).