With economic growth expected to return to pre-crisis levels in the coming fiscal year, a growing number of flourishing companies and high net-worth individuals will probably be more willing to loosen their purse strings and sign up for a business jet

Will Business Aviation ever be the same again? At the end of 2009, Honeywell Aerospace’s annual Business Aviation Outlook forecast a 10-year (2009-2019) tally of 11,000 new business jet deliveries worldwide with a total value of $200 billion (Rs 9,24,535 crore). Not bad, one might say, except that the figures marked a dramatic drop from projections of just a year earlier. In 2008, Honeywell was high on the ‘best ever’ year for business aviation, predicting another record for 2009 and sales of 17,000 new jets worth almost $300 billion (Rs 13,86,805 crore) by the end of 2018. But caution and sobriety seem to have set in. Less than 700 new jets are estimated to be delivered globally this year compared with about 750 to 800 last year and an all-time high of 1,139 in 2008. Besides, the talk is no longer of a two or three-year cyclical downturn followed by renewed growth. There is now a major dampener on expectations over the entire period of the forecast.

Blame it on the recent financial meltdown? Yes and no. Last year’s recession did indeed result in the most devastating slump in business and consumer confidence for decades. Politicians, press and public especially in the US, needed a potent symbol of corporate profligacy and decadence to bash. They found it in business jets, which is why the American business aircraft market, by far the world’s most important, went into freefall. As some firms cancelled or delayed orders, others frantically tried to get rid of their jets. But so great were the negative vibes associated with private jets that many went a-begging despite heavy discounts. Business aviation was more intensely affected than any other sector of the aerospace industry or the economy. And business jets fell from grace.

We Are Different

In India, however, there wasn’t even muted criticism of corporate jets. Perhaps because their numbers are insignificant—around 170 jets all told. This compares with over 11,000 private jets in the US alone. Another reason could be a tolerant mindset which sees nothing wrong in the well-heeled expending their wealth whether on their offspring’s weddings or on private jets. Or it may just be that in India the period of extreme pessimism, which often triggers paroxysms of envy and criticism of corporate ‘excesses’, passed quickly. Layoffs, job losses and slashed salaries seem to be a thing of the past. Pay hikes this year are expected to be of the order of 9 to 18 per cent. And big bonuses are looking to make a comeback. All of which help make business jets seem less over-the-top.

Executive jet sales depend heavily on growth, corporate profits and stock market performance. With all three generally heading North and India’s economic star again in the ascendant, the country seems an attractive market albeit a relatively small one. Embraer believes that Asia’s share of the business jet market is currently between 10 to 12 per cent of the global total. It also anticipates that the number of jets in Asia will grow by nine per cent annually over the next decade to more than double the current number of 600 to 700. It expects India, together with China, to play a major role in this growth. This is borne out by International Air Transport Association (IATA) figures that the Asia-Pacific region is now the world’s biggest passenger market for scheduled traffic. Amidst this growing optimism, can business aviation be far behind?

There are two main reasons why business persons are willing to pay more to travel by corporate jets—utility and quality. It is effective for company executives to fly private because of flexibility, time saved and greater reach. A business aircraft can operate from many more airports than airliners can. In the US, for instance, private jets can land at more than 5,000 airports against just 400 touched by commercial flights. This does not yet apply in India. But with the central government committed to a three to four fold increase in the number of airports within a decade, many smaller airports would probably be connected by business aircraft rather than scheduled services. Some far-sighted state governments have realised the value of activating dormant airports and invited private aircraft to park and operate from there. The returns may be less than from scheduled flights, but the major airlines are also less likely to touch small airports anyway. Then there is the issue of quality. With commercial aviation prone to delays, congestion and irksome security procedures, entrepreneurs would prefer a more satisfying travel experience. If they are entitled to stay in luxury hotels, why grudge them travel in style?

Reality Check

Business jet manufacturers and charter companies have long been predicting good times for the Indian market. They mention poor transport infrastructure, an underdeveloped airline network and the low existing business jet base as key factors favouring explosive business aviation growth. Yet the market has not quite lived up to its promises. Ask Asian start-up BJETS. Just two years ago, the company placed orders for 50 jets and announced ambitious plans to become the region’s first fractional ownership enterprise, operating from Singapore and Mumbai. However, till date it has reportedly taken delivery of only four jets, three of which are based in India. It has delayed most of the remaining deliveries and might even cancel some of them. BJETS now seems to have become a run-of-the-mill charter operator. Though a weak market is ostensibly to blame, it is also possible the company overestimated the demand for fractional ownership. Other stories are told of charter providers facing setbacks as well.