Plane speaking5 min read . Updated: 28 Nov 2008, 11:18 PM IST
The parking area for private jets at Mumbai’s domestic airport is a narrow tarmac off the runway. Mostly unattended by airport staff, each jet has its own maintenance and inflight crew of three or four.
Manfred Baudzus, director, business development, Asia Pacific, Embraer, who’s on board, is an Australian by birth, a pilot for the past 36 years, a Singapore resident and somewhat of an Indophile. In 2007, when he visited Mumbai for the first time since his childhood, the pilot-turned-executive was astonished by the change he saw. Flyovers criss-crossed the suburbs and skyscrapers had changed the city’s skyline. “I was convinced it was the perfect time for Embraer to come to India. India’s progress was in your face," Baudzus says.
We cruise at about 40,000ft above sea level, as most private jets do, and touch down at our destination, Goa, after exactly 35 minutes (it’s usually a 50-minute flight on commercial airlines).
The Legacy 600 is divided into three sections: a formal sitting area with seven adjustable chairs and a table, cabinets on either side and two satellite telephone connections; a resting area with a sofa that turns into a bed and a large reclining chair; and a pantry-cum-storage area, equipped with portable kitchen gadgets and electronic devices.
Although Baudzus is confident his jets will find takers, he quibbles about the lack of infrastructure at metro airports. “If you own a $30 million (around Rs150 crore) aircraft, you should feel important and you should get at least some advantages," he says.
It’s an unrealistic expectation. The demand for private jets has grown phenomenally in the last eight months, but better infrastructure at airports, specifically meant for private jets, is not a priority for the authorities. Flying commercial airlines is still, after all, a nightmare in most Indian cities.
The private/executive jets market in India took off at the end of 2007. In January, the government issued around 100 permits for private jets, and according to the latest aviation industry figures, there are around 800 private jets in India now, priced at anywhere between $15 million and $55 million.
It’s a market driven largely by private operators who rent out jets to companies and individuals. Embraer’s two prominent clients so far are Invision India and Aviators India—both operators of business jet fleets. “We have bought about 20 Phenom jets from Embraer which are suited to Indian conditions and yet have all the luxury and convenience of private jets," says Vinit Phatak, managing director, Invision. Aviators India has bought two Phenoms from Embraer. Embraer has also sold five jets to the Union government, two of which are for the Prime Minister’s Office.
Last year, a few Indian companies acquired jets by Bombardier and Cessna, the two most popular brands of aircraft-makers. In February, the US-based Briley Group picked up a majority stake in BJETS, Asia’s first dedicated fractional and block charter jet operator, and a minority stake was picked up by the Indian Hotels Co. Ltd which owns the Taj group of hotels. They started flying in India in mid-August.
The other leading operator is the Warren Buffett-promoted NetJets, whose Indian partner is Ashish Chordia, CEO, Shreyans. Both these operators run on the fractional aircraft ownership model, which allows individuals and companies to enjoy all the benefits of owning a jet at a fraction of the cost of the whole aircraft ownership and guarantees availability 365 days a year at just a few hours’ notice. “At this stage we are offering only international services to the Indian community. We are strategizing the best way to enter the market. However, the initial response by prospective customers has been encouraging," says Chordia.
Around 150 of the 800 jets have individual owners, most of whom are hesitant to talk about their acquisitions. Some new owners of private jets are G. Mallikarjuna Rao of the Chennai-based infrastructure company GMR Group; the Maran family that owns Sun TV, and the owners of DLF and Bharat Forge. “A private jet is not a toy or a luxury purchase, it makes sound business sense to most buyers," says Kapil Kaul, CEO, Indian subcontinent and Middle East, Centre for Asia Pacific Aviation. He estimates that despite the economic meltdown, there should be at least 500 individually owned jets in India by the end of 2009.
It generally takes at least two years for a private jet to be delivered after the order is placed. A contract is signed with the buyer, who pays a signing amount to the company manufacturing the jet.
Baudzus of Embraer, however, says that he does not want to be naive about the effect of the market slowdown on the sector. “In the last two months, I’ve had very few new enquiries," he says. But his company sold 30 jets in India last year, and has a backlog of approximately another 20 orders. Singapore-based Mark Baier, CEO, BJETS, says he is not worried. “Overall, there has been no difference to us, compared to the financial sector. People who see private jets as an investment that saves them time to look at extra opportunities will continue to buy them," Baier says.
It’s a slightly different scenario in the US. On November 18, three head honchos of the auto industry—Robert Nardelli of Chrysler, Alan Mulally of Ford Motor Co. and Rick Wagoner of General Motors—flew into Washington, DC. for congressional hearings, to ask for bailout money for their respective companies. Not only were they grilled, they were ridiculed. Democrat Gary Ackerman was quoted to have said, “It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."
Earlier in the month, a CNN report indicated a distinct slowdown in companies such as Hawker Beechcraft and Cessna. Hawker Beechcraft was reported to have told its employees that nearly 500 jobs would be cut. But Bombardier was optimistic, and only because their focus, as its spokesperson said, was “more international".
Going by that logic, Baudzus and his fleet may not have much to worry about—for now.