It is not just bikes and cars that are bought through loans in India, even aircraft are!
With the high net worth individual (HNIs) base growing rapidly in the country, banking institutions and finance corporations are now intensifying their lending operations in the field of aviation.
Knocking on the doors of the opulent class that aspires to own small jets are the big financiers who are rolling out attractive loan options in the general aviation category (in which aircraft are operated for purposes other than commercial passenger flight or military use).
Getting more aggressive on the Indian turf is the US-based Cessna Finance Corporation, a general aviation financing company that claims to have provided over $16 billion for 182,000 aircraft across the world.
"In today's global general aviation market, India is the most happening place," CFC director (international finance-Asia Pacific) Sameer A Rehman told Business Standard while emphasising on the fact that the country has the highest number of billionaires and millionaires in Asia.
CFC, which is part of the $13.2 billion Textron company, has drawn up a route map to push smaller aircraft -- especially the Cessna line of small and mid-size jets -- into the Indian market. Of the 22 Cessna Citation jets that are currently operating in India, CFC has financed nine aircraft to the tune of $52 million in the last two years.
Said Rehman: "Unlike most Indian banks that do not finance up to 75 per cent of the aircraft's purchase price, we give up to 85-90 per cent.
We understand why customers fly and the need for it, so we don't question them." CFC has various repayment options with regard to the time horizon. "We give loans up to a period of 20 years," Rehman said while declining to give details on the rate of interest. "Interest rate is product and customer specific, it depends on the net-worthiness of the individual," he added.
CFC's ability to convince the HNI segment is expected to leverage Cessna's sales in the country. While Cessna light jets are priced between $2.8 million and $9.5 million, those in the mid-size category cost $12-22 million.
These aircraft can fly a range of 1,100-1,750 nautical miles and are ideally suited for domestic travel. Joining Rehman, Cessna Aircraft Company's regional sales director Michael McGreevy said eight aircraft would be delivered to India by the end of the year and the company was looking at selling 10-15 Citation jets every year in the country in future.
Not just Cessna, several other aircraft manufacturers like Embraer, Dassault, Gulfstream, Bombardier and Raytheon are chalking out strategies related to financing in order to scale up business in the country, aviation industry experts maintained.
"Competition in the country's business jet market will only heighten in the coming years," predicted former Air Marshal B K Pandey, who is keenly tracking developments in the aviation sector. The business aviation aircraft market which includes corporate aviation, air charters, fractional ownership companies and private ownership by HNIs has increased from 50 in 2003 to 200 in 2007, he said.
The aircraft manufacturers have been telling potential customers that it makes 'sense' to own or charter a smaller aircraft instead of wasting hours at the airport trying to catch a commercial flight.
