Firms fly to chartered airline business

Sometime in the second half of this year, Vijay Mallya-controlled Kingfisher Airlines will start operating chartered flights with two helicopters in and around Mumbai.

 

Later, it will also press into service a handful of very light jets.

 

But the skies could be chock-a-block with chartered flights by the time it begins operations. The business of chartered aircraft has caught the fancy of not just Indian carriers but other well-heeled business groups as well.

 

Big names in the fray include BJets, GMR, Videocon, Reliance Industries, Invision and SpiceJet.

 

According to aviation experts, there are clear signals that the market for chartered aircraft is expanding rapidly. And everybody wants to move in quickly to get the first-mover's advantage.

 

The market for general aviation is estimated at Rs 320 crore and is projected to grow 25 per cent a year over the next three years.

 

The growth in the market, experts said, will be driven by very light jets which cost about half the private jets.

 

To get a march over its rivals, Kingfisher Airlines last year bought 50 per cent in US-based Epic Aviation, a maker of very light jets, for $120 million. This

might help the airline get priority for aircraft delivery.

 

Business jet-maker Hawker Beechcraft has rated India one of the three fastest growing markets in the world for chartered aircraft.

 

According to industry estimates, India already has 120 aircraft doing chartered flights. The Centre for Asia Pacific Aviation estimates that the number will go up to 500 by 2020.

 

But is the market big enough for all to make money? Aviation experts said that an aircraft can cost anywhere between $15 million and $50 million and that it needs to fly 60 to 80 hours a month to break even.

 

"As private air travel is now spreading even to small and medium enterprises, the demand for charters is slated to rise," said Ashok Rai, director of charter operator Club One Air.

 

Charters also offer some tax relief that commercial scheduled aviation in India does not.

 

"When you buy an aircraft with a non-scheduled operator's permit, you have to pay 30 per cent less tax than when you buy it for scheduled operations," said Nigel Harwood, CEO of InterGlobe General Aviation and former CEO of Kingfisher Airlines.

 

For instance, a non-scheduled operator does not have to pay service tax unless it is plying international operations.