MUMBAI: India's big companies are selling their own jets and chartering flights because of rising operational and input costs amid a sluggish economy and a weak rupee.
In the past year, the number of nonscheduled operators in the country has fallen to 125 from 150, with several companies getting rid of their private jets. The slack has been taken up by private jet operators.
"We are currently doing 55 flights a month now, up 20% from a year earlier," said Atiesh Mishra, general manager of Taj Air, the Tata Group's charter unit. Taj Air has an alliance with Deccan Charters Ltd and Business Jets India Pvt for operating business jets in India. Companies are scrapping or delaying plans to buy planes because of the economic environment.
"There are a lot of corporates who have postponed their plans of buying planes and are looking to hire services of private charter operators. That has led to a rise in passengers for us," said Robin Sharma of Reliance Transport Travels.
The rupee weakened about 20% between January and August, increasing foreign exchange costs for Indian companies. That included costs of buying and leasing planes as well as salaries to expatriate staff. The rupee has strengthened since hitting a record low in August. Business plane prices have risen 25% in the past year because of the currency weakness, said Rajeev Wadhwa, chairman and managing director of Baron Luxury and Lifestyle.
Baron sells business jet flights through annual memberships at rates ranging between Rs 25 lakh andRs 2 crore. It has a fleet of nine planes and shares flying hours with other charter operators for 18 more planes in India. Vedanta Resources sold its jets two years back and now charters planes, an executive said.
Mishra said landing, parking and ground-handling charges have increased, adding to expenses. Most charter operators have been passing on such increases as additional charges to customers, while keeping their base rates intact. But that too is set to change.
For instance, Taj Air has been charging Rs 2.85 lakh per hour for its Falcon 2000, but plans to increase this by up to 15% in the next few months. Another factor that discourages companies from having their own jets is the lack of parking space at Mumbai airport. As the business capital of the country, this is where most of business travel originates.
Mumbai currently has about 30 parking slots for business aircraft, the last one allocated in 2006. But only half of them can be used for permanent parking. The companies using the rest of the slots, can only park their planes for 48 hours. Any operator parking a plane for more than 48 hours has to pay a penalty, said a Mumbai International Airport Ltd spokesperson. This ranges from Rs 1,000 to Rs 8,000 an hour.
"So a business jet has to now park in a place like Aurangabad since there are no slots in Mumbai," said Wadhwa. This means an increase in flying time and charges, he said. An executive at Indiabulls, which recently lost its parking slot in Mumbai, said that because of the penalties, the charges at the airport are 10 times what had been agreed upon when the company started flying to the airport. Ahmedabad is therefore becoming the new hub for business aircraft.
"The airport is open 24 hours and has international operations and is preferred by companies as a parking place. The airport currently has about 16 business jets parked in it, from four a year back," said Mishra.
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