Corporates seem to be taking wing, literally. Spurred by cost and time benefits and a solid, secular growth in bottomlines during the past year, business houses have bought, are buying or chartering aircraft to conduct their business.
The latest corporate to buy a snazzy flying machine is the Rs 17,000 crore (Rs 170 billion) Essar Group.
Disposing of its old King Air and Hawker jets, Essar has acquired a Gulfstream G5 costing $50 million or roughly Rs 225 crore (Rs 2.25 billion).
According to industry sources, the G5 is among the most modern executive jets any Indian corporate has acquired thus far, capable of transatlantic flights.
Flying high
An Essar official, commenting on the new acquisition said: "With the value of old aircraft also increasing, the new acquisition has been quite cash neutral. We sold the two old machines to buy the G5. The only difference will be in the operating cost."
The group also reconfigured the 30-seater into an 8-seater machine.
Reliance Industries acquired a Bombardier BD-700 GlobalExpress aircraft in November last for about $45 million. Another transatlantic machine, it is used extensively by the Ambanis and top company executives.
This is apart from a Gulfstream IV, a Beechcraft and a Hawker-Siddeley that Reliance already has, apart from two helicopters.
The Aditya V Birla group, which earlier used a Hawker-Siddeley 125 and a Cessna Citation, bought a Gulfstream G100 for about Rs 50 crore (Rs 500 million).
It was recently too that Subroto Roy, chief worker of the Sahara Group, plonked about Rs 220 crore (Rs 2.20 billion) to pick up a Boeing business jet.
The King of Good Times, Vijay Mallya, has a Boeing 727 that is quite a hit in the party circles -- both social and political.
The Tata Group, too, owns a clutch of flying machines through its aviation arm Taj Air, as do other majors of India Inc such as Videocon, Finolex Cables, Larsen & Toubro and Bajaj.
The Jindals are in the process of acquiring a 7-seater Cessna Citation II costing around $10.5 million. The group will charter it out at Rs 115,000 per hour.
Pune-based Cyrus Poonawalla, he of the horses and the Serum Institute, is also going for a Cessna Citation, which, according to sources, will be handed over in the first half of the current fiscal. It will be chartered at Rs 135,000 per hour.
Interestingly, industry observers say more and more corporates are opting for chartering aircraft for faster and easier travel. As a result, the chartering industry grew 70 per cent in 2003-04 year on year.
Taj Air recently acquired two Falcon-2000 from Dassault, the French aerospace firm, which come at a price of around $25 million apiece. It will be used mostly to ferry the Tata top brass.
Taj Air, by the way, is the largest player in the aircraft chartering industry. Apart from the Falcons, it has a Hawker Siddeley-125, two Cessna 90s and one P-12 aircraft.
Sanjay Bahadur, chief executive officer (CEO) of Taj Air, said, "It is a good sign that more and more corporates in India are acquiring aircraft. The buying spree will create employment avenues for pilots and aerospace engineers."
He, however, said of the 350 airfields in the country, only about 125 are operational. "Hopefully, these idle airfields will also be utilised by the ever increasing number of corporate jets."
Finance for buying an aircraft is easy to get too _ at around 8 per cent interest, according to sources.
US major General Electric has a major presence here. It was the first one to offer finance for Indian corporates going for flying machines during second half of 2003 through its $50 billion commercial equipment financing business. The GE CEF, as the business is known, also finances heavy-duty IT purchases.