Why India Inc is scared to fly in business jets

Business jets and chartered flights have been an unlikely victim of the recent corruption scandals involving India Inc.

Businesses' reluctance to splurge and show off has taken a heavy toll on general aviation, which includes aircraft not flown by the government or private airline companies (called scheduled operators) or the military.

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According to figures from the Airports Authority of India (AAI), the growth of general aviation in terms of movements went into the red in the first quarter of this financial year.

The sector saw a fall of 12.9 per cent in April-June this year, compared to a growth of 36.6 per cent during the same period last year.

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Traffic movements (landing and take-off by planes) during the first quarter of this financial year fell to 63,000 from 72,000 during the same period last year.

The sector saw a decline of 17.7 per cent in April, 15.6 per cent in May and 5.7 per cent in June.

"People who take chartered flights are mainly corporate personalities and politicians.

Both sections have stopped taking chartered flights after the 2G scam, as everyone is under scrutiny by various intelligence organisations," says Pradip Thampi, director, Executive Airways, a Mumbai-based aircraft charter company that rents out planes.

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He says the fare for an eight-seater Mumbai-Delhi-Mumbai chartered flight is Rs 14 lakh (Rs 1.4 million) - a seat cost of around Rs 175,000 - much higher than a return business class ticket between Delhi and Mumbai that costs Rs 18,000.

"No one wants to be seen paying so much for such short trips, which is why people are  avoiding chartered flights," says Thampi.

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Subash Goyal, chairman, Stic, which provides chartered aircraft, feels the scam could be one of the reasons behind the fall in demand.

"The scams in the recent past are one reason, but there are other factors too, such as the slowdown in the economy."

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Some analysts feel the sector will recover after the economy rebounds.

"The fall could be because of the slowdown in the economy and a relatively weak monsoon. I do not think there is a need to press the panic button right now," says Kuljit Singh, partner, Ernst & Young.

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The estimated business potential in general aviation in India is Rs 3,000 crore (Rs 30 billion). It is expected to grow at least 40 per cent annually.

General aviation in India is a niche market, preferred mainly for hassle-free travel and instant availability.

Cargo movement in the domestic sector has also seen a decline in recent months.

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Domestic cargo movement fell 3.8 per cent in May and 8.2 per cent in June. But, international cargo is seeing growth.

"Things will rebound only after September, when the economy is expected to recover," says Mukul Pathak, chairman and managing director, Aryan Cargo Express.

He says international cargo has also seen a decline, which is not reflected in the figures.

"A cargo consignment sent by air from Delhi to Mumbai to be taken to some foreign country through the Mumbai port is domestic air cargo. But, technically, it is international cargo."