Business Jets: The need of our times

Back in the 3rd century BC, in the Indian sub-continent, arose an empire that was undoubtedly one of the most prosperous and mighty empires of ancient times. Lorded over by Ashoka of Pataliputra (modern-day Patna), the spread of the empire stretched from Bengal in the East to Afghanistan in the West, from Kashmir in the North to Tamil Nadu in the South. This mighty empire was created on the back of numbers and strategy. Many historians believe that the Ashoka’s army was one of the largest armies of its time, and that was the reason it won so many wars. Yet, one of the most critical components of the army, that won him many battles, was the large battalion of elephants. Indeed, the ruler used his elephants effectively to create havoc and intimidate his opponents. And he had laid down a proper set of guidelines on how to raise and train this battalion. It is estimated at the Ashokan army had as many as 9000 battle-ready elephants, with whose feet the whole empire was created.

Raising so many elephants was a very capital-intensive task, and if there ever were a CFO in Team Ashoka, he or she would have baulked at the very prospect of the same. But when one looks at the overall RoI, the costly elephants and their upkeep makes a lot of sense for Ashoka, quite like how business jets make great sense for corporate tycoons and business houses. In fact, expanding a business empire is not really all that different from how a dominion was created in yore. The principles more or less are the same; it’s only the aspects that change, say from warrior elephants to corporate jets.

In fact, in a curious way, corporate jets are often considered to be a costly and a rather unnecessary acquisition. In a society that looks kindly on billionaires who travel economy-class like many else, corporate jets are largely perceived to be a sort of personal bling, an ostentatious show of wealth. While indeed, quite a few jets are bought for the sake of spectacle, the economic benefits accruing from corporate-jets do make a lot of business sense.

The biggest benefit that a private jet brings with it is in terms of agility and speed. Top management or business decision-makers can now travel to different parts of countries in a single day, continue to work while still in transit and conclude deals while even at 25000 feet. Also, considering how important the time is for a CEO, wasting hours in commercial air travel makes just no sense. With a business jet, the CEO is empowered to expand his business to geographies he had never imagined before. Besides, commercial aviation has limited reach to two and three tier cities in India. Not to forget, companies in mining and oil & gas sectors are highly dependent on business aviation for transport and connect.

The forecast for business aviation is pretty positive. With the new government in place, and a positive economic outlook, the market for corporate jets is all set to expand. According to Bombardier Business Aircraft Market Forecast, the fleet of corporate jets is supposed to grow from 125 in 2013 to 1320 in 2033, at fleet growth equivalent to a CAGR of 13%. The other factor that is fuelling this positive outlook is the growth in the number of billionaires in India. According to Forbes, the numbers are fairly decent -- from 48 billionaire (USD) in 2012 to 56 in 2014. Both factors -- growth of economy and business expansion -- are driving the optimism in the business aviation sector.

Yet, challenges exist and are big enough to 'derail' this growth. The biggest challenges lie on the regulatory and compliance side. The laws and tax-norms are pretty complex when it comes to buying a personal aircraft. There is plenty of paperwork, and running around required to complete one purchase. The DGCA (Directorate General of Civil Aviation), the nodal body for the sector, has laid down stringent norms and processes. The other big factor is infrastructure, with the existing ones over-burdened and new ones taking much time, business aviation is not really able to expand to its full potential.

And if all the paperwork and norms were not difficult enough, there is the added complexity about financing the purchase. Banks or many financial institutions are completely at sea on how to deal with financing the purchase, for instance, unlike a car; they cannot impound an aircraft and sell it at an auction, like they do for other defaulters. Little wonder, there is not only a paucity of lenders for such purchases but also of schemes and options. It is in this domain that GE Capital scores compared to the rest. With a global portfolio of over 2000 aircrafts around the world, GE Capital in one of the leading providers of corporate aircraft financing. Considering its vast know-how of the sector , the company is able to fashion innovative and customisable schemes to fund the aircraft purchase. For instance, you can even have a lease-purchase sort of an agreement to fund the same.

The biggest advantage of partnering with GE Capital is its in-depth understanding of the aviation sector. If you choose a finance partner who does not have adequate understanding of the sector and lacks sufficient experience, it can prove to be unproductive in the long run. By associating with GE Capital, you will get optimal solutions and maximum financing.

In the end, in the fast-paced business environment owning a business jet makes a lot of sense. For instance, it is said that steel tycoon Lakshmi Mittal is able to commute to around 3 countries in a single day in one of his jets, or that Ratan Tata, used to fly his own Dassault Falcon 2000 jet for meetings when he was heading the Tata Group. The growth of corporate aviation is indicative of the growth of economy. Business jets like Bombardier, Dassault, Embraer or even a Boeing, are no more a luxury but a necessity, quite like elephants were in Ashokan army. They can be the difference between business as usual and business on a roll.