Why India has been a complete let-down for business aviation

A A380-800 aircraft operated by Kingfisher Airlines.

Problems that commercial aircraft financiers have had de-registering aircraft operated by Kingfisher are deterring business jet lenders from financing Indian aircraft.

Based on the slow growth of its business jet fleet, the surprisingly wealthy India could be considered the market’s biggest underachiever.

The most positive change to happen to the business jet market over the last five years has been the growing internationalisation of the industry. It has also led to a trend in people hyping new markets. This happened with China in 2010 and – to a certain extent – with Africa now (as well as every Dubai Air Show, like we’re seeing this week). But there is a tendency to forget about countries that have underperformed. The worst of these is without doubt India.

India should be a big buyer of business jets. Although its economy has slowed down (albeit to 5 per cent last fiscal year), India is a large country with major international companies; it is the 10th largest importer and the 19th largest exporter in the world. In its latest report, Wealth-X says India has 7,850 ultra-high net worth individuals and 103 billionaires, which puts it in sixth place in the billionaire league table, just behind Russia and ahead of Hong Kong, France, Saudi Arabia and Switzerland – all of which have large business jet fleets.

India’s billionaires

The first Wealth-X and UBS Billionaire Census shows there are 103 billionaires in India.

The first Wealth-X and UBS Billionaire Census shows there are 103 billionaires in India.

India’s business jet fleet does not reflect the country’s wealth. According to local experts, at the end of 2010, the Indian business jet fleet comprised of around 150 aircraft. Now there are less than 120. In 2009 and 2010, the market was seeing around 50-80 new jets and turboprops enter the market each year. This have pretty much fallen to zero.

In 2013, Bombardier lowered its 20 year forecast for India for last year, cutting it by 20 per cent to 1,070 business jets. The aircraft manufacturer estimates that China will take more than twice as many business jets.

Bombardier forecast (business jet deliveries)

10 year forecast
10 year forecast
10 year forecast
Change in forecast2011:
20 year forecast
2012: 20 year forecast2013:
20 year forecast
Change in forecast
Greater China96010001000+40236024202420+60
Other Asia370370360-10975985980+5

Source: Bombardier

There are lots of reasons why India is not growing. Airports are still congested – there is very little space to park a jet at Mumbai, for example, and plans to privatise airports are moving at a glacial pace – and because of issues with de-registering both business jets and commercial aircraft, finance is not readily available for aircraft that have been registered in India.

But the main reason people are not buying aircraft is political. Potential buyers – both individuals and corporates – in India say that the political environment is off-putting. They believe they are likely to face much greater tax scrutiny if they own a jet.

India is changing. Between 2000 and 2012, its GDP quadrupled. Although millions of its 1.2 billion citizens live in poverty, it has a rapidly growing middle class. Two weeks ago the country successfully launched a Mars Orbiter.

The country may get a more business friendly government after elections next year but no one expects things to change quickly. India will no doubt become a major business jet market but if you want to be part of it you need to have a lot of patience.