The COVID-19 pandemic has increased concerns over safe flight travel and is pushing people to look for alternatives to crowded airports and boarding planes with almost no social distancing. With hygiene being the top-most priority, the rich are opting for charter flights instead.
This in turn has increased business opportunity for budding private jet companies that lease aircraft. Their clientele includes corporate houses, HNIs, international tourists, Bollywood/production houses, PSUs, and sportspersons.
“For the first time, we saw requests coming from people like never before, including people who weren’t necessarily wealthy. We work on a model wherein we take complete management of an aircraft or take the aircraft on a long-term lease,” said Kanika Tekriwal, CEO and founder of JetSetGo Aviation.
These businesses claim that the demand for their services has suddenly spiked manifold. “If we used to get five to 10 inquiries per month from the super-rich previously, that has now increased to 30. We were anticipating a complete shift in flying patterns of people in the next four to five years, but the pandemic is pushing the super-rich to consider private jet leasing earlier than we expected,” said Ambashankar, director of Chennai-based SBS aviation.
When an aircraft gets wet-leased, there is a temporary transfer of the title for six months (200 hours) or one year (400 hours). During that period, complete management of the plane is taken care of by the jet leasing firm. They provide the crew, including pilots, engineers and flight attendants, and also maintain the aircraft, and arrange insurance, DGCA approvals and other licenses. The salaries of the crew are also paid by the lessor.
“There are only a handful of people who own an aircraft even amongst the superrich. People generally don’t buy aircraft because they have to spend heavily on maintenance and operations. But, when we give it for lease, we take care of everything. The price is also bearable,” Ambashankar added.
Price of leasing
Leasing services start at a minimal rate of ₹3 crore. The price increases, depending on the number of hours and capabilities of the aircraft. For example, in case the lessee wants to lease a basic Cessna Citation model that can fly for around four to five hours for a period of 6 months, it would cost them around ₹3.5 lakhs, whereas a Hawker 900 XP or a Falcon 2000 with better capabilities might cost around ₹12.8 crore a year. But, the leasing rate of the basic model aircraft would cost around ₹180 to ₹200 crore, without maintenance charges. Private jet companies believe this gives them an upper hand to negotiate with their clients.
While the entrepreneurs expect an upward trajectory growth, industry experts acknowledge that the people, however, will fly only when necessary. While the number of inquiries has seen a surge, there is still doubt about how many of them would actually turn into clients.
The government allowed domestic air travel of private jets and charter flights from May 25, while issuing guidelines for operation. This includes specifications that do not allow meals to be served, require passengers to be screened, and download Aarogya Setu app and for the crew to be in full protective suit among others. The operators can decide how much to charge.
“Until recently, the government permitted charters and private jets to operate only to facilitate medical operations. Now, they are allowed to operate with certain restrictions. Businesses are looking for opportunities, but people will purely travel based on necessity. Luxury travel will be avoided. If anybody wants to hire planes for lease, it would mostly be corporates who want their senior executive members to travel safely for meetings. Big industrial houses would already have their aircraft,” said Captain Uday Gelli, president of Rotary Wing Society of India, Western region.
While COVID is expected to change air travel patterns of people with operations slowly resuming, a reality check can be done only when the aviation sector completely opens up.