Busi­ness Model Wait­ing to be Ex­ploited

A busi­ness model adopted by Qatar Air­ways would pos­si­bly be a con­ve­nient so­lu­tion of the prob­lems faced by Air Char­ter com­pa­nies in In­dia


For travel by air in In­dia, whether for busi­ness or leisure, one has the op­tion to fly on board a com­mer­cial air­liner or hire a busi­ness air­craft from an Air Char­ter Com­pany. The hired air­craft could be a busi­ness jet, tur­bo­prop air­craft or even a ro­tary wing plat­form. In all, cur­rently there are 54 Air Char­ter Com­pa­nies op­er­at­ing in In­dia. Th­ese com­pa­nies are hir­ing out a va­ri­ety of fixed and ro­tary wing plat­forms. In the fixed wing regime, at present, there are more than 250 busi­ness jets of which around 130 air­craft are owned by the lead­ing busi­ness houses and do not op­er­ate un­der the con­trol of Air Char­ter Com­pa­nies. The re­main­ing 120 or so are avail­able for char­ter­ing by the pub­lic. There is a also a pos­si­bil­ity for large groups to hire a twin tur­bo­prop air­liner such as the ATR 72 or the Q400, or for that mat­ter, even a re­gional jet. How­ever, while there are Air Char­ter Com­pa­nies abroad that pro­vide such a fa­cil­ity for group travel, this is not avail­able in In­dia as Air Char­ter Com­pa­nies here have not been mak­ing any at­tempt to foray in this do­main.


Although the In­dian civil avi­a­tion in­dus­try re­cov­ered from the de­bil­i­tat­ing eco­nomic down­turn of 2009-10, growth in the busi­ness avi­a­tion seg­ment has been very slow as there are a num­ber of fac­tors that serve as im­ped­i­ments to its growth. Apart from chal­lenges re­lated to in­fra­struc­ture, ground han­dling and some­what crip­pling reg­u­la­tory pro­vi­sions, the busi­ness avi­a­tion seg­ment of the in­dus­try is af­flicted with high cost of main­te­nance

and op­er­a­tions which is fur­ther ag­gra­vated by ex­tremely low vol­ume of busi­ness. As Air Char­ter Com­pa­nies have just a few air­craft on their in­ven­tory, it is very dif­fi­cult if not im­pos­si­ble to make their busi­ness fi­nan­cially vi­able. Although pre­dic­tions about the fu­ture of busi­ness avi­a­tion in In­dia are op­ti­mistic, there is cer­tainly the need to ex­plore newer busi­ness mod­els to place this seg­ment of the in­dus­try on a bet­ter foot­ing. One such busi­ness model that could be an­a­lysed and pos­si­bly adopted by the In­dian civil avi­a­tion in­dus­try to mit­i­gate the ad­ver­si­ties faced by the busi­ness avi­a­tion seg­ment, is one that is fol­lowed by in­ter­na­tional car­ri­ers Qatar Air­ways as well as All Nip­pon Air­ways or ANA of Ja­pan. Along with their fleets of reg­u­lar air­lin­ers of vary­ing ca­pac­ity, th­ese in­ter­na­tional air­lines of re­pute also op­er­ate a busi­ness avi­a­tion wing with high end busi­ness jets. This en­ables the air­lines to serve the needs of both cat­e­gories of air trav­ellers – those who opt to fly on board a com­mer­cial air­liner and those that pre­fer to fly on board a busi­ness jet.


Op­er­at­ing since Jan­uary 1994, Qatar Air­ways with its head­quar­ters in Doha, is the na­tional car­rier of Qatar. With a fleet of more than 200 air­craft on its in­ven­tory, the air­line op­er­ates a hub-and-spoke net­work link­ing over 150 in­ter­na­tional des­ti­na­tions across Africa, Cen­tral Asia, Europe, Far East, South Asia, Mid­dle East, North Amer­ica, South Amer­ica and Ocea­nia. It was dur­ing the Airshow in Paris in the year 2009 that the air­line first an­nounced the for­ma­tion of a sub­sidiary named as Qatar Ex­ec­u­tive. This com­pany is meant to op­er­ate busi­ness jets and this ven­ture was a part of the on­go­ing ro­bust global growth strat­egy of Qatar Air­ways and the air­line’s con­tin­ued com­mit­ment to the busi­ness travel com­mu­nity of not only the Mid­dle East; but in the rest of the world as well. Based at Ha­mad In­ter­na­tional Air­port, busi­ness jet ser­vices by whol­ly­owned busi­ness jet fleet of­fered by Qatar Ex­ec­u­tive, is avail­able for world­wide char­ter. As of now, the busi­ness jet fleet has the fol­low­ing 11 air­craft on its in­ven­tory: Four Global 5000, one Global XRS, three Chal­lenger 605 and three Gulf­stream G650ER.

In less than a decade since its es­tab­lish­ment, Qatar Ex­ec­u­tive has at­tained a lead­er­ship po­si­tion in air char­ter ser­vices that the com­pany pro­vides to in­di­vid­u­als, busi­ness com­mu­nity, cor­po­rate ty­coons and se­nior func­tionar­ies in the govern­ment. In May 2015, Qatar Ex­ec­u­tive made pub­lic its plans to pur­chase up to 30 air­craft from Gulf­stream Aero­space Cor­po­ra­tion, which in­cludes firm or­ders and op­tions. This new ac­qui­si­tion would bring the strength of air­craft on the busi­ness jet in­ven­tory to a level that could match the in­ven­tory hold­ing of some air­lines in In­dia. The fleet of 30 busi­ness jets to be pro­cured by Qatar Ex­ec­u­tive is planned to be a com­bi­na­tion of the G500, the G600 and the flag­ship G650ER. All th­ese are new, wide-cabin air­craft from Gulf­stream. With the fi­nan­cial back­ing of its par­ent com­pany Qatar Air­ways, it would have been eas­ier for Qatar Ex­ec­u­tive to build up a large fleet of the lat­est, high-end busi­ness jets which in turn would help in mak­ing op­er­a­tions by the sub­sidiary com­pany fi­nan­cially vi­able as well.


The other in­ter­na­tional car­rier with busi­ness model that is sim­i­lar to that of Qatar Air­ways, is ANA of Ja­pan. Founded in 1952 with just two he­li­copters, to­day, ANA is the largest air­line in the coun­try on the ba­sis of fleet size, rev­enue and num­ber of pas­sen­gers car­ried. It has 260 com­mer­cial air­craft on its in­ven­tory and pro­vides con­nec­tiv­ity to 85 des­ti­na­tions and car­ries about 52 mil­lion pas­sen­gers per year. In Oc­to­ber 1999, the air­line be­came a mem­ber of Star Al­liance. ANA con­trols as many as 64 sub­sidiaries and as re­cently as on April 27 this year, the Ja­panese car­rier an­nounced the launch of a new sub­sidiary named as ANA Busi­ness Jet Com­pany Lim­ited, a joint ven­ture with So­jitz Cor­po­ra­tion, to of­fer char­ter flights by busi­ness jets.

On March 28 this year, ANA and Honda Air­craft Com­pany had an­nounced the sign­ing of a Mem­o­ran­dum of Un­der­stand­ing (MoU) for a strate­gic part­ner­ship to sup­port the ex­pan­sion of the busi­ness jet mar­ket around the world with the help of the Hon­daJet, a tech­no­log­i­cally ad­vanced busi­ness jet from Honda Air­craft Com­pany of Ja­pan. ANA will in­tro­duce cur­rent busi­ness jet users and its com­mer­cial flight cus­tomers to the Hon­daJet by max­imis­ing the util­i­sa­tion of the air­craft in its char­ter and feeder flights con­nect­ing them to the ex­ist­ing broad net­work at ma­jor travel hubs in North Amer­ica and Europe. Honda Air­craft will sup­port work­ing with global char­ter op­er­a­tors to pro­vide ex­cep­tional cov­er­age for ANA’s cus­tomers and es­tab­lish­ing a frame­work for ground sup­port func­tions at a va­ri­ety of ANA’s tran­sit lo­ca­tions.

The Hon­daJet is the fastest, high­est-fly­ing, qui­etest, and most fuel-ef­fi­cient busi­ness jet in its class. This plat­form in­cor­po­rates sev­eral tech­no­log­i­cal in­no­va­tions in avi­a­tion de­sign, in­clud­ing the unique Over-The-Wing En­gine Mount (OTWEM) con­fig­u­ra­tion that dra­mat­i­cally im­proves per­for­mance and fuel ef­fi­ciency by re­duc­ing aero­dy­namic drag. The air­craft is equipped with the most so­phis­ti­cated glass cock­pit avail­able in any light busi­ness jet, a Honda-cus­tomised Garmin G3000. This is the first com­mer­cial air­craft de­signed by Honda and lives up to the com­pany’s rep­u­ta­tion for su­pe­rior per­for­mance, ef­fi­ciency, qual­ity and value


A busi­ness model sim­i­lar to the one adopted by the two in­ter­na­tional car­ri­ers that has been de­scribed above, would pos­si­bly be a con­ve­nient so­lu­tion of the prob­lems faced by Air Char­ter Com­pa­nies in In­dia. Hav­ing an Air Char­ter Com­pany as a sub­sidiary of an air­line, would sig­nif­i­cantly en­hance the mar­ket po­ten­tial in the busi­ness avi­a­tion seg­ment as the par­ent air­line will be able pro­vide far bet­ter fi­nan­cial sup­port. With much higher level of re­sources, the par­ent air­line will be able to make much larger in­vest­ments, have larger fleets, pro­vide eas­ier and more ef­fi­cient mar­ket­ing, will have ac­cess to wider clien­tele, can pro­vide bet­ter main­te­nance sup­port, en­counter fewer prob­lems re­lated to in­fra­struc­ture and will be able to pro­vide eas­ier and bet­ter ground han­dling for the busi­ness jets. The man­age­ment of the par­ent air­line will also be in far bet­ter po­si­tion to cope with reg­u­la­tory on­slaughts. Busi­ness avi­a­tion will no longer have to fend for it­self and be en­gaged in a per­pet­ual strug­gle against the wide range of ad­ver­si­ties that cur­rently plague this seg­ment of the in­dus­try.

Hav­ing an Air Char­ter Com­pany as a sub­sidiary of an air­line, would sig­nif­i­cantly en­hance the mar­ket po­ten­tial in the busi­ness avi­a­tion seg­ment as the par­ent air­line will be able pro­vide far bet­ter fi­nan­cial sup­port


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