Business jets less in demand as India’s rich turn thrifty

Mumbai: As the country’s economy soared—by at least 9% in the past three years— Indian companies and executives took to the skies, literally.
Plane makers sought to feed the frenzy. Even in small towns such as Bellary in Karnataka, where entrepreneurs suddenly found themselves rich on the back of a boom in the iron ore business, the executive jet (or turboprop) replaced the Mercedes S-class as the status symbol of choice.
Now, with the economy slowing—the International Monetary Fund’s estimate for India’s growth in calendar year 2009 is 5.1%—companies, entrepreneurs and the plane makers themselves have been brought back to earth.
Fewer business jets will be bought in the country as a result, and plane makers will fall significantly short of earlier sales estimates.
Worse still, some companies are pulling back orders or selling planes they own.
Reliance Industries Ltd, DLF Ltd and Sterlite Industries (India) Ltd are among the firms selling or pulling back orders, people in the aircraft business say. Meanwhile, demand for jets in India—dubbed the second important market after China by plane makers—will halve this year as businesses in areas such as financial services, real estate, automobiles and petrochemicals take measures to cut costs and buffer themselves from eroding profits.
Reliance denied it is selling any planes; a senior executive at Sterlite confirmed the development; and a DLF spokesperson said the company’s decision to not go ahead with an order is not because of the slowdown.
04/02/09 P.R. Sanjai and Baiju Kalesh/Livemint

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Categories: Indian Aviation- In General Feb 2009