Mumbai: Mahindra Aerospace, a division of Mahindra Systech, wants to provide inexpensive air travel with its aircraft, the GA8 Airvan. How inexpensive? If the plans on the drawing board are to be believed, an air-conditioned cab from Mumbai to Goa costs Rs 3,600 and takes 12 hours to cover the 600-km distance. On the Airvan, a seat will cost Rs 4,500 and the journey will take less than two hours. The eight-seat fixed-wing aircraft - two crew and six passengers - can fly about 1,000 km on a full tank. It flies 14 km on a litre of jet fuel, which makes it as fuel efficient as group company Mahindra & Mahindra's bestseller SUV, the Scorpio. Just like the Scorpio, which is known for its ruggedness, the Airvan has the capability to land on short or semi-prepared landing strips.
About 159 million Indians flew in 2012-13. That's less than 12 per cent of the population. The possibilities for the sector would multiply if smaller cities and towns get air connectivity and fares become lower. This is where Mahindra's aviation plans fit in. Its aviation strategy is based on acquisitions as well as organic growth. In December 2009, the Mahindra group had bought a majority stake (75.1 per cent) in Australian companies Aerostaff Australia and Gippsland Aeronautics. The acquisitions were made jointly with Kotak Private Equity with a total commitment of approximately Rs 175 crore. Both the companies have a plant each in Australia to manufacture planes and components.
The logic for the acquisitions was sound: the market for 2- to 20-seat aircraft (the turboprop market) was, and still is, amongst the fastest growing segments in civil aviation. Turboprops provide operational adaptability in environments with relatively poor infrastructure and can serve the market at the lowest cost per passenger seat kilometre. They can be used for commercial purposes, for personal use or even for spraying insecticides on crops. Luthra was bullish at the time of the acquisition. "Over five years, we believe that we could build as many as 475 aircraft in the 2- to 20-seat range and expect peak revenue of about Rs 650 crore," he had said while announcing the acquisitions. Four years later, it is not clear if this target is likely to be achieved.
12/11/13 Swaraj Baggonkar/Business Standard
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About 159 million Indians flew in 2012-13. That's less than 12 per cent of the population. The possibilities for the sector would multiply if smaller cities and towns get air connectivity and fares become lower. This is where Mahindra's aviation plans fit in. Its aviation strategy is based on acquisitions as well as organic growth. In December 2009, the Mahindra group had bought a majority stake (75.1 per cent) in Australian companies Aerostaff Australia and Gippsland Aeronautics. The acquisitions were made jointly with Kotak Private Equity with a total commitment of approximately Rs 175 crore. Both the companies have a plant each in Australia to manufacture planes and components.
The logic for the acquisitions was sound: the market for 2- to 20-seat aircraft (the turboprop market) was, and still is, amongst the fastest growing segments in civil aviation. Turboprops provide operational adaptability in environments with relatively poor infrastructure and can serve the market at the lowest cost per passenger seat kilometre. They can be used for commercial purposes, for personal use or even for spraying insecticides on crops. Luthra was bullish at the time of the acquisition. "Over five years, we believe that we could build as many as 475 aircraft in the 2- to 20-seat range and expect peak revenue of about Rs 650 crore," he had said while announcing the acquisitions. Four years later, it is not clear if this target is likely to be achieved.
12/11/13 Swaraj Baggonkar/Business Standard
