India still a huge untapped market for executive jets: Embraer's Jose Eduardo Costas

Leading makers of private executive jets in the world see an untapped market potential in India. "Over the next 10 years, this is a $5-billion market and all the leading companies in this space will be competing for it," said Jose Eduardo Costas, 51, Vice President for marketing and sales of executive jets at Embraer. The company, headquartered in Brazil, is one of the leading makers of executive jets in the world.

He spoke with Business Today on board a Lineage 1000E, its largest executive jet, parked in Hyderabad for the Civil Aviation 2014 event jointly organised by the Ministry of Civil Aviation and the Federation of Indian Chambers of Commerce and Industry (FICCI). He said  it is estimated that another 200 executive jets will be bought in India in the next 10 years. This is the potential market.

He said he believes there is huge potential for executive jets in India, although it is still a small market. With just 130 jets in all from all suppliers, it has along way to go compared to, say, China, which has 300 such executive jets operating today.

Costas acknowledged the challenges in India. "The potential... has not been exploited because the infrastructure for these to operate is still very limited," he said. He pointed to the lack of basic supporting infrastructure at Indian airports. He said: "Unlike in some leading markets, such as the US, there are no separate or dedicated terminals or entrance for customers of executive jets at the airports." He noted that few airports, other than perhaps Delhi and Mumbai, could handle this. Ideally, he said, airports needed to have dedicated facilities and services such as catering and aircraft cleaning.

Other hurdles besides the lack of facilities were high taxes, rising costs to land and park, and fewer parking slots. Still, he said, he was hopeful despite the slow pace of change, saying: "It does not happen overnight. The US took 25 years to get to where it is today."

He noted that in China, the market for chartering aircraft had taken off, and added: "The maturity of the charter market is key to catapult the growth of this market for executive jets, as demand will pick up after customers experience the aircraft and appreciate the convenience it offers."

Costas said there were still some models in the market that had not been tried in India. He gave the example of NetJets, a company owned and financially backed by Warren Buffett's Berkshire Hathaway. NetJets offers what is called "fractional ownership" and gives a portfolio of services in a model that is similar to holiday time-shares. It manages, operates and maintains the jets. NetJets, Costas said, bought 125 Phenom 300 jets - Embraer's best-selling model last year. This eight-seater costs $9.5 million and has a travel range of 2,000 nautical miles. JOYJETS, a executive jet charter company of Kerala's Joyalukkas, has also bought this model, he added.

Embraer has in the last seven years sold 20 jets in India. Of these seven are smaller and 13 are larger. It offers seven different products. The entry-level Phenom 100E accommodates up to five passengers, costs $4.6 million and has a travel range of 1,178 nautical miles. At the  top end is the Lineage 1000E, an ultra-large executive jet that accommodates up to 19 passengers. Of course, in executive jets, the number of people travelling is not the most important criterion. The Lineage 1000E costs $56 million and has a travel range of 4,600 nautical miles. In other words, it can fly non-stop for 10 hours - say, from an Indian city to London.

Embraer's rivals include Cessna, Bombardier and Gulfstream.