Ratan Tata readies plan to enter aviation business


September 2, 2011

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India | Industry

Ratan Tata may have given up plans to get into civil aviation but the chairman of the $72 billion Tata Group is putting pieces together to be a major player in the general aviation space. Tata, a trained pilot, is working out deals with international players for business jets, helicopters as well as for aircraft management and maintenance services. Investments in this space are being driven by the group’s two main holding companies, Tata Sons and Tata Industries.

By Reeba Zachariah & Boby Kurian | TNN

The group is in talks with Florida-based Avantair to establish a partnership in India, where use of private planes by companies is on the rise. Avantair’s business model is of fractional ownership, giving individuals and businesses the benefits of whole aircraft ownership at a fraction of the cost. The firm intends to emulate its US programme here, said sources familiar with the plans. "Discussions including the equity structure of the venture are at an early stage," they added. If things work out as planned, it will be the salt-tosoftware conglomerate’s second investment in a fractional jet operator after Singapore’s BJETS in February 2008.

The group’s hospitality arm Indian Hotels (Taj chain) holds about 62% stake in BJETS, which has a fleet of four aircraft comprising of Cessna and Hawker jets. The Tata Group is also set to form a 50:50 joint venture with Hong Kong’s Metrojet to offer aircraft maintenance services to the growing Indian corporate aviation market. The country has some 130 private jets, accounting for 12% of global market that analysts expect to double in the next ten years. The group plans to separate its small aircraft management services unit housed under Taj Air into the new JV company, sources explained.

Until a few years ago, the Tata Group had a small presence in air charter services. Through Taj Air it had forayed into business aviation in 1993 and had just one aircraft. The main purpose was to fly Taj guests to various Taj properties within the country.

Last year, Taj Air increased its fleet size to four aircraft comprising of Falcon and Avanti jets, and also started offering aircraft maintenance service. Ratan Tata, said sources , is himself spearheading the initiative and putting the building blocks in place for the group to emerge as a significant player in the business aviation space.

Last year, Tata Sons acquired a one-third stake in Italy’s Piaggio Aero Industries, manufacturer of the Avanti II turboprop twin, marking the group’s entry into aircraft manufacturing.

Though the group, that pioneered commercial airlines business in India through Tata Aviation which after nationalization became Air India, it has almost buried its desire to enter the civil aviation sector after a couple of failed attempts. In mid-1990 s, it planned to float an airline with Singapore Airlines and then it looked to buy a 40% stake in Air India, when the government was talking of divesting its stake in the national carrier.