Eyeing at small aircraft demand, Mallya picks up stake in Epic

Written by Corporate Bureau | New Delhi, Sep 27 | Updated: Sep 28 2007, 04:57am hrs
Vijay Mallyas move to buy a large stake in US based light jet and turboprop maker Epic Aircrafts highlights the increasing demand for smaller, lighter aircraft to increase commercial efficiency and travel at the spur of the moment over a short haul.

Though the exact stake or price at which it was sold was not specified it is reported that Mallya bought the 50% stake for $120 million.

The deal not only enables Mallya to get into the private jet business but also enables Epic, which is seeking to tap the private jet and business aviation market, to get a foot into the doorway of the Indian market.

Epic is part of a handful of aircraft manufacturers along with Eclipse Aviation, Honda Jet and Diamond Aircraft Aviation that are developing twin turboprop and small-sized jets, that may cost as less as $2 million to tap into the emerging general and business aviation market.

TVS Motor Co reportedly is already in the process of buying planes with less than 10 seats to speed up connections between factories and offices and thereby increase business efficiency.

The demand for such planes in India alone is estimated to be about 1,000 by 2020, including private ownership and purchases by companies, Kapil Kaul, CEO, Centre for Asia Pacific Aviation India said.

But not everyone is that optimistic. The market has huge potential and it is a brilliant asset to buy for the future but there are too many infrastructure constraints as far as the Indian market goes, said Ankur Bhatia, MD of Amadeus India. The shortage of pilots and airport infrastructure in terms of parking and congestion in the air are major setbacks, he adds.

Essentially called very light jets (VLJs), they are economically viable due to the lower fuel costs and a price tag of $1.5 million. Without the infrastructure constraints, India could easily get around 200 to 300 aircraft of this kind every year, Bhatia said. And at Rs 6 crore, the EMIs are not massive, he adds.