Story ID: 
First fractional provider spreads wings in India
By: Charles Alcock
Caption: Asia is set to get its first full fractional ownership program by year-end.
Word Count: 490
Asia is set to get its first full fractional ownership program by year-end. Bangalore, India-based Aviators expects to begin operations with three Cessna Citation Excels and three Pilatus PC-12 turboprop singles during the fourth quarter of this year.Managing director Arun Sharma told AIN that he received his first letter of intent for the Aviators fractional program on February 18. He confirmed that he now has “expressions of interest” covering more than 4,000 flight hours in the two aircraft types being offered. Following the formula of the U.S.-based NetJets program, Aviators is selling its aircraft in one-sixteenth shares. Each of these amounts to 50 occupied hours per year over the course of the five-year agreement.For example, a one-eighth share, allowing 100 hours’ usage annually, in an Excel is priced at approximately $1.3 million (although the actual price paid will be in Indian rupees). On top of this, customers will pay a monthly management fee of $7,840 and an hourly occupied rate of $1,640.Similarly, a one-eighth share in an executive-configured PC-12 will cost approximately $410,000. The monthly management fee for the aircraft will be around $2,800 and the hourly occupied rate will be $725.Aviators customers will be able to exchange flights in the two aircraft types. For example, the PC-12 might be used to serve some of India’s short and unprepared landing strips that are not accessible to the Excel.The aircraft will be flown under Aviators’ existing commercial air operator certificate, with bases selected according to where the customers are concentrated. International flights will also be available. Aircraft availability will be guaranteed between six and eight hours’ notice, depending on the size of a customer’s share in the program.One difference with the standard NetJets terms and conditions is that Aviators guarantees to repurchase aircraft shares at a fixed rate, rather than at a fair market value. However, from the as-yet unspecified fixed rates, it deducts “applicable legal/closure and remarketing fees.”Sharma said that, partly for tax reasons, Indian fractional customers need to be given a fixed buy-back rate for their aircraft shares. India’s tax code allows fractional customers to write off up to 93 percent of the asset’s value over the term of the five-year agreement. Accordingly, Aviators has calculated that a one-eighth Excel shareholder would effectively be paying an overall rate of $2,390 per occupied hour once all amortization is taken into account. Aviators has been managing business aircraft in India for the past seven years. It also now operates a three-year-old Dassault Falcon 2000 in the charter market, and is involved in flight planning and ground handling for visiting corporate jets. Sharma said the limited availability of executive jets for charter should strengthen the case for the new fractional-ownership program.Bombardier has been offering block charter through its Flexjet Asia program since last year, but this does not involve any share ownership. Flexjet Asia flights are operated by five executive charter firms located in Beijing, Macao, Manila, Sydney and Singapore.