Vijay Mallya

Vijay Mallya, billionaire chairman of the United Breweries Group and of Kingfisher Airlines, a part of that group, has acquired half the equity of Epic Aircraft, an Oregon, USA, based small aircraft company which has ambitions of growing big. The price is $120 million (about Rs 480 crore), which Mallya is reported to be paying in his personal capacity.

domain-b.com had reported on 9 August this year that "Mallya flew into Oshkosh, Wisconsin, for the Experimental Aircraft Association''s AirVenture air show on his personal Airbus A320 and made an appearance with Epic Aircraft president and CEO Rick Schrameck during a press conference." (See: Vijay Mallya and Epic Aircraft: Buying a stake or a plane?) At that time, while we stated that "Mallya sealed a deal with Schrameck, investing a significant amount of money into EA", the details of the deal were not made public. Now they are public.

Rick Schrameck, Epic Aircraft''s president and CEO, said, while announcing the new partnership today, "Epic was really looking for a strategic partner, not just an investor. Dr. Mallya now has a significant interest in our company, and we will immediately benefit from his relationships with a variety of companies, including Airbus and Pratt & Whitney."

Epic Aircraft, which launched itself in the market with the novel concept of selling "homebuilt" aircraft, where customers participate in the production process, is now going in process of getting its aircraft certified. It has set up facilities in Canada, where it will find it easier to get the certification done. The US Federal Aviation Administration takes longer to complete the certification process.

Under FAA rules for experimental aircraft, its owner must build at least 51 per cent of each plane he owns. To meet this condition, Epic invites customers to its manufacturing facility, where they build their planes with the help of Epic Aircraft mechanics. As "experimental aircraft" the planes are allowed to be flown in the US without FAA certification.

The Canadian government is keen to attract investment, and has offered Epic Aircraft substantial incentives to locate in Canada, which it is doing at a 100,000-square-foot facility near Calgary in Alberta province. The company is also negotiating with the recently created Canadian Centre for Aircraft Certification to develop a 50,000-sq. ft. certification facility. Epic will be the first aircraft company to use the CCAC facility.

Once it receives Canadian certification (expected in end-2008) the company''s Dynasty aircraft will cease to be governed by the "51 per cent owner-built" rule. Canadian certified planes are permitted to fly in the US without separate FAA certification.

Epic is said to be in the advanced stages of flight-testing for the Dynasty, the 1,200-hp single-engine turboprop. The company recently unveiled two new ''very light jets, the twin-engine Elite and the single-engine Victory. The jets will begin their certification process immediately following certification of the Dynasty.

According to an Epic press release, the company has recently "experienced an unprecedented surge in sales", booking more than $23 million dollars worth of orders at the Sun ''n Fun fly-in April 2007, then selling another $40 million worth of aircraft three months later at AirVenture in Oshkosh, Wisconsin.

With growth, Schrameck hopes to expand the Alberta facility to 200,000 square feet. The plan is to make the company''s Dynasty planes there. The company expects to have a workforce of 500 to 600 people. Certification for Dynasty is expected to come in the fourth quarter of 2008, and deliveries should begin in early 2009.

The American company''s management believes that the Mallya deal "provides Epic the ability to accelerate the process of bringing the company''s growing line of aircraft to the certified market, as well as strengthening the company''s relationships with customers and vendors worldwide". Mallya is expected to get the help of EADS (Airbus) to speed up the certification.

In India, the UB Group''s fledgling airline Kingfisher Airlines has redefined the experience of flying by introducing superior quality in a market that has been rocked by low-cost carriers. The UB Group, which has a strong balance sheet, recently acquired a 26-per cent stake in the leading low-cost carrier, Air Deccan, and is planning to launch flights to the US soon. Kingfisher Airlines, among the first to order the new Airbus A-380, is one of the largest customers of EADS, the European aircraft maker.

Mallya, whose UB Group, which dominates the Indian liquor and beer market, and recently acquired British scotch producer Whyte & Mackay, is also a motorcar aficionado, like the Epic Aircraft boss. He has won races on the professional international car racing circuits, and has bought a 50-per cent stake in Spyker, the Dutch Formula 1 car racing team (See: Vijay Mallya closes in on Spyker Ferrari deal). Schrameck holds records for wins in automobile racing.

Their common interests in cars and aviation will now be tested in creating a working relationship to take on established rivals in the very light jet market, where it''s not just fun and games, it''s hard-nosed business. Epic too will make its journey from selling turboprop planes to hobbyists to entering the business jet market. It expects substantial growth in North America.

The Indian market for small business jets is expected to grow exponentially, and Mallya has an eye on this market. He is reported to be considering investing in resorts in Kerala and the Lakshadweep islands; the small jets would be ideal for ferrying customers to and from these resorts.

Mallya says, "I am very excited about the phenomenal opportunities that Epic has in the industry today, and this strategic investment will pave the way for the company to embark on an unprecedented growth trajectory."

"It''s a great relationship," Schrameck says, adding, "Vijay has already brought Airbus into the role of consultants for our certification programs."

Schrameck is known to make things work. Schooled as a biochemist, his first jobs in the 1970s were in the medical instrumentation business at Perkin-Elmer and DuPont. From there he moved to IT. He has been a general manager at Radius and FIC Computers, and led Motorola''s Apple Portable Clone business, which reached $200 million in the first year. He also founded RDI, a UNIX-based portable computer firm, which he grew and later sold, and has served as president and CEO of VEReCOMM, a communications software group, where he led a turnaround and repositioning of the business.

Also see: Very light jets: Light on the pocket, high on convenience.