The Government of India needs to remodel the business aviation segment of the civil aviation industry to enhance the beneficial impact on the national economy
|By Air Marshal B.K. Pandey (Retd) |
Former Air Officer Commanding-in-Chief of Training Command, IAF
December 15, 2017, was indeed a day to celebrate for the business aviation segment of the Indian civil aviation industry as it heralded a new beginning for the industry. It was from this day onwards that it became considerably easier for operators of business aircraft in India to fly to destinations outside the country.
Growth of Business Aviation in India
As per a report by the International Air Transport Association (IATA), over the last decade, a large number of business aircraft, primarily the latest offerings of business jets from the global aerospace majors, have been inducted into the business aviation segment of the Indian civil aviation industry, which is now rated as the ninth largest in the world. It has also been reported by IATA that by the year 2026, the Indian civil aviation industry is expected to overtake that of the United Kingdom and ascend to the position of the third largest in the world. However, in terms of ownership of business jets, India currently has stands at the 18th position or so in the world with around 200 business jets. This is higher than the number of business jets in China even though it has more billionaires than India has. Currently, in India, there are over 150 private and non-scheduled charter operators in the business aviation segment of the Indian airline industry. However, India is poised for a rapid growth in the business aviation sector on account of its strategic geographic location between the Middle East and Europe in the West and the East Asian economies in the East. There is also expected to be the rising demand from the increasing number of high networth individuals and business houses in the country.
The business aviation segment in India has been on a steady growth trajectory despite the numerous impediments that emanate largely from stringent regulatory provisions. Growth of this segment of the Indian civil aviation industry can be attributed to the dynamism in the business culture and the changing business environment. With the acquisition of businesses in foreign countries by the large and prosperous Indian business houses, India’s global business linkages have without doubt become progressively stronger. But most importantly, both the Indian industry and the Indian Government have begun to appreciate the fact that business aviation contributes effectively not only to the business interests of the company, but in turn, to the growth of the national economy. There is undoubtedly a change in the perspective of both the Indian government as also corporate India. Business aviation that hitherto was perceived only as luxury at exorbitant cost, is now being viewed as an effective tool for the promotion of business interests especially at the international level.
THIS PROCEDURAL COMPLEXITY PRECLUDED THE POSSIBILITY OF HIGH NET-WORTH INDIVIDUALS, BUSINESS LEADERS OR EXECUTIVES UNDERTAKING BUSINESS RELATED FLIGHTS TO DESTINATIONS OUTSIDE INDIA ON SHORT NOTICE
As in most other sectors under control of the government at the centre, since its inception, the Indian civil aviation industry had also been in a vice-like grip of the regulatory agencies of the government, a system largely inherited from the colonial past. However, over the years there have been reforms and a degree of decontrol particularly of the Indian airline industry with the ushering in of an era of private airlines. The most recent changes brought about by the government for the Indian airline industry have been abolition of the 5/20 Rule as also the thrust on regional aviation through the Regional Connectivity Scheme duly supported by the government. All these years, the business aviation segment had however, been on the back burner and hence in a state of neglect. Unfortunately, this segment of the Indian civil aviation industry has not received attention of the government that it should have. This was so perhaps because it did not figure high enough in the order of priorities of the central government.
Regulatory Changes for Business Aviation
Hitherto, business aircraft registered in India, whether privately owned, registered in the name of a business house or operated by a charter company, that was planning to fly to a destination outside India, would require prior clearance from the Indian civil aviation regulatory authority, the Directorate General of Civil Aviation (DGCA). The concerned operating agency would have to submit an application to the DGCA for clearance and after an elaborate and time consuming process of verification that would normally take a couple of days, the DGCA would issue sanction for the flight by allocating a ‘YA Number’. The operator would then be required to file the flight plan with the appropriate Air Traffic Control after which the aircraft was free to embark on the air journey. Incidentally, this precondition of the need to obtain prior clearance from the regulatory authority was also applicable to business jets over flying India territory. Also, this practice was unique to India as it is not followed anywhere else in the world.
This procedural complexity precluded the possibility of high net-worth individuals, business leaders or executives planning and undertaking business related flights to destinations outside India on short notice, on weekends or on holidays. Urgency of the situation was of no consequence to the regulatory authority. The crippling regulatory complexities rendered it extremely difficult for Indian-registered business jets or charter aircraft to contribute meaningfully and effectively to the objective of enhancing ease of doing business in India which is an issue of high priority for the NDA Government led by Prime Minister Narendra Modi. The highly shackled business aviation would also deter foreign investors who would be hesitant to make heavy investments into the Indian economy. After interaction with the stakeholders and due deliberations amongst the government agencies involved, the Ministry of Civil Aviation decided to remove the pre-condition of obtaining a YA number for Indian-registered business and charter aircraft, much to the relief to all the stakeholders in the business aviation segment of the Indian civil aviation industry. Under the new dispensation, operators will be given clearance to fly to destinations outside India at the time of initial registration of the aircraft after the necessary verification and not before every flight. This clearance will be for a period of five years.
The Way Forward
The latest move by the Ministry of Civil Aviation effective December 15, 2017, suggests that things are set to change and the business aviation segment of the Indian civil aviation industry could look forward to further easing of regulations that would render the operating environment for it more efficient and business friendly. Having addressed one of the problems that had been afflicting the business aviation in India for a long time, one would expect that the government would move forward and address other problems that afflict this sector.
To begin with, there is a need to simplify the convoluted procedure currently in vogue for import of business aircraft that currently takes months and possibly more. There is definitely the need to introduce single-window clearance for business aviation to obviate the need for operators to run from pillar to post to get their business aircraft off the ground. Further, it is also necessary for the government to address issues troubling business aircraft registered abroad desirous of operating into or through India. The government needs to study the progressive policies and practices that are followed by other countries in the developed world and remodel the business aviation segment of the India civil aviation industry to enhance the beneficial impact on the national economy.