Reform BA to boost national economy

The government needs to radically reform its policies for business aviation to prosper. Till then, this segment will not make any meaningful contribution to the nation’s economy.

Issue: 3 / 2018By Air Marshal B.K. Pandey (Retd)Illustration(s): By Anoop Kamath

The Indian civil aviation industry appears to have embarked on a growth trajectory. As per assessments by international agencies, the Indian civil aviation industry has the potential to emerge as the largest in the world by 2030 from its present global ranking at number three. This unprecedented growth of the Indian civil aviation industry can be attributed primarily to the growth of the Indian airline industry, its largest component, which has received a major impetus for growth in the wake of the new National Civil Aviation Policy (NCAP) unveiled in June 2016 by the NDA Government. A major focus of the NCAP is regional aviation which holds the potential for the next phase of growth of the Indian airline industry and in turn the Indian civil aviation industry as a whole. In pursuit of this objective, the Ministry of Civil Aviation has launched the Regional Connectivity Scheme which is moving forward slowly but surely.

While the growth of the Indian civil industry has been laudable, the same has not been the case with business aviation, which undoubtedly is an important segment of the industry with immense potential to further fuel its growth. The NCAP is certainly a positive step for the Indian civil aviation industry. The policy covers every segment of the Indian civil aviation industry, but has left out business aviation. When compared to the Indian airline industry, business aviation in India continues to remain much below its potential. In sharp contrast to the annual rate of growth of the Indian airline industry which last year was around 17 percent, the business aviation segment in India has registered a growth rate of mere two percent over the last five years.

In India, conditions are indeed favourable for the growth of business aviation. The location of the India between the Middle East and Far East, both regions endowed with prosperity, is strategically significant and important from the point of view of trade and business and in turn for the health and well being of the national economy. As the growth of business aviation is intimately connected to economic growth, there is no doubt that with the growth of the Indian economy, in the long term, there will be increasing demand for business jets. All major business enterprises and high net-worth individuals would like to acquire business jets for business-related travel to save on time and enhance efficiency of their business enterprise. Besides, the number of charter companies operating business jets to serve business houses, who do not own dedicated aircraft, will only grow in size and numbers to service the growing demand for exclusive air travel from the Indian business community. Business jets that have traditionally been regarded as luxury and were associated with the super rich, have now actually become an effective tool to enhance efficiency of business management and productivity of business houses. In other words, business aviation is no longer “elitist” or a corporate status symbol, but has the attributes and potential to play a critical role in the growth of business in the country and in turn contribute to the growth of the national economy. The contribution of business aviation to the national economy however, is yet to be fully understood.

The problems afflicting the business aviation segment of the Indian civil aviation industry are many. First of all, the procedure to import a business jet is extremely complex and tedious requiring clearance from multiple agencies. It can take more than a year to obtain all the sanctions and bring the aircraft into the country, complete the registration process and obtain the license to commence operations. In addition, the duty on import of aircraft is around 25 per cent of the value of the platform. The high rate of import duty is indeed a dampener for the growth of the segment. In fact, the taxation structure for business aviation is killing as there are duties for aircraft and spares that are not charged from aircraft in the airline industry.

There is pathetic lack of infrastructure as the six metro airports are heavily congested where space is at a premium. There is little or no space for accommodating transiting business jets that have to fly to smaller airports for overnight parking. Most of these airports do not have facilities for operations by night and lack hangars for parking of aircraft. In fact, there is not a single airport in India that has exclusive infrastructure for business and general aviation aircraft.

Business aviation aircraft get a lower priority compared to airlines because of the heavy traffic of scheduled flights at metro airports. Delays in takeoff and landing clearances may defeat the purpose of investments in business jets whose owners are treated on a par with commercial airlines. All compliances, in terms of documentation and clearances required for operating business jets are the same as for airline operators. There is a crying need for review of the existing regulatory and operational framework.

Unless and until, the government take steps to introduce radical reforms in business aviation for it to prosper, this segment will not be able to make any meaningful contribution to the economic prosperity of the nation.