Developing the Ecosystem

The indian aviation market is expected to grow rapidly and emerge among the three largest markets in the world by 2017. New scheduled operators and non-scheduled operators have started operations or intend starting in the near future. The general aviation (GA) segment that includes business jets, turboprops and rotary-wing aircraft is forecast to grow at over 10 per cent annually to cross 1,600 crore.

In the next two years, the number of business jets, small aircraft and helicopters will go up substantially, driven by strong economic parameters as indicated by the World Bank and also the International Monetary Fund, both have pegged India’s growth rate at nearly 7.5 per cent. As per the report by the Working Group of the 12th Five Year Plan, a total investment of more than 20,000 crore in GA is expected during the Plan period (2012-17). The helicopter market in India is equally promising, with growing requirements in tourism, mining, corporate travel, air ambulance, homeland security, etc.

In line with this economic outlook, there is frenetic activity in the transportation sector. Efforts are on to seamlessly link multimodal transportation, including aviation. However, the roadblock for growth has been poor infrastructure facilities for general aviation as there is still a bit of perception that it is only meant for travel of the uber rich, though general aviation is increasingly a business tool.

One of the drivers for the general aviation industry is tourism. But then poor connectivity, lack of facilities at smaller airports and other incentives have hampered the growth of the tourism sector. Infrastructure is the key.

SMALL AIRPORTS DEVELOPMENT

There are about 150 airports with most of them under the jurisdiction of the Airports Authority of India (AAI). Though it is now investing in developing non-metro airports, there is no sense of urgency and most development is bogged down by bureaucratic hurdles. The focus has been development of scheduled commercial aviation, neglecting general aviation, though of late we hear that the government is keen on incentivising general aviation for them to not only survive but also flourish.

Unlike in the US or Europe, the general aviation market in India is small and needs to be nurtured. The government has to look into procedures relating to the import of an aircraft and the development of infrastructure for general aviation. The key ingredients for growth of general aviation are small airports and heliports; MRO facilities; fixed based operations (FBO) and other economic incentives. These include service tax exemption and custom duty rationalisation, both within and outside an SEZ environment states a report of KPMG.

It states that the development of airport infrastructure and reforms are essential to create a favourable operating environment. With the current traffic load of scheduled flights at metro airports, GA aircraft inevitably get lower priority as compared to scheduled operators. Delays in take-off and landing clearances are invariably defeating the purpose of investments in this segment.

The Indian GA market is small and underdeveloped as compared to its global peers. The US with around 5,110 active airports, the largest in the world, also has the largest number of GA aircraft approximating more than 2,55,000. On the other hand, India has been a laggard in the global GA market with approximately 680 aircraft and only around 150 active airports.

INFRASTRUCTURE CREATION

A significant impediment in the growth of the GA market in the country is the absence of full-service fixed base operators (FBOs) considered essential for services in business aviation. However, a start has been made with the introduction of an FBO by Delhi’s Indira Gandhi International Airport (IGIA). The FBO, Shaurya Aeronautics Ltd, offers services such as ground-handling, passenger services, maintenance support, lease and purchase of aircraft and helicopters and spare parts for various fixed-wing business jets and helicopters. The IGIA also plans to further develop suitable GA infrastructure like building an enhanced GA apron and further upgrading its aircraft maintenance activities. Mumbai’s Chhatrapati Shivaji International Airport (CSIA) became the first airport in the country to start dedicated international operations from its GA terminal. The GA terminal at the CSIA offers exclusive services and facilities for travellers and houses world-class facilities like meeting rooms, conference rooms, crew rest rooms, F&B outlets, bars and lounges.

The development of greenfield airports at Bengaluru and Hyderabad along with a new airport planned at Navi Mumbai is expected to further encourage GA in the country. Moreover, the planned upgradation of the Chennai and Kolkata airports and improvement of technology at all its existing facilities by the Airport Authority of India (AAI) are also likely to encourage both commercial and general aviation. The Ministry of Civil Aviation (MoCA) is also envisioning ’merchant airports’ to be independently developed and run by private companies. The government’s Vision 2020 envisions creating infrastructure to handle 280 million passengers by 2020. Investment opportunities of $110 billion are anticipated through 2020, consisting of $80 billion in new aircraft and $30 billion in airport infrastructure.

A majority of the regulatory framework in India is targeted towards scheduled commercial aviation. GA does not receive due attention. Activities related to GA like obtaining an operator’s permit or purchasing a corporate jet are time consuming because of the large number of permissions required. Another reason is that private aviation compliances are usually treated at par with those of scheduled commercial airlines. The high rates of customs duty, service taxes and cess on fuel further compound the problem.

CHALLENGES GALORE

Within the 150 airports open to business aviation in the country, facilities are substandard when compared with those of other countries. Parking space is limited so is customs and excise availability. Groundhandling options are limited as well as expensive and a large number of infrastructure related challenges are faced: • Most GA aircraft are based out of metros where space is at a premium • Few airports are oriented to service GA. Only Delhi and Mumbai airports have specialised lounges for GA • The small regional airports lack basic facilities like that of hangars. This causes aircraft and helicopters to be stationed out in the open, not preferred by owners. Most small airports also do not have adequate night-landing capabilities. This seriously constricts the timings available for GA aircraft • A large section of airspace is controlled by the military and business aircraft. Their schedules are not predetermined, they have to fight for slots and are sometimes also required to give at least seven days’ prior notice of landing.

Heliports can play an important role to support the growth of GA in India and business aviation in particular. This is beneficial in areas that cannot have runways for financial or terrain-related challenges. The option of developing these heliports on PPP mode can also be considered. In the GA segment, effective, transparent monitoring and oversight mechanisms will need to be evolved to ensure smooth operations.

US SHOWS THE WAY

A 2012 report of the US Department of Transportation Federal Aviation Administration (FAA) titled ‘General Aviation Airports: A National Asset’ explains how the general aviation sector has been developed and what the authorities further intend to do.

There are tens of thousands of general aviation aircraft, including corporate jets, medical evacuation helicopters, and airplanes owned by individuals for business and personal use are flown in the United States. In fact, three out of every four take-offs and landings at US airports are conducted by general aviation aircraft, and most of these flights occur at general aviation airports.

19,000 AIRPORTS, HELIPORTS ....

The report states that there are over 19,000 airports, heliports, seaplane bases, and other landing facilities in the United States and its territories. Of these, 3,330 are included in the FAA’s National Plan of Integrated Airport Systems (NPIAS), are open to the public, and are eligible for federal funding via the Airport Improvement Programme (AIP). When an airport’s owners or sponsors accept AIP funds, they must agree to certain obligations (or grant assurances). Most people are familiar with one or more of the 378 primary airports that support scheduled commercial air service, such as John F. Kennedy International, Chicago O’Hare International, or Los Angeles International, where US and foreign airlines operate.

General aviation also rely on the other 2,952 landing facilities (2,903 airports, 10 heliports, and 39 seaplane bases) to support aeromedical flights, aerial fire fighting, law enforcement, disaster relief, and to provide access to remote communities. These 2,952 landing facilities are primarily used by general aviation aircraft and are, therefore, commonly referred to as general aviation airports. Besides, 121 airports also support limited scheduled air service boarding at least 2,500, but less than 10,000 passengers each year.

The FAA takes deep interest in developing the aviation sector and there are many lessons to be learnt from the US if India has to develop a healthy transportation network.

In cooperation with the greater aviation community, the FAA conducted this groundbreaking 18-month review of these 2,952 landing facilities. The FAA has documented many important aeronautical functions that are economically and effectively supported at these general aviation airports. These range from emergency preparedness and response to the direct transportation of people and freight and commercial applications such as agricultural spraying, aerial surveying, and energy exploration.

Together these 2,952 general aviation airports form an extensive network and make important economic contributions to society. Many of these aeronautical functions cannot be economically supported at primary commercial service airports and other alternatives (e.g., fighting forest fires without aerial support) are less effective and sometimes more dangerous.

FOUR CATEGORIES OF AIRPORTS

FAA divided the general aviation airports into four categories based on existing activity. The four new categories are national, regional, local and basic. Of the 2,952 general aviation airports studied, 2,455 were grouped into the four new categories. FAA said it could not establish a clearly defined category for the remaining 497 airports. They have different types of activity and characteristics and cannot readily be described as a clear group or category. These 497 airports are currently not classified and require further study.

The US general aviation airports focus mainly on more specialized services that scheduled airline service cannot provide. In 2009, non-airline operators at these general aviation airports spent over $12 billion, flying an estimated 27 million flights for emergency medical services, aerial fire fighting, law enforcement and border control, agricultural functions, flight training, time-sensitive air cargo services, business travel and scheduled services. Some general aviation airports provide all of these aeronautical functions, while others provide only a few. Some airports are large and have multiple runways and extensive facilities, while others are relatively small and may need only a short, single runway, helipad, or sea lane to serve a critical function.

The FAA said it will continue to identify general aviation airports that are important to the national transportation system through the formulation of the NPIAS. Future reports to US Congress, starting with the 2013-2017 NPIAS report, will incorporate the new general aviation airport categories developed in this report.

The FAA will: (1) Incorporate these categories into the process for identifying the national airport system’s five-year development and funding needs; (2) Work with airports and state agencies to assess the 497 general aviation airports not classified that could not be placed into one of the four new categories; (3) Update the existing FAA guidance to reflect these new categories; (4) Re-evaluate the general aviation airports biennially, in conjunction with the FAA’s report to Congress to capture changing conditions, needs, and roles; (5) Review policies related to providing Federal money to privately owned airports included in the NPIAS, the role they play in the national transportation system, and the types of protections necessary to safeguard public investment in these airports over the long term; and (6) Continue to work with aviation stakeholders to address investment and regulatory questions concerning part 139 certification, grant assurances, airport requirements, funding eligibility, and entitlement programmes, and revenue use and diversion.

The FAA takes deep interest in developing the aviation sector and there are many lessons to be learnt from the US if India has to develop a healthy transportation network.