Message from President, BAOA

To Sin or Not to Sin

As the debate on GST Impact goes on in the country, the Government has done well to reconsider the GST rates of several items and revise them from 28 per cent to lower brackets of 18 per cent, 12 per cent, or in some cases, even 5 per cent. A total of 178 Items have been removed from the 28 per cent bracket to lower rates, leaving only 50 items in the coveted list of “Sin Goods” which covers items meant for luxury, white goods, cement, paint, and private aircraft. Therefore, much to our disappointment, the users of private aviation continue to be deemed as “Sinners”, along with people who drive cars, buy yachts or smoke cigarettes and bidis!

So here are some facts about the Sinners! Private Jets are used by companies for the safe and efficient travel of their senior management, to destinations which are not covered effectively by scheduled airlines, and where they have business interests. It allows them to access remote areas for furtherance of their business, and exploit opportunities in the interiors of the countries, which they would never be able to do otherwise. It allows the harried CEOs the luxury of utilizing their time effectively, thereby increasing the efficiency of their companies and generate better profits. This in turn adds to the GDP of the economy, affords employment opportunities to the local population of these regions, and adds to the overall development of the national economy. Unlike a yacht, the private aircraft is a tool to for business growth, employed by companies worldwide. If you think of the Prime Minster as the CEO of India, utilizing Air India One to transport him across several continents to enable him to bring investments into India, and project India’s image to the world, think of the CEO of a company in a similar way, who is trying to enhance the business of the company that he, or she, represents. Both require the same tools to do their jobs! I don’t see either one of them committing any sin in doing so!

As per the National Business Aviation Association (NBAA) study of 2017 where the financial performance of S&P 500 Companies was evaluated from 2013 to 2017, it was found that the “Users” of Private Aircraft outperformed the financial performance of Companies that did not use private aircraft (“Non-Users”). The most important measure of impact is the company’s enterprise value, by both share amount and share appreciation. Users out-performed the Non-Users by about 70 per cent over the past five years. Business aircraft leverage key employee productivity, accelerate transactional closings, and boost customer interaction. A study carried out by BAOA in 2016 on similar lines, established business aviation as a major enabler for productivity, employment generation and a boost to the national economy. If this is the result of sinning, I think it’s high time that the government realizes that not all sin is bad! We would request the Hon’ble Finance Minister to reconsider the 28 per cent GST on purchase of private aircraft, and bring it to the more reasonable level of 12 per cent, to allow business leaders of the country to travel seamlessly and enable their businesses.

On another note, the crisis of airport infrastructure is staring at us in the face. Decades of poor planning has left us in a position where the growth in the industry cannot be managed till infrastructure catches up. While the Ministry of Civil Aviation is doing well to address the problem for the growth of airlines, it still must address the issue for infrastructure development for GA & BA. With Mumbai being closed for the growth of GA & BA till Navi Mumbai is operational, and Delhi delaying the construction FBOs by another two years, a study needs to be carried out by the Ministry to address the infrastructure planning for GA & BA over the next 20 years. As per BAOA report of 2016, even if we take an average CAGR of 7 per cent growth for this industry, a total of 700 to 800 aircraft and helicopters belonging GA & BA will be added to by 2030. This is an acute problem which requires immediate attention.

I hope you enjoy reading the present edition of BizAV India. Please feel free to contact me at rohitkapur@baoa.in with your feedback and suggestions. I look forward to getting your inputs on how to address the issues at hand.

Till then, Happy Landings and Safe Flying!