Positive Economic Impact

While it is difficult to quantify the impact of multi-modal transportation on the economy, it can be unarguably said that without transportation there is no economic growth. It has to be a judicious mix with chunks of capitalism and socialism. That the present government understands the importance of civil aviation in economic development is known and it is said to be working towards facilitating reforms.

The Modi Government has rightly announced a policy to expand regional and remote air connectivity in its bid to tap into the richness of the hinterland. And ‘general aviation’ is at the core of this policy. Whether it is for offshore oil rigs, whether it is to move people and goods from and to areas not connected with airstrips, whether it is for disaster relief operations, whether it is for medical evacuation, whether it is for reconnaissance or tourism, general aviation is the answer. Fixed-wing (turboprops and jets) and rotary-wing aircraft are deployed with great effect for the activities mentioned above.

With this realisation, efforts are on to develop non-metro airports and heliports, besides other aviation-related activities. The intent is there, one needs to wait and watch how soon they take off. As the environment gets conducive one is likely to see enhanced general aviation activity.

Presently, there are 124 non-scheduled operators with 365 aircraft (business jets, helicopters, turboprops etc). The Business Aviation Operators Association of India (BAOA) has pegged the business aircraft numbers at over 550 (both private and NSOPs) and these numbers are expected to go north with the momentum that the government promises to give. In fact, it is the present ruling party that made the best use of general aviation in its run-up to the Lok Sabha elections. Its lead campaigner and now the Prime Minister, Narendra Modi, crisscrossed the nation using business jets and helicopters. The campaign was widespread and successful, thanks to general aviation.

While the government has to further capitalise on the potential of general aviation, it should also keep in mind the aspirations, the needs of the high networth individuals who contribute significantly to economic development.

The general aviation sector, specifically business aviation, is set to grow fast as the number of high networth individuals is expanding. Forbes has estimated that India has 55 high networth individuals (billionaires) and there is a growing class of individuals (celebrities, politicians, corporate executives, etc) who have started using general aviation for their business and travel needs. The general aviation market in India is expected to grow at 10 per cent per annum to cross Rs. 16 billion by 2017 with operators acquiring about 300 business jets, 300 small aircraft and 250 helicopters. As per the report of the Working Group of the 12th Five Year Plan, a total investment of over Rs. 200 billion in general aviation is expected during the Plan period.

POTENTIAL IN EMERGING ECONOMIES

Presently, the United States and Europe remain the two largest markets for business jet aircraft in the foreseeable future, the emerging wealth of certain nations—particularly Brazil, Russia, India and China—will fuel increased demand for business jet aircraft, as was demonstrated during 2006-10. The economies of these countries grew at a faster pace than those of the traditional markets, such as the United States and Europe, during this period, in part because the economic downturn was not as severe for these markets.

Growth in some of the business jet markets of these countries, however, is limited by restrictions on airspace usage and poor aviation infrastructure. Moreover, high import tariffs in both Russia and India, along with India’s stringent operating regulations for business jets, also present challenges to sales of business jets in these countries. The net effect of these restrictions, infrastructure limitations, and tax challenges will slow the expansion of these countries’ business jet fleets when compared to those of the United States and Europe. In India the issues are hangar space, inadequate infrastructure, and high taxation among other issues.

General aviation sector in India had witnessed growth that started in 2002-03 and peaked in 2006, when the growth rate was 26 per cent. But, gradually, over the years, the segment witnessed a slow down. It is visible from the fact that there was a sudden slump after unreasonable taxes on the purchase of aircraft were imposed in 2007. In 2013 there was negative growth as some of the general aviation aircraft were sold outside India.

As the government is providing incentives to industries to set up plants in backward areas, small airstrips and small aircraft make viable business propositions. Business aviation would help in providing about 70 per cent regional connectivity through code-sharing, which is being negotiated with the Ministry of Civil Aviation by the industry.

INDUSTRY SUGGESTIONS

The Secretary of the Business Aviation Operators Association (BAOA), R.K. Bali, has outlined what the government needs to do to prop up the general aviation sector.

• Firstly, the government should provide the required infrastructure for business and general aviation to grow.


• The taxation policies on purchase of aircraft should be reconsidered. As this is a capital good and no threat to indigenous industry, it should be abolished or significantly brought down.


• Requirements of NSOPs, which is much different from the commercial airliners; should be understood and considered while framing policies.


• We are asking the regulatory authorities and Directorate General of Civil Aviation (DGCA) to give approval to International Standard for Business Operations (ISBO), which is a document advised by the International Business Aircraft Council, matching the International Civil Aviation Organisation (ICAO) requirements for operations of business aircraft.


• Issues of Bureau of Civil Aviation Security on training needs for crew and issue of airport passes, have to be addressed.


• The Operational Management Development Agreement (OMDA), which was signed with Delhi and Mumbai in 2006, needs to be amended and reframed for the other airports, which are coming up on PPP model. Unless you include these specific requirements of business and general aviation, these airports will not become regional hubs for providing regional connectivity.

The BAOA has been proactive and is constantly interacting with the government. Recently, it suggested to the government that it put in place separate regulations (Civil Aviation Requirement) for Scheduled Commuter Airlines (SCA) before the new policy is implemented.

The Civil Aviation Ministry had on March 18 circulated the draft policy for stakeholders consultations with the last date for response being March 30. According to the BAOA, there is no way SCA would take-off without proportionate rules being issued as per the size, weight, passenger capacity, area of operations among others.

In the proposed policy, the government has sought to do away with the regional scheduled airline category and in place allow them convert into scheduled, or scheduled commuter airline after three year of their operations. At the same time, there is also a proposal to allow non-scheduled operators convert into a scheduled commuter airline or a charter operator after one year of operations. The Association has also urged the ministry to issue guidelines for code sharing between SCA and SA, adding that it may also advise SA on how to share operational arrangements and functions with SCA, especially at metro airports, in coordination with airport operator.

Code share arrangements would be allowed between scheduled airlines and scheduled commuter airlines, and SA may have any commercial arrangement with SCA where all operational arrangement and functions may be shared between them under the proposed norms, BAOA said. Scheduled airlines may have arrangements with any other airline, where deployed capacities may be adjusted among themselves to meet mandatory operations, according to the norms. The Association has also recommended that SCA be provided with all the support in terms of zero landing and parking charges. Dedicated regional SCA hubs (other than metros) should be created at around 20 airports, as suggested earlier by BAOA, to have adequate MRO and night parking facilities for SCAs, the association said in its response.

Developed economies have shown how air transportation, along with surface and marine, can be seamlessly networked for them to add to economic growth. The reforms initiated seem to be in that direction and it now pegs on effective implementation.