A variety of factors—ranging from infrastructural bottlenecks to an inflexible bureaucracy—has long stymied the growth of Indian business aviation

The recent protracted election process may have tested the patience of many but it proved a boon to Indian business aviation. With scores of indefatigable netas keen on addressing election meetings across the country, air charter never had it so good. For weeks it was party time. As Fredrik Groth, CEO of Air Works said, at the time, “With election time on in India, the helicopter charter industry has left the recession hit market far behind and seems to have overcome all figures in this regard.” One source estimated that as many as 55 helicopters flew 600 sorties during the period. In the process, many of the unique characteristics of non-scheduled aviation were highlighted: the ability to reach far-flung places in quick time, the freedom to revise plans and schedules at short notice, the privacy, the sheer convenience.

However, a variety of factors—ranging from infrastructural bottlenecks to an inflexible bureaucracy—has long stymied the growth of Indian business aviation, preventing it from achieving its huge potential. Now that a stable government is in place in Delhi, hopes have been raised that systemic shortcomings will be tackled with much-needed determination.

Recession Bites
The current global recession that has inflicted considerable pain on India, seems to have clouded the prospects of the air tag in 2001—the dollar denominated pricing makes import of aircraft that much more expensive. Government regulations also seem somewhat lacking in clarity. Captain Karan Singh, President of Business Aviation Association for India (BAAI), says, “Import duty on business aircraft is very short-sighted. The process of acquiring an aircraft is cumbersome—it takes from three to nine months. Also, the RBI regulations to move money create a headache.” (Refer to ‘Fractional Ownership is a Failed Model in India’, SP’s Aviation, July 2009.)

Another headache seems to be on account of the Customs Department. Customs officials allege that some companies obtained non-scheduled operator permits (NSOP) for their aircraft but instead put them to personal use; others floated a company to import aircraft, then chartered them to the mother company; in still other cases, companies, after importing aircraft, sold, leased or chartered them to those who did not have an NSOP. However, if an aircraft imported for non-scheduled services is put to personal use, the taxman takes a dim view, and a huge fine is imposed. Consequently, over the last few months, many businesses have taken fright and altogether scrapped plans for importing aircraft.

An Indian Model
Despite the prevailing economic gloom, experts are unanimous that India’s long-term growth story is intact. Once the current slowdown passes the rebound is expected to be vigorous. The same goes for business aviation. A number of industrial parks and special economic zones (SEZs) are under construction, many in remote areas. Executives need to travel to and fro expeditiously and free of the hassles of commercial flights. According to BAAI estimates, India already has 275 private fixed-wing aircraft, plus 227 helicopters. However, to view this figure in perspective, at the close of 2007, the US fixedwing business fleet alone comprised nearly 34,000 piston, turboprop and jet aircraft. Obviously, India’s business aviation sector is growing from a low base, and has excellent mid-to long-term prospects. Though growth has slipped from the predicted 40 per cent pace, it is still a healthy 25 per cent.

The coast is now clear for another 30 companies to launch non-scheduled services in the country. They will swell the existing figure of over 160 charter operators, including passenger and cargo. However, therein lies the rub. The tally of aspiring charter operators is long—like the list of over a thousand Indian political parties—but not all are serious players. Yet another imperative is to develop a business model specifically tailored to the Indian scene. Some believe that fractional ownership faces a culture bias and is unlikely to succeed. Nigel A. Harwood, CEO Inter Globe General Aviation Private Limited explains, “There is a mental setup in the clients here which does not believe in sharing aircraft. All owners want the aircraft exclusively for themselves and at their beck and call.”

While this may be true from the owner’s perspective, as far as end-users are concerned India’s aviation market is remarkably price-sensitive. If a customer believes the price is right, he or she will bite. On the other hand, privacy is not the critical issue as it is in the West. Everything from auto-rickshaws to accommodation is cheerfully shared with perfect strangers—so long as it saves money. Another opinion, therefore, is that the future belongs to aircraft pools or shared air-taxis. The enormous latent demand for affordable business aviation could well be met by social networking services which make use of the Internet to match businesspeople with business flights. As always, information holds the key.

Then there are empty seats and empty legs. If a Mumbai-based executive needs to be in Kolkata the following day and learns there’s a free seat on a Kolkata-bound business jet, albeit of another company, wouldn’t that be wonderful? Full-paying customers sometimes book a one-way flight which means the aircraft has to return to its home base unoccupied. Such unoccupied flights are known as empty legs. Business travel agents could send “empty-leg emails” to those wishing to be kept abreast of such golden opportunities, once again enabling a perfect match.

Silver Lining
Another prospect opening up for Indian business aviation lies in the drop in service standards of scheduled carriers as they struggle to rein in costs in a harsh economic environment. The muchawaited economic recovery is likely to be accompanied by a steep rise in the price of fuel, and where will that leave the airlines? Probably with little choice but to hike fares and slash flights and routes—a strategy sure to drive away many more passengers. This gap could be filled by air-taxi operators prepared to offer no-frills, low-cost, point-to-point and efficient services.

In fact, for a variety of reasons, AirNetz Research predicts a dramatic share-shift from commercial to private aviation. According to its latest study published in April, passengers carried by non-scheduled operators increased a stunning 70 per cent from 2007 to 2008. The numbers equalled 1.5 per cent of the passengers traveling by scheduled airlines and the ratio is rising. The lowest hourly charter cost for a five-seat turboprop aircraft has dipped to Rs 55,000, implying a per hour-per person price tag of Rs 11,000—or 3.5 times as much as on a commercial airline. AirNetz also finds that turboprop charter is the biggest growth market in India, increasing at over 50 per cent annually.

Going by these trends, AirNetz predicts that by 2014, the cost of flying in a private air-taxi will equal the cost of taking a scheduled commercial flight. This is incredible, because it hasn’t yet been achieved anywhere in the world. If the prediction were to come true, it would be only a matter of time before non-scheduled travellers equal or even exceed the numbers using regular airlines.