Saturday, February 4, 2012

Bureaucracy and Costs Stifle Newborn Indian Bizav

Business aviation in India
BAOA is advocating the adoption of clear guidelines on access to Indian airspace and airports for foreign-owned business aircraft.
February 4, 2012, 6:00 AM
India’s Business Aircraft Operators Association (BAOA) is urging the nation’s government to abandon plans for new restrictions on flights by foreign-owned aircraft. The campaign comes as the country’s tax authorities are probing 15 Indian companies that they believe have registered corporate aircraft offshore with the intention of avoiding customs duty and taxes.

BAOA is advocating the adoption of clear guidelines on access to Indian airspace and airports for foreign-owned business aircraft. Under current rules, operators face a frustrating maze of bureaucracy resulting in delays and restrictions that negate the case for this mode of transportation.

“Arduous regulatory directives are restrictive for growth. There is no plan or policy, no FBOs or heliports and limited parking and hangar space for general aviation in India,” BAOA president Rohit Kapur told AIN. “The myth that business aircraft are toys of the rich for fun and frolic needs to be shattered. Business leaders fly these aircraft to save time, adding to productivity and GDP.”

The 39-member association is concerned that if the Indian government presses ahead with planned new restrictions, Indian aircraft might face retaliatory action overseas. There is concern that operating business aircraft into and within India has become so impractical as to discourage inward investment.

“Pain points [in India] start with getting clearances in a timely manner,” said Lex den Herder, vice president for government and industry affairs at Universal Weather & Aviation. In his view, India should consider a blanket or multiple operation system to reduce requirements for landing and overflight approvals, improve processing of formalities for customs and immigration and introduce a favorable climate for purchase and operation of business aircraft taxation and regulation.

The cumbersome and time-consuming procedures for buying, importing and operating business aircraft only make the situation worse. It takes three months to get security clearance for qualified pilots and a week or more to get clearance for foreign aircraft to land. In addition, there are arbitrary customs duties, high duties on spares, sales tax on aircraft transactions and high ground handling charges.

“Landing clearance [requests] submitted on a Friday will typically not be approved until 10 or 11 days later,” added den Herder. “Clearance Processing severely limits planning and schedule changes in this ever-changing business climate.” By comparison, according to Universal, clearances for China and India’s neighbor Bangladesh now take only 3 days, while four days are required for Dubai and one day for Saudi Arabia.

A classic example of India’s bureaucracy was provided by a flight into India made by executives with U.S. aerospace group Honeywell. Their aircraft had a hydraulic problem in Mumbai and they were unable to complete their planned business trip because it would have taken a week to get clearance to solve the issue. Mechanics flown in from the U.S. to oversee repairs were unable to obtain an airport pass to access the aircraft.

“The overall sense I get is that bureaucracy is clogging things up. From what I gather in the industry, the leadership of many OEMs say it is actually easier to ship something from outside India to India than within,” a General Electric customer was quoted as saying in a presentation by Universal at the recently held India-U.S. Aviation Summit in New Delhi. “It just takes too long to get parts and support to the spot where they are needed.”

“We try to plan to arrive overhead the airport with excess fuel because you can get one hour holding due to traffic saturation,” said a foreign pilot at the same meeting.

“We travel globally all the time and do not experience these types of delays and limitations anywhere else,” said den Herder.

Despite setbacks and a climate that is not entirely friendly to foreign investment, business aviation activity in India is growing, driven by a rising class of millionaires. BAOA predicts the Indian business aircraft fleet will grow three-fold over the next eight years, from the current 621 aircraft to almost 1,800 in 2020.

“Passenger growth in commercial aviation is estimated to rise at a compound annual growth rate of 17 percent. India needs to put into place the requisite safety mechanisms, airspace control and monitoring mechanisms, and landing clearance processes at a time when its airspace is already quite crowded. Now is the time to adopt best practices for India,” said an aircraft owner under condition of anonymity.

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