India presents a ripe market for business aviation, if the industry can overcome significant regulatory and infrastructure hurdles, they emphasized at India Aviation.
April 8, 2014, 4:50 AM
The economic downturn over the past couple of years has resulted in negative growth for Indian general aviation, which has “hit rock bottom,” according to Rohit Kapur, president of the country’s Business Aircraft Operators Association (BAOA). Nevertheless, the Indian bizav community hopes that a general election next month will result in more decisive political leadership and effect change to a regulatory environment that many agree has stifled growth in their own industry and the wider Indian economy.
“General aviation is directly related to the health of the economy, and once orders start coming in [for Indian companies] I am confident regulations will fall into place,” Kapur told AIN. “If business is sluggish it is difficult to convince the board that an aircraft is an urgent buy.”
The past two years have seen Indian owners divest themselves of some 30 helicopters, and some 15 jets have left the national register. While most aircraft sold were smaller types owned by charter companies, larger corporate operators are also increasingly cutting their fleet sizes. These include Larsen &Toubro, Essar Group, Jindal Steel & Power, Reliance Infrastructure and Grasim Industries. Reliance, for example, sold its Beechcraft King Air and a Hawker, as well as a Bell helicopter that it had operated until recently. Last year, Essar shut down its in-house engineering department of eight to 10 people. Others are looking at similar exits from business aviation, according to the BAOA.
“Downsizing is detrimental to growth of the industry. People are losing jobs,” said Kapur. “We need consolidation to bring in efficiencies. This has not started in India yet, though theBAOA is making a push for it by holding discussions with the regulator–the Directorate General of Civil Aviation [DGCA]–to recognize aircraft management companies that offer an integrated asset-management approach to owners.”
Kapur told a press conference at last month’s India Aviation show in Hyderabad that 13 aircraft were imported into the country last year and 19 were sold. The BAOA estimates the inventory values of GA aircraft in India to be around $2 billion. Noting that there has been a decline in industry projections, Kapur said, “In 2011 we predicted there would be 786 aircraft in the inventory [by 2013]. Unfortunately, we have not reached even half that number.”
Calling for a roadmap for general aviation, Kapur emphasized the need for regulations that do not lump GA together with airlines as the two sectors “have different needs.” Scathing in his comments, Kapur said GA infrastructure is virtually nonexistent in India, as manifest by a lack of heliports, FBOs, hangars and parking space. “Airports consider us an unwanted irritant,” he said.
According to the BAOA, only 50 percent of heavy maintenance and almost 100 percent of engine repair work has to be sent outside the country. Most MRO operators with hangars on lease in Delhi and Mumbai have been given notice by airport developers to vacate the premises, with no alternate sites offered.
Regulatory Impediments to Growth
For now, the complex mesh of DGCA regulations continues to make life difficult for business aircraft users. The BAOA has suggested that private companies or holders of air operator certificates be allowed to take over the management of aircraft “that can generate revenues when not being used by the owner.” An ICAO-led team endorsed this recommendation in a draft general aviation policy submitted to the Indian government in April 2012, but Indian officials have yet to implement any coherent regulations for the sector.
Recently, Kapur suggested the authorities mandate that owners of fewer than three aircraft use management companies. Such a requirement, he said, would help raise safety standards and improve cost-effectiveness. “The DGCA has said it has problems [overseeing] some 164 NSOPs [nonscheduled operator permit holders],” he stated. “This proposal would reduce the number to around 35 and create fewer administrative hassles. Also, the DGCA has to address ICAO requirements for safety and quality, thereby intensifying the burden on owners. Even those with just one aircraft have to hire at least five people [to operate it],” he said. With standards of training not up to the mark and a shortage of people to run operations’ departments, “the important step is to consolidate,” said Kapur.
A major regulatory issue facing the industry is a DGCA requirement that mandates installation of a cockpit voice recorder and a flight data recorder (extended by a year to December 31 this year) on twin-engine aircraft weighing less than 5,700 kg (12,566 pounds). The BAOA has cautioned that the high cost of installation and certification may result in the disposal of many aircraft.
“Time is ticking,” Kapur told AIN. “We had asked the DGCA to do an economic analysis. That hasn’t been done. We’re slowly creeping toward confrontation again. This is affecting sales of aircraft into India, which have slowed as sellers are unable to install this equipment on aircraft manufactured before 2007.”
The BAOA also wants India to rationalize its differential rate of customs duty–18.5 percent for aircraft intended for private use and 2.5 percent for charter companies. “Duty imbalance is killing the industry. The government should impose a nominal duty for both categories,” said Kapur.
Indian-owned subsidiary companies regularly flying aircraft in and out of the country face customs difficulties. The BAOA maintains that customs rules in general have far too many loopholes in India and leave a lot to interpretation, all of which acts as a further disincentive to aircraft ownership.
In addition to regulatory hurdles, the Indian industry faces shortcomings in terms of airport infrastructure, most notably a lack of parking areas for business aircraft. “Mumbai is a mess. Approximately 70 percent of owners have moved their aircraft to neighboring airports,” explained Kapur. “This defeats the idea of owning a business aircraft. We are hearing rumblings about people saying they may as well charter aircraft to save time,” he added.
Some in the industry have suggested that the government revisit the operation, management and development agreement signed with its private joint-venture airport partners. The BAOA maintains that this agreement was structured to discriminate against access for business aviation. “The government has put us on a path of confrontation” with airports, which “view [GA operations] as intruders,” said Kapur.
Following discussions with the government, Kapur is hoping authorities will give consideration to the establishment of new FBOs and heliports. In particular, he wants a more favorable environment for operators engaged in services such as aerial photography, emergency medical flights and power-line support. At present this work is benefitting overseas operators that employ foreign pilots, simply because it can take a domestic operator six months to obtain clearance to conduct a three-month contract.
Kapur acknowledged that the business aviation industry has made some progress in rationalizing the Indian government’s approach to regulating it. For example, operators of foreign-registered aircraft can now obtain landing permits in three business days, down seven days. Overflight permits can now be issued in one day rather than three. The government has also authorized Indian consulates overseas to grant business visas to visiting crew.