- December 6, 2016, 11:57 AM
India’s replacement of all Rs500 and Rs1,000 notes in an attempt to curb counterfeit and “black” illicit money is negatively affecting business aviation in the country. A shortage of the new currency since last month's announcement by Prime Minister Narendra Modi is creating problems for business aircraft operators, who have traditionally conducted certain aviation services transactions in cash in India.
“Our business has been affected…mainly because of our own operational compulsions of paying in cash for various purposes,” Jayant Nadkarni, president of India’s Business Aircraft Operators Association (BAOA), said yesterday during the release of the group’s “Business Aviation in India” report. With some 80 percent of the old notes withdrawn, the country is facing a cash crunch that is being amplified by cash withdrawal limitations.
Nadkarni told AIN that some flights had to be cancelled, as cash was unavailable to pay charges for landing, takeoff, parking and ground handling at smaller airports primarily run by the government-owned Airports Authority of India. With not enough cash in circulation, he said more flights might have to be refused.
“The problem will continue until airport owners and agencies start accepting payments online,” he noted. BAOA has held discussions with the Ministry of Civil Aviation about this. “We are worried especially because of the onset of the peak season now. If demand does not materialize, it will not be a good sign. If the situation continues, we could suffer a loss of around 8 percent. Only time will tell.”
Added Nadkarni, “We have all been bootstrapping, surviving. Though owners of charters are large companies, they have to deal with their own pressures.”
Meanwhile, regulator Directorate General of Civil Aviation has cautioned charter companies and pilots that they will be held responsible if they fly “demonetized” currency without security clearance. Screening of passengers and baggage in aircraft with up to 10 seats has to be done by the pilot-in-command. “While this has raised an additional layer of responsibility, BAOA is focusing on bringing in international best practices,” said Nadkarni.