Business aviation is luxury, but also necessity for those who use it: Jayant Nadkarni

Jayant Nadkarni, president, Business Aircraft Operators Association (BAOA), an industry federation working for business aircraft operators in India, says the General and Business Aviation (GA/BA) industry is in recession. Nadkarni, who comes from a military aviation background having flown MiG-21 fighters in 90s, has been closely associated with commercial aviation industry since over two decades. In an interview with Shahkar Abidi, he spoke about the issues ailing the industry.

What ails the general & business aviation industry?

The three broad reasons are constrictive regulations, irrational taxation and insufficient infrastructure. These have caused the GA/BA operators to remain highly fragmented. To illustrate, on the commercial side there are more than 50 non-scheduled operators with just one aircraft, around 25 operators with two aircraft and another 10 to 15 with 3 aircraft. Add to this the private category operators and the fragmented picture of the industry worsens. Had our operators managed to grow their fleets, it would have brought in cost efficiencies and other benefits that accrue from economies of scale. Some operators have had to shut shop, many are mulling it, and several in the midst of selling off their aircraft to reduce costs. This is direct fallout of previous government policies. Signs from the NDA government were positive, and we were hopeful that a conducive and growth oriented regime would be put in place with the new national civil aviation policy. However, the new draft policy appears disappointing as none of our representations appear to have been met.

Last two years have seen a series of regulatory policies. How do they affect for the industry?

Our industry has faced a lot of operational complexities, which can all be attributed to the regulator having a non-consultative rule making approach. Take just one example wherein additional cabin crew requirements applicable to scheduled-airline operators were made compulsory for GA/BA operators without taking into account that we carry mostly 8 to 10 passengers and not 100-plus as the airlines do. It took four years for the understanding to seep in and relief to come for the industry. There are many more such examples. The point is that all this happens only because there is a non-consultative approach in rule making. Thankfully we see this as changing for the positive with the regulator, but it is still very sporadic.

According to the aviation industry captains the existing taxation regime is a cause of concern...

First, there is an incorrect perception of luxury, which has contributed to the current taxation regime. Business aviation is luxury for sure, but it is also sheer necessity for those who use it. We need the government to realise that an individual or company importing an aircraft is not doing this just for luxury, but also to use it as a business productivity tool, which can only be good for the economy. It should not make a difference if the plane is imported for private use or commercial use, both of which contribute to the economy. Captains of the industry really do need to move fast with flexible timings and in comfort using even air time to work on their projects, setting up factories, holding multiple meetings and so on. Just see the sheer numbers of business aircraft in the US, Europe, Brazil, South Africa, Mexico, Russia, and now even China, and you can see how business aircraft are playing a key role in enhancing productivity of corporates. Greater volumes of aircraft will result in additional revenue from service tax, which over a 5-7 year period will more than offset the revenue loss from import duty reduction from present NSOP duty levels.

The private charter operators functioning from Juhu airport allege that the airport operator has increased the charges by over 400% in past few months. However, the infrastructure and facilities are lacking. What is BAOA doing about it?

A delegation from BAOA recently met the secretary, Ministry of Civil Aviation and raised this concern, among other issues. We have witnessed manifold increase in charges/royalties in recent years at private and AAI Airports. The indiscriminate and unregulated airport charges being levied on account of ground handling, hangarage and parking needs to be standardised immediately. We have asked for the finalization of report prepared by Economic Advisor to the committee within MoCA in this regard. Moreover, the operators should be allowed self-handling at smaller airfields and competitive pricing at other privately operated airports. This is another reason we need to start pushing for separate GA/BA airport infrastructure in addition to existing airports to create at least a semblance of competition.

There is severe shortage of parking space for non-scheduled aircraft in Mumbai. How, according to you, can the situation be eased?

Mumbai, among the most prominent airports for GA/BA operations, is also the most space constrained airport in the country. There are about 45 to 50 GA/BA daily movements on an average at Mumbai, but the available parking slots have remained stagnant at 24 for the last 10 years. While additional parking space was created for scheduled airline operators during the upgradation in 2013, no additional parking slots were created for small aircraft operators. The Lima Bay at Mumbai airport, which is lying vacant after removal of old Kingfisher Aircraft, can be effectively used for creating additional parking slots.

One workable solution is the development of a civil enclave at HAL's Ozhar airport as a business aviation hub. It will still not solve the core problem of parking at Mumbai, but will most certainly reduce huge wastages & reduce costs, since currently GA/BA aircraft have to fly to far away Ahmedabad or Nagpur for parking, while most of their passenger pick ups and drops are in Mumbai. BAOA has given a special briefing to a team of HAL officials about the business aviation activity levels at the airport in Mumbai with an aim to provide a better insight into possibilities to develop Ozhar airport as a business aviation hub. A very long-term solution is creation of alternate infrastructure, for which the planned Navi Mumbai airport project is much delayed, and if the situation continues we may need to look at alternatives.

Thursday, 12 November, 2015