Business Aviation is Going to Get its Rightful Place Soon

Chaiti Narula – Boardrooms and Fairways – WION TV in conversation with Group Captain Rajesh K. Bali (Retd), Managing Director, Business Aircraft Operators Association (BAOA), about the challenges, the opportunities and the technological developments in aviation and business aviation sector in India,. Excerpts...

Issue: BizAvIndia 2/2017Photo(s): By Wion TV
Group Captain Rajesh K. Bali (Retd), Managing Director, BAOA

Q: You at Business Aircraft Operators Association submitted a research report that spoke about how a country’s GDP has a close correlation to Business Aviation in the country. Give us some sort of perspective, does that hold true only for India or is it something that holds true for the rest of the world as well?

A: It holds true for the rest of the world globally, in fact if you look at the history of aviation, nations who had taken a lead in this sector are today the developed nations. Aviation started in America, today they hold 70 per cent of global BA fleet and that is why they are the world leaders. Coming back to relationship with GDP, it has been researched by ICAO (International Civil Aviation Organization) which says that every 100 rupees spent on aviation leads to 325 per cent growth in other sectors. So that is the kind of effect it has on the GDP.

Q: But how is the science and the members come into being, really it’s a very interesting fact?

A: In fact, it has been well researched by ICAO and figures published by them. It is accepted world over not only with the GDP but also employment generation. Six times is the effect it has on employment generation, you employ 100 people in aviation sector today it generates 600 jobs in the allied sector, so same synergic effect is on GDP growth also.

‘I can tell you that this government is focused on giving this industry its due share of importance because they realised that if they have to connect India it is only through these small aircraft due to the type of airfields which exist today in India. This sector is bound to gain importance, more and more, as we progress towards becoming a developed nation and our GDP growth increases.’

Q: The usual perception about people taking business and charter flights is that “Oh My God that’s so much of a luxury” but could you clear that myth because the truth is far away from reality that it is absolutely a necessity in this country & at the same time there is too much over regulation as far as especially India is concerned in this sector. What are you at BAOA doing in terms of having talks with the right authorities to make sure that there is some sort of de-regulation that comes into place.

A: I think we have been largely able to break this myth about business aviation. It is essential for doing business efficiently and its necessity is felt by the political leaders too, who, during the election time, charter the aircraft to go to far flung areas to connect with their voters over there. It is only through these small aircraft that they get connected. I can tell you that this government is focused on giving this industry its due share of importance because they realised that if they have to connect India it is only through these small aircraft due to the type of airfields which exist today in India. This sector is bound to gain importance, more and more, as we progress towards becoming a developed nation and our GDP growth increases. Business aviation is going to get rightful place soon. You talked about regulations, yes of course, it is an issue because we need to have a professional regulator. Government is aware of it and committees have been formed. Fortunately, I am also part of one of the National level ‘consultative group’ on this and we are working towards that. Soon, we are meeting and I am sure within next six months to 1year we are going to take care of all the regulatory impediments.

Q: Here you are somebody who is a voice for civil aviation and for business aviation in this country and this is a question which is intriguing me for the longest time. You see the number of most of the airlines that are operating today, are working on very thin profit margins and most of them literally are running into losses. What I want to try to understand here is why would promoters and entrepreneurs want to start getting a foot in the door in the civil aviation sector if the sector is not doing that well& is not giving the right kind of ROI one would require when one enters the business?

A: Well you know aviation sector is a very challenging one and not easy to make it profitable, primarily because of one reason – the level of safety which is mandated at the international level is to ensure the chances of failure of any machinery or equipment is one in a million. To reach that level of safety assurance, you have to have lot of cost inputs built in the system and this is the reason that it is challenging and tough to make it profitable. You need players who are long-term, who come with a vision and good planning. You are talking about airlines running into losses, yes in India, they may run into losses but there is an airline like Indigo. Why they are doing fine so far is because they have come with a long term planning. They came with 20-25years of planning to sustain operations, to keep changing their strategy in between as per changing scenario in aviation and as per the changing eco system. Most of the airlines we have seen earlier were Government runs, PANAM closed because they did not have dedicated efforts towards making it profitable all the time and to monitor the situation on day to day or monthly basis to make it profitable, which it is very challenging. There is no doubt about it but I am sure someone is committed to doing it in the right way, can find the right way of doing it.

Q: Just shifting focus a little bit, disaster management is something can be very well taken care of by a country if you have better connectivity and increased number of fleet as far as charter planes are concerned. How much are we on track as far as India is concerned in utilizing the full capacity of charter planes in India?

A: See as a part of national policy in India, disaster relief is undertaken by the Indian Air Force (IAF). That is why when there were floods in Kashmir or wherever disaster strikes, it is the IAF which plays a major role. However, I will just give you an example of how business aviation can get in. You know when flood took place in Uttaranchal and there were earthquakes, it was a business aviation aircraft positioned already there doing pilgrimage flights which undertook immediate rescue operations. I think as a part of national policy we will have to look at integrating business aviation aircraft availability in certain areas for immediate relief during the disaster.

‘To reach that level of safety assurance, you have to have lot of cost inputs built in the system and this is the reason that it is challenging and tough to make it profitable. You need players who are long-term, who come with a vision and good planning.’

Q: You know there is one thing about the pricing of aircraft in India, we are paying very high import duties on aircrafts because we are laying at the mercy of the manufacturers& manufacturing countries. Why is it that India does not have its own manufacturing facility? What is really stopping us on that front because we have got RND in place, assembly centers in place. What is stopping us from manufacturing and building our own capacity as far as aircraft is concerned?

A: Well the reasons are historic. Aviation in India has only grown with IAF. The first Directorate General of Civil Aviation was an Indian Air force Officer. So it was a predominant position given to Indian Airlines which did not allow civil aviation to get the rightful place here. But I think now the realisation is there. Earlier the growth focus was only towards railways. Now, being a fast developing nation we are fast realising the importance of aviation and that is where now the manufacturing sector is also being given the attention. Component manufacturing should be beginning to pick up very soon and I am sure assembly lines will pick up in 5-7 years.

Q: How is the government really trying to give this sector the right kind of impetus & boost that is required to become selfsufficient?

A: I think recent times Government is trying to give every boost which is possible. Let me put it this way – 100 per cent FDI is being allowed but how much of it has actually come to us is to be linked with skill development. You have to have skill in India to have a sustainable system of growth and that is where education comes in. National Aviation University has recently been formed with Rashtriya Udan Academy IGRUA where they are going to focus on skill development. BAOA is partnering with them along with ministry to give the expertise on small aircraft. I think all this has to happen together, it cannot be in isolation. As far as import duty point is concerned there is a need to rationalise it. Look at all the developed nations, our focus should be only at them as we aspire to be one of them. In developed nations like US, Brazil, Japan the import duty is NIL whether it is Airline-Charter service-Private. It is because they realise that this is Capital Investment which will generate jobs and boosts the economy. There is no point in taxing them. We are working with the Government on it. They are not adverse to the idea of uniform tax structure for all commercial airlines system. We are also part of public air transport system, though it will take little time for them to realize the need to rationalise the import duty on aircraft in the private category. Duty here too needs to be rationalised from 22 per cent to 5-10 per cent so that the spare capacity can be utilized for commercial operations for creating a winwin situation.

Q: There has been misuse of business and charter aircraft and as far as the security of these aircraft is concerned, there have been instances reported in the past where the business aircraft were used for siphoning of funds as well. Of course you now got demonetisation going on and all of these factors really playing up on everyone’s mind of late. Give us a sense of how much are you planning to beef up security and where are the lapses really?

A: I am glad you asked this question as I would like to put things in the right perspective here. Unlike airlines, where a pilot comes, checks aircraft externally, prepares the cockpit and flies; the small aircraft pilot is multi tasked. The small aircraft fly from short runways, isolated places without appropriate facilities. Here, the pilot has to play the role of security officer also and, in foreign countries, because the labour is costly, he even cleans the toilet. Now here in India, because of lack of adequate manpower at BCAS, he has to play the role of a trained CISF person. Neither he has the core competency to do so nor there are X-ray machines to check the baggage. So, once these things are known to unscrupulous elements, they can take advantage of it. There has been an incident, I read in newspapers, post which a circular was issued by DGCA, reminding the operators of the task PIC has, while undertaking a flight, and the PIC has to be vigilant.

I do not agree that there has been siphoning of funds through charter aircraft during demonetisation. I would give some examples of people who brought counterfeit currency through airlines, when the facilities provided by Airlines are much better in terms of scanning of baggage through X-ray machines/security checks yet, such incidents happen. On the contrary look at the isolated and remote areas from where the PIC operates from with bare minimum facilities. I am sure they are diligently doing their jobs. Gradually, we will be able to plug those limitations and provide adequate manpower. In fact this is one of the requirements we have given for regional connectivity scheme that adequate security with equipment must be provided. This will take care of blaming it on the small aircraft, which is far from being true.