SP’s Aviation (SP’s): How do you perceive the growth of business aviation in India in the short and long term perspective?

Colonel Jayanth Poovaiah (JP): Indian economy (apart from the last 12 months) has enjoyed a relatively good period of growth. In fact, even in the current turmoil, India has not been impacted as significantly as the rest of the world. Indian entrepreneurs have created a tremendous amount of wealth over the last few years. Another important driver is the growth of second tier cities in India as centres of industrial and economic growth. With all major businesses having their corporate offices in metros like Mumbai, Delhi and Kolkata but their factories and facilities at smaller towns a few hundred kilometers away, demand for helicopter and light aircraft charter is bound to grow.

SP’s: What are the key problems plaguing day-to-day operations?

JP: At present, according to Civil Aviation Regulation (CAR) stipulations, a pilot is required to have a minimum of 100 hours Pilot in Command (PIC) to be eligible for Single Pilot Operations (SPO). This requirement is too high and restricts optimal utilisation of experienced pilots. Instead, any pilot having 1,000 hours PIC on helicopters should be cleared to operate SPO once he has 25 hours PIC on type. This will ensure that the pilot has adequate overall flying experience and is also adequately familiar with the type of aircraft.

Further, at many airports there is no transport available transfer crew to/from the aircraft to air traffic control and other locations. Even at airports where such facilities are available through the Airports Authority of India, the charges are very high.

SP’s: Describe the current business aviation environment in India. What should be the outlook in the short and long term?

JP: Currently, the business aviation industry is in a state of unstructured growth largely responding to the needs of corporate India. It remains dominated by a large number of small players who own one to two aircraft and are unable to optimise their fleets to offer nationwide services at reasonable costs that will also allow them to remain independently profitable. The industry needs a few large players with significant investment to provide a nationwide service, with optimised fleets. Another key area lacking is educating the market of the efficiencies of using business aviation. Businesses need to be shown the rationale of the cost of executive time and the efficiencies that are lost by not availing business aviation.

While more serious players are entering the sector and the government has made some progress by updating antiquated policies and infrastructure in the country to promote civil aviation, it still lags behind in meeting the needs of the growing market. Special and dedicated infrastructure will be needed to allow business aviation to grow to it full potential.

SP’s: What are key taxes/duties/levies/charges that add to the expense of owning and operating a business aircraft?

JP: Key taxes/duties/levies/charges that add to the expense of owning and operating a business aircraft are:
Taxes on lease of aircraft from abroad adds to cost significantly. Government should reintroduce the exemption under IT. There are not enough aircraft in India and importing will not adversely affect the Indian market.
Service tax element on the interest paid on lease finance which should also be removed, since the external borrowings are also expensive and increases the cost of operation. There need not be a tax on servicing of borrowings from abroad since this would not reduce the demand for domestic funds given that we anyway depend on funds from abroad.

Policy on any tax should be clear and unambiguous, as was the case of the applicability of service tax. Operators had to seek expert opinion. We do not have any other major taxes. Other taxes/duties/levies/charges in operation are:

• Customs duty on non-spares imports (tools, consumables, and so on).
• VAT, excise duty, and so on on all domestic purchases and service tax on a majority of services, including those rendered in India from abroad.
• Entry tax, Octroi (Mumbai) on all domestic purchases from outside the state of use
• Freight and forwarding.
• Landing and parking charges.
• Fringe Benefit Tax and Income Tax as for all.

SP’s: What are the main shortcomings in India’s business aviation infrastructure?

JP: There is a paucity of airfields for a country the size of India. Since airports do not have dedicated terminals for business aviation, passengers have to go through the same tedious processes like any other traveller. Helicopters are even lower on the priority and are not given separate entry and exit routes. As a consequence of this, inordinate delays lead to higher operating costs.