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Business Aviation in India: Patience Required, But Opportunity Abounds
June 10, 2011
Similar to the industry environment in China, India in some ways offers great promise for business aviation.
It has a population of more than one billion, a growing and vibrant economy and a business culture that is discovering that a business airplane is a timesaving, productivity-increasing business tool. Many of the world's aircraft manufacturers already are building sales and service bases there to get in on the ground floor.
But, unlike China, where government officials increasingly are making it easier for business aviation to grow and expand, India imposes an onerous and sometimes mind-numbing array of regulations. A massive and complex bureaucracy makes simply flying into India via business aircraft a time-consuming affair by requiring at least seven days advanced notice to receive the necessary permits to enter the country.
Once there, the lack of full-service FBOs, as well as limited maintenance and support staff, can turn even simple repair issues into major headaches; especially if parts have to be shipped in from another country.
Even flying within India via business aircraft can be difficult. For example, India requires all passengers on business aircraft to be issued boarding passes, even when flying on demo flights. And, many airports in major cities, including New Delhi and Mumbai, bar business aircraft flights during evening hours.
Add in onerous import duties of as much as 20 percent, and currency outflow restrictions imposed by the Reserve Bank of India (the country's central bank), which severely limit aircraft sales to outside buyers, and one wonders how business aviation can survive, let alone thrive, in this vast country of contrasts. "India has made bureaucracy an art form," said Chris Buchholz, vice president of Asia/Pacific of Universal Weather & Aviation, Inc., in summing up the challenges there.
Adds Trevor Esling, vice president of international sales of Cessna Aircraft Company: "It's one of those markets where you have to be very patient. The whole process of just buying an airplane takes a lot of time because of the bureaucracy."
Due to cash-outflow limits, deposits on aircraft purchases by Indian-based buyers typically are limited to about $100,000.
"And, when you actually come to close the [sale] of the airplane and take delivery, there is a further limit of around $1.25 million, so the balance typically is financed somehow," he said. "Financing, itself is quite a challenge."
Import duties of roughly 20 percent add even more to the purchase price. "On a $10 million aircraft, that's another $2 million you have to find," Esling said.
India did allow non-scheduled, or AOC-135 operators, to bypass the tax, but the government now imposes a 2.5 percent duty on aircraft imported by those operators.
Nonetheless, Esling and others say India's fledgling business aviation market is growing after several slow years. And its future potential is huge. "The encouraging thing is that despite all of the difficulties of buying and then operating an aircraft in India, people are buying them," Esling said. In fact, as of March 15, 2011, there were 136 private jets registered in India, according to a report published by Firestone Management Group (FMG), in Miami, FL.