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Business Aviation in India: A Long Road Worth Traveling
February 18, 2013
Rohit Kapur would tell you that building an industry from the ground up is a struggle.
He has worked to bring two different business aviation organizations together within the past two years to form the Business Aircraft Operators Association of India (BAOA), of which he is president. Together with his directors and staff and approximately 60 members, Kapur has struggled to help India create a vibrant business aviation industry in one of the world’s most promising environments.
“Growth over the past 10 years has averaged 12.5 percent year-to-year,” he said. “We are cautiously optimistic. [Business aviation in] India has the potential to grow 25 percent year on year for the next decade. But that will only happen if certain factors fall into place.”
Educating the Indian Government
Right now, in order for a business to purchase an aircraft in India, it must first have the permission of the Minister of Civil Aviation, Kapur said. “This doesn’t work for general aviation,” he added.
Kapur pointed to that process as one example of rules and regulations that his association believes must be changed in order to foster growth in business aviation over the next 10 years.
“We are achieving some success in this area. The government is starting to listen and see how things are done globally. NBAA is always supportive. We are associated with IBAC and GAMA and are engaging with the U.S. Trade Development Agency,” said Kapur.
Still, Kapur believes one of the biggest challenges BAOA faces in educating the government of India about the benefits of business aviation is the mindset among some elected officials and regulators that general aviation aircraft are “toys for the rich.”
That way of thinking appears to have led to huge penalties for business operators who overstay their allotted parking at Mumbai Airport, Kapur explained. Privatized in 2006, and struggling with issues related to capacity and growth, the Airport Economic Regulatory Authority last July raised penalties assessed on charter aircraft that overstay their parking permits by a factor of 50.
“They took the easiest path to handling their problem with capacity. They hit the soft target – business aviation – saying, ‘You’re not welcome here anymore,’” Kapur explained. The charges apply to both domestic and foreign business and charter aircraft.
BAOA challenged the higher penalty, which is now the focus of a legal battle, according to Kapur.
Infrastructure and Taxes
“There needs to be a long-term road map, a strategy for the development of a general aviation infrastructure in India,” Kapur said. “I don’t see that being addressed by the government at the moment. Everything is so focused on commercial airlines that they’re not even talking about the fixed-base operators, the heliports. We’re not getting the kind of response that we need to get.”
Aside from regulation and infrastructure, Kapur said business aviation in India is being choked by high taxes.
“We pay huge import duties on aircraft which are imported into India. That stunts growth,” Kapur lamented. “There are huge duties and taxes on MRO [maintenance, repair and overhaul] activity in the country.”
The BAOA president pointed out that many of the issues his industry faces are not centered on the Civil Aviation Ministry, but rather on the Finance Ministry. That alone, he said, gives him confidence that the Indian government will eventually “sort it out.”
“Mindset is most important. We need to make government understand that this is all about economics – nothing more and nothing less,” he said.