India’s ministry of civil aviation is now working on a model that would better accommodate business aircraft management, India Business Aviation Operators Association (BAOA) managing director R.K. Bali told AIN. These new guidelines would help the country’s business aviation sector to become more cost-effective, he said.
Ravi Menon, founder of Air Works, India’s oldest and largest maintenance and services company, expects the final guidelines to be released in six months. AIN has learned that the ministry of civil aviation has appointed an economic advisor to liaise with numerous ministries, including those of finance and trade,to ensure the rules are enforced expeditiously.
“We are taking one step at a time,” noted Bali. “The next issue will be for easing of rules for fractional ownership.”
In the past three years, the number of nonscheduled operators in India has decreased from 139 to 110 due to the economic unviability of running these operations after the government introduced stricter laws on safety oversight. “There are no more shortcuts now,” explained Bali.
Invision Air co-founder Jayant Nadkarni said his company was forced to sell two aircraft because of the restrictions. “The cost of ownership crashes” because of the situation, he said.
Present guidelines require every nonscheduled operator to handle its own fleet management. Eighty percent of such operators in India have only one aircraft. Each owner is required to have a maintenance technician, flight safety manager, and a complement of pilots with every aircraft, increasing the cost substantially.
Even if the aircraft is not underutilized, operations costs go up by at least two to three times compared to an aircraft management company handling a larger fleet, said Bali. "As a result, economies of scale cannot be reached."
Air Works’ Dubai-based subsidiary Empire Aviation—one of the region’s largest managed fleets of business jets, with more than 25 aircraft under management—has been waiting in the wings to start aircraft management services in India. “Unlike the U.S. with zero import tax rates, certain countries in Europe also have differential tax rates on commercial and private aircraft as in India, but take a more mature attitude towards it,” said Nadkarni.
India imposes high and differential import duties on business aircraft based on their end use. For charter companies, it is at 18 percent; that rises to 28 percent for aircraft procured only for personal use. “We would like rationalization for both categories,” said Bali.