India's FBOs Face Headwinds

 - August 19, 2019, 12:03 PM

General aviation in India, projected just four years ago to see a thriving future, today is a cash-strapped industry trodden under the weight of taxes and an economic slowdown. Sandwiched inside this scenario are the two FBOs at the Delhi International Airport (DIAL): Bird ExecuJet Airport Services and Indamer MJets Airport Services. Contracted in 2016 by DIAL, a single campus to house the two FBOs was supposed to be ready by October, but a senior official told AIN the facility to be inaugurated is “temporary,” with no conference rooms and added amenities. He added while Customs and Immigration would be available, “the start of the first phase would be announced later.”

Rajeev Gupta, managing director of Indamer, expects the permanent building to be ready by March 2020 based on a design supplied by DIAL. Two hangars to be shared by both the companies are under construction along with two ancillary facilities.

While earlier it was believed the two concessionaires were mandated to invest around $15 million each on the FBO terminal, lounges, hangars, fuel and parking, approximately $9 million is being spent on the joint FBO. Gupta is not very confident on return on investment. “We are expected to get our money back in 16 years when the lease expires, as against 40 years of the life of a hangar.”

"With the industry suffering financially, who in their right mind would invest in a facility that will only lose money?” queried R.K. Bali, managing director of the Business Aircraft Operators Association (BAOA). He said: “DIAL has sold them a dream of a great future that would have 150 private jet landings, and their return on investment would be outstanding.” He added: “The problem with trying to keep your head above water is the worry there could be shortcuts in future.”

AIN has learned the FBO had initially attracted 14 bids.

The biggest barrier to the FBO is the high revenue-sharing clause between the concessionaire and DIAL. According to the New Civil Aviation Policy, “Airport royalty and additional charges will not be levied on MRO service providers for a period of five years from the date of approval of the policy.” DIAL refused to comment. Gupta reminded AIN of the recent budget announcement that mentioned GA in a positive light but offered no policy or amendments. He added: “It is interesting India has a Civil Aviation ministry but not an aviation ministry that should include GA.

Bharat Malkani, chairman and managing director of Mumbai-based Max Aerospace told AIN it was “embarrassingly sad” that GA activity in India had declined by around 25 percent in the past three to four years. Reduction in tax, royalty (removal), and regulatory improvements are needed fast if we don’t want companies to wind up.”