Amid slowdown, 32 firms get nod to operate non-scheduled flights

Amid slowdown, 32 firms get nod to operate non-scheduled flights
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First Published: Tue, Sep 30 2008. 12 32 AM IST

Updated: Tue, Sep 30 2008. 12 32 AM IST
Mumbai: Despite a slowdown in Indian aviation, the coast is now clear for more than 30 companies to launch non-scheduled passenger airlines in the country.
The ministry of civil aviation has in the past four months alone issued at least 32 no-objection certificates, or NOCs, to firms that applied to operate non-scheduled passenger carriers—including large companies such as Bajaj Auto Ltd, Ashok Leyland Ltd and Hiranandani Aviation Pvt. Ltd.
Non-scheduled carriers do not publish timetables, operating piecemeal for each flight, usually on routes not serviced by scheduled airlines such as Jet Airways (India) Ltd or Kingfisher Airlines Ltd.
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This boom in non-scheduled operations is occurring at a time when scheduled domestic carriers are expected to report a combined loss of $2 billion (Rs9,380 crore) for the fiscal year that ends in March—largely due to higher jet fuel costs and falling passenger numbers.
“People are waiting for the market to (get) back in shape. They are getting ready with the licence and necessary infrastructure,” said Koustav M. Dhar, executive director of MDLR Airlines Pvt. Ltd, which runs charter operations on a non-scheduled licence and regional operations in north India under a scheduled licence.
Companies such as Reliance Commercial Dealers Ltd, Punj Lloyd Aviation Ltd, Welspun Logistics Ltd, Gujarat Adani Aviation Pvt. Ltd, Sun TV Network Ltd, GVK Aviation Pvt. Ltd and GMR Aviation Pvt. Ltd have earlier secured licences for non-scheduled passenger flights.
“Believe it or not, Indian companies, especially small and medium enterprises, are betting big on the corporate aviation space,” said Mark D. Martin, senior adviser, advisory services, at audit and consultancy firm KPMG India Pvt. Ltd. “Big companies are also bifurcating their aviation management into a different wing that could even fetch some investments.”
Currently, there are more than 160 non-scheduled operators, including passenger and charters. However, the charter aviation market is highly fragmented, with some 32 charter carriers operating a fleet of no more than two aircraft.
The trend of non-scheduled operators is similar to the luxury car market, said G.R. Gopinath, vice-chairman of Kingfisher Airlines and founder of the erstwhile low-fare carrier Air Deccan. “Because of economic reforms, the country has created a lot of wealth. And this will be used for high-end products,” said Gopinath, who also runs a non-scheduled operation through Deccan Charters Pvt. Ltd.
A September report on Indian aviation by consultancy Ernst and Young Pvt. Ltd quotes Empresa Brasileira de Aeronautica SA, a Brazilian maker of executive jets, saying that the country accounts for 12% of the global market for business jets. The Indian market is “gradually capitalizing on its business potential in charter aviation, which in turn could drive the demand for helicopters and very light jets,” the report adds.
However, Ramachandran Iyer, executive director of Chennai-based airline Air Dravida, a division of Premier Tours and Travels (Chennai) Pvt. Ltd, questioned the number of serious players in the new list, and said NOCs are liable to being misused.
“Many companies are importing through these non-scheduled operations to get exemption of 17.5% customs duty and 5% countervailing duty,” Iyer pointed out. “If you are importing for personal use, you will have to pay this.”
Recently, customs have collected more than Rs1,000 crore in bonds by seizing planes on grounds of duty evasion from Indian companies that bought planes for charter but put them to personal use.
“It is true that companies are doing this. But there are a lot of serious players. At least six new full-fledged players will be there in this space with decent fleet size by next May,” said an executive with a Delhi-based charter operator, who spoke on condition of anonymity because he is not authorized to speak to the media. “These permissions are also translating into aircraft acquisitions.”
For example, Bajaj Auto has secured permission to import two helicopters and an aircraft. Punj Lloyd, which already has a non-scheduled licence, has now got permission to acquire one Gulfstream 500 aircraft and in-principle approval for a Gulfstream 650.
Poonawalla Aviation Pvt. Ltd has also secured permission to import one Falcon 900 Ex, while MSPL Ltd has got a green signal to import one turboprop and one jet aircraft and an import licence extension for a Cessna Citation.
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First Published: Tue, Sep 30 2008. 12 32 AM IST