Flying on the green high club

The first commercial flight in India was a charter flight flown by Sir JRD Tata in the year 1932. That really was the foundation stone of India’s business aviation. The legacy of this historic milestone today lives on with India’s finest corporate institutions, captains of industry and charter companies. As India gets declared as one of the fastest growing economies in the world, the backbone of this growth comes in from India Inc. There is a growing realisation that business aviation is no longer a luxury but a necessity. I recently played golf in Delhi with Captain R K Bali, MD of Business Aircraft Operators’ Association, and he drew an interesting analogy of business aviation and the state of any country’s economy.

We tee’d off talking about the role of business aviation in nation building. BAOA has recently published a study on the close correlation of a nations’ GDP growth with business aviation, which has a direct, indirect and an induced impact on the economy. If you notice the nations which are on par with development, they have all taken business aviation seriously. For every Rs 100 spent on aviation, there is a 325% growth in other sectors. Time is money for a nation and better connectivity is an enabler for quick business turnaround.

While we all imagine the charter plane high fliers to be enjoying luxuries on the airways just like the swanky golfers on fairways, Bali holds that it is a must for emerging economies to lap on to business aviation. He is working on deregulating the sector and feels that skill based education is the future.

The BAOA notes that the purpose of using business aviation is to increase productivity by enhancing task completion, reducing sales costs and improving time management to boost shareholder value.

The misconception and false perception of business aviation being a rich man’s indulgence has led to successive governments both at the centre and the state ignoring this sector, while continuing to tax and over regulate it. I think it’s time our government realises that business aviation is an imperative element of air transportation. The government should consider giving tax subsidies to the sector just like they do anywhere else in developed markets.

Quite interestingly, 2007 saw a 18-20% CAGR in this sector on a YoY basis but it has now slowed down now. Keeping macro-economical factors under consideration, a 12% CAGR is ideal. Having said that, Bali is now creating an environment to birdie on the growth rate or maybe albatross or eagle on it.

While aviation turbine fuel pricing continues to play stalemate in the sector compressing margins, the long shot in the distant future will be hybrid models going into complete solar technologies. A lot is happening in this niche space all brewing in the background and a ‘hole in one’ by Bali of BAOA is sure in the offing.

Chaiti Narula is a business journalist and an anchor at WION