Indian Operators Push For Aircraft Interest Rate Breaks

The Indian government is aggressively promoting its Regional Connectivity Scheme, which encourages charter operators to run scheduled services, including some operating business jet types. To support that program by making new aircraft purchases more viable and help stimulate business aviation in general, the Punjab Haryana Delhi (PHD) Chamber of Commerce, supported by India’s Business Aircraft Operators Association (BAOA), has appealed to central government for an interest subsidy to bring prevailing interest rates from Indian finance agencies more in line with international rates for small-aircraft loans.

Bhupesh Joshi, CEO and director of Indian operator Club One Air, told AIN, “The present rate of interest is very high in India; at retail commercial rates of 14- to 16 percent, making it unviable. We have suggested the interest rate be capped at 9 percent.”

To ensure lending institutions have less liability and risk, BAOA has drawn up guidelines suggesting appropriate sizes and models of aircraft for regional sectors. “We have also suggested aircraft eligible for the subsidy should not be over five years old,” added Joshi. Discussions have been held with state governments of Gujarat, Uttar Pradesh, Andaman & Nicobar Islands and Rajasthan during pre-bid meetings for inter-state shuttle services. “Unless the central government takes a lead by presenting guidelines to the states, it is unlikely more operators will invest in aircraft acquisition. For an aviation company in India to get capital investment, it will have to be incentivized,” said Joshi.

India’s 2016 budget, announced Feb 29, contained little for the general aviation industry, barring development initiatives for unused and remote airstrips. Jayant Nadkarni, President BAOA told AIN, “While developing new airports is good, lower-interest loans for capital procurement for aircraft to fly to them, are a must. Before operations can commence, we need clarity on funding, taxation, duties, and incentives.”

Thursday, 3 March, 2016