Asia-Pacific Round-Up Jet Aviation/SkyPark developments open- while trouble brews in India. Despite the credit crunch- many within the business aviation sector reckon that the Asia-Pacific region is in a better condition to weather the storm than many other parts of world. Since this quarterly feature appeared last- the Summer Olympics have come and gone- Jet Aviation- which has become the major player in the region- has been taken-over- and there is trouble in India for some business jet ...
Jet Aviation/SkyPark developments open- while trouble brews in India.
Despite the credit crunch- many within the business aviation sector reckon that the Asia-Pacific region is in a better condition to weather the storm than many other parts of world. Since this quarterly feature appeared last- the Summer Olympics have come and gone- Jet Aviation- which has become the major player in the region- has been taken-over- and there is trouble in India for some business jet owners. This is just a sample of what’s been happening and what’s been brewing in the region over the last three months.
Considering that the Beijing Olympics start and finish dates had been set in stone for at least eight years- it takes a brave consortium to face running the premier business jet operation for such a massive world event- just four months from start-up. This is exactly where the joint venture of Jet Aviation- Deer Air- and Reach Investments- found themselves after their joint announcement on April 17th that they planned to open a new FBO facility at Beijing’s Capital International Airport (PEK)- and be ready to handle aircraft for the opening day celebrations on August 8th.
Work on the futuristic three storey FBO executive terminal (3-300 square meters) was started just before the agreement was signed- completed in less than six months- and just ready in time- although it is only now (in the fall) becoming fully operational. A 6-000 sq m hangar should be ready by the beginning of 2009.
A Jet Aviation spokesman said- “The operation represented one of the most challenging and exciting events that we have ever undertaken.” Jet Aviation offered maintenance and ramp services for over 300 aircraft during the frantic period- together with Capital Jet- a subsidiary of Capital Airport Holding- which took care of passenger handling. “Twenty-three skilled ramp handlers were brought in from our US facilities- five maintenance experts came from the US- Asia and Australia- and managers arrived from Europe and the US-” Jet Aviation explained.
This movement of specialist personnel to major events has become a regular occurrence for large FBO chains- in the States for Super Bowl- and around the world for other ‘mega events’. Altogether there was a team of over 70 people on hand to smooth the operation for probably the most discerning clientele on the planet.
“Peak traffic in Beijing occurred on August 7th and 25th- with 121 arrivals and 67 departures on the 7th-” said our spokesman. “On the night of August 8- there were so many business jets on the ramps - a sight never before seen at the Beijing airport - that people flocked to have a look.” The company says that it undertook more maintenance than it had expected- with staff replacing a windshield and repairing landing gears- as well as mending an APU and fixing avionics and oxygen systems. “These services allowed aircraft operators to continue with their travel plans without lengthy maintenance delays.”
To guarantee top maintenance services- “Jet Aviation managers flew to China ahead of the Games and met with local OEM representatives to plan the operation. Bombardier- Dassault and Gulfstream actually had representatives present at the FBO during the Games- while Honeywell placed both a representative and a parts store on-site. The global logistics company Fiege worked with Jet Aviation throughout the operation to ensure an efficient supply chain-” the spokesman continued.
While all was happening for Jet Aviation in Beijing- an even more momentous announcement was made as the Olympic Games continued when General Dynamics announced (on 19th August) that it was acquiring the Jet Aviation Group.
The transaction is subject to normal regulatory approvals- and is expected to close by the end of 2008 (see our Peter Edwards interview on p136 for more details). “…Our focus will continue to center on fulfilling our customer commitments while extending the global reach of our current lines of business- further enhancing our long standing relationships with all OEMs- partners and customers-' Peter Edwards- CEO of the Jet Aviation Group explained. Following completion of the deal- Jet Aviation will emerge as a new business unit within the General Dynamics Aerospace group operating under the Jet Aviation and Midcoast Aviation brands.
Trouble Brewing in India
According to a story broken by the Times Of India- more than six business jets and helicopters were impounded by India’s Commissionerate of Delhi Customs (Preventive) as aircraft owners allegedly evaded the new blanket 25%-27% import duty on the importation of private aircraft. Some owners have since deposited bonds to the amount equivalent to the cost of the aircraft to get them provisionally released. The aircraft included an Airbus ACJ- a Global 5000- a ‘Cessna Jet’ and four helicopters according to the report.
The Times Of India article said- “Any import of aircraft under the Non-Scheduled Operator (NSOP) (passenger) category provides for availability of these aircraft to the general public for non-scheduled and charter flights. The guidelines strictly prohibit use of these aircraft for personal use. In case the aircraft is diverted for personal use- the importer has to pay a duty of around 25%-27%. Sources said nearly 250 private jets have been brought into the country in the last two years by allegedly mis-declaring facts and diverting them for private use.”
“This 25%-27% import duty in the private aircraft category is a new tax introduced by the Indian Government during the last financial year (actually March 2008) – prior to this there was no such tax on private aircraft-” said a high-ranking India-based OEM representative speaking to World Aircraft Sales Magazine as we went to press.
Imported aircraft for the business aviation charter category (NSOP) are exempt from the tax- but Indian Customs are scrutinizing all new import applications. The source explains that some large Indian companies and groupings operate corporate aircraft which were imported under the ‘charter category’ but are not then chartered-out. Customs now deem some of these aircraft to be in the private category and therefore are demanding the duty.
“Arbitration is going on right now- and the impounding is not necessarily to enforce the payment of duty but the equivalent of the duty as a deposit until the arbitration is resolved-” explains the source. “This process is concerning a lot of business jet customers. If you look at it from the Government viewpoint though- it is trying to increase its revenue-base as it sees large companies making a big profit- so they should pay the tax on these aircraft.
“Given that India is in the run-up to a general election (next March) one arm of the government is trying to maximize its revenue.”
So how long will it take to resolve the situation we asked our source? “If these guys win their case in front of the Supreme Court or some kind of Arbitration Panel- then it’s fine- but if not- then it’s going to take a while depending on which government comes in and how it decides to handle the issue. It’s going to have an impact especially on the smaller buyers; the bigger players will obviously still go forward as their need is more crucial-” he explained.
Another source adds- “Some people were avoiding the tax by ‘gifting’ aircraft- and that a Government review could take at least 12 months to deliver a judgment.” The insider says that even those privately-owned aircraft that are managed- and might spend as much as 95% on charter- will be checked-out by officials for compliance.
Yet another source goes even further saying- “People have set up their own Charter AOCs in the hope of avoiding paying the importation tax- but the authorities are finding that they aren’t being used for charter at all. I heard that Customs were trying to claim back something like $400 million.”
Deccan Launches SkyLimo
Staying in India- Deccan Aviation has launched its Deccan SkyLimo helicopter shuttle service to Bangalore’s new international airport. New- connecting roads to the airport haven’t yet been built and road travel times are very slow according to locals.
The service started with a Bell 206- and another helicopter is being added according to the company- which has ambitions to open similar services in Mumbai and Hyderabad- basing two helicopters at each location.
Meantime- the business aviation FBO Subang SkyPark at Sultan Abdul Aziz Shah Airport- Malaysia- was officially opened by Malaysia’s Deputy Prime Minister Dato’ Sri Mohd Najib bin Tun Haji Abdul Razak- with the Minister of Transport Datuk Ong Tee Keat in attendance.
The top men from joint FBO operators ExecuJet and Hawker Pacific were joined by VistaJet chairman Thomas Flohr whose first two charter aircraft (a Challenger 605 and Challenger 850) have become the first residents based there. VistaJet has placed a $1.2 billion order for 35 Bombardier business jets- including an option for an additional 25 aircraft.
Combined with the Skyjet International transaction- VistaJet's fleet will expand to 94 jets by 2012. The company recently forecast a 50 percent increase in revenues for this year and has ambitious growth goals through its SkyPark hub.
SkyPark’s FBO interior work was due to be completed by the end of October- while its futuristic exterior is due for completion this month. Work on the design and execution of phase two of the Skypark project includes accommodation for both ExecuJet’s and Hawker Pacific’s full business aviation MRO facilities- including new and pre-owned aircraft sales and aircraft management offices.
Wati Yaakob has been appointed SkyPark FBO Malaysia’s operations manager- and is one of the first women in Asia to be appointed to such a senior position within the industry.
Japanese Ray of Hope
The Japanese Business Aviation Association (JBAA) admits that there has been a long held perception that Japan is one of the most problematic countries for effective business aviation use. It says it still takes three to seven days’ prior permission to get slots through Tokyo’s Narita and Haneda International airports because of heavily congested airline traffic.
There does seem to be light at the end of the tunnel though for Japan’s business jet fleet of less than 100 aircraft- and hopefully for international visitors too- as earlier this year the Japanese Government (Ministry of Land- Infrastructure- Transportation- and Tourism) made a series of surveys to promote business aviation in Japan.
It has recognized - says the JBAA - that “entry procedure to airports in Japan is a nuisance- and the regulatory system is not optimized for business aviation. Facilities and dedicated business aviation services are very limited- as is airport capacity in the Tokyo megalopolis area.” In the words of the JBAA- “The government has opened improvement programs to the public including- but not limited to- the following:
• Make it simple to request landing slot- parking spot- and other operational permission.
• Shorten seven days prior permission at Haneda airport.
• Explore optimum rule to maximize availability of parking spot at Haneda airport.
• Enhance availability of CIQ (China Inspection & Quarantine) inspection.
• Improve routes where business aviation passengers are segregated from airline passengers.
• Enhanced and effective security inspection appropriate to business aviation passengers.
• Explore safety regulations that suit business aviation.
• Explore regulations for fractional ownership.
• Provide facilities such as passenger terminal- maintenance hangar- appropriate to business aviation for enhanced FBO function.
• Provide airport or airports other than Haneda and Narita in Tokyo megalopolis area for appropriate use by business aviation.”
The JBAA says that these latest announcements have- “Started to break the wall.” It backs this up by showing its growth figures despite the severe restrictions in Japan. “In year 2007- 63 Japanese registered business aviation airplanes landed at Japanese airports a total of 9-403 times - in comparison the 2006 total was 7-457 times” so that’s a growth of 25% for 2007.
The figure for foreign registered business aircraft in 2007- was 629 different aircraft landing some 2-284 times at Japanese airports- in comparison with 431 airplanes and 1-272 landings in 2006- resulting in a 45% growth in numbers of airplanes- and an 80% growth in the number of landings. Doubtless the pressure for more slots and facilities- from the JBAA- operators and other international business aviation bodies- has finally proved the importance of business aviation to - hopefully - an enlightened Japanese Government Department.