The Hindu Business Line : Private air travel becomes dearer

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Mumbai March 1 Budget 2007 has hit private users of helicopters and airplanes with the Finance Minister, Mr P. Chidambaram, announcing three per cent import duty on all purchases of private air travel, plus countervailing duty (CVD) and additional Customs duty.

Clients include corporates though it is unclear whether the provision will cover non-schedule operators offering private air travel services, said Mr S.J.S. Saighal, Chairman of Global Vectra Helicorp.

Non-schedule operators offer air travel services to various industries like the oil and gas sector primarily for transporting men and material to rigs.

Deccan Aviation and Vectra Helicorp (part of the Vectra group) are players in this segment who could be affected by the Budget proposal.

Deccan offers charter flights and private helicopter services while Global Vectra offers helicopter services only.

Kingfisher Airlines has plans to enter this niche segment.

Private helicopters and jets are imported directly or through distributors, said industry sources.

`Bell' and `Eurocopter' are the popular helicopter brands in the country. Vectra Aviation, part of the Vectra group, is the official distributor of `Eurocopter'.

Today a jet may cost Rs 50-100 crore, according to customisation levels, while helicopters can cost Rs 25-40 crore.

An extra three per cent cost as import duty would mean rise in cost by Rs 75 lakh to Rs 3 crore, without including CVD and additional Customs duty.

Corporate users have no option but to bear the cost, though non-schedule operators can offset the hike by charging clients more.

Experts said that a levy of Customs duty will not dampen sales in the private air travel sector.

Till a few years ago, India was home to just 24 private planes; now it has 130 units plying in Indian and international airspace.