Directorate General of Civil Aviation looking at delicensing non-scheduled operators having less than three aircraft • As many as 80 of the 120 operational NSOPs may lose permits

To prevent private jet owners from evading customs duty by importing aircraft through the non-scheduled operator (NSOP) route, the Directorate General of Civil Aviation is looking at delicensing all NSOP permit holders who have a fleet of less than three aircraft. As many as 80 NSOPs of the 120 NSOPs in service at present stand to be delicensed once the regulator amends the minimum requirements for grant of permits to non-schedule operators.

The change in regulations is also intended to address concerns raised by US-based Federal Aviation Administration (FAA) regarding safety oversight mechanism for non-scheduled operations.

As per the latest available information, there are 52 NSOPs with one aircraft, 28 NSOPs with two aircraft, 13 NSOPs with three aircraft and only 27 NSOPs have more than three aircraft. Only a third of the total of 120 NSOPs in service may retain their permits once the new regulations come into force.

A senior official in DGCA said, "When we were reviewing regulatory requirements for NSOPs, we found that most NSOPs fall in the general aviation category or perform limited charter operations for company executives. Private jets are often imported through the NSOP route to save on customs duty. We decided that non-scheduled operators with less than three aircraft will not be permitted commercial operations to plug such loopholes."

Currently, an aircraft imported for personal use attracts import duties between 19 percent and 21 percent, while one imported for commercial operations attracts duties of 2.5-3 percent only, as the latter is not subject to countervailing duty and special additional duty. This differential in tax structure has led many private jet owners to import aircraft through NSOP route to save on customs duty.

Consolidation in the business aviation industry would also aid DGCA is strengthening its safety oversight mechanism for the category. "Post the findings of the Federal Aviation Administration (FAA), DGCA had constituted a committee to address concerns raised by the US regulator as relates to the NSOP sector. Once private jet owners are weeded out of the NSOP category, safety oversight would become more effective", added the official.

The FAA is scheduled to conduct a fresh audit of India's safety oversight mechanism later in December this year. The US regulator had downgraded India to category II of safety ranking earlier in January 2014, which had barred Indian carriers from expanding operations in the United States. The DGCA has been working to meet all requirements pointed out by FAA to regain category I status at the earliest.

As per the proposed amendment in CAR, non-scheduled operators' permit holders would now be required to have a minimum fleet of three aircraft or three helicopters either through outright purchase or on lease. The aircraft shall be registered in India and shall hold a certificate of airworthiness in the normal passenger category. To facilitate the start of operations, the operator will be permitted to commence services with one aircraft/helicopter but will have to increase fleet size to three within a year of securing a NSOP permit.

The existing NSOPs will be given an option to either raise their fleet size to three airplane/helicopter as per the revised CAR or get themselves converted into private category.

DGCA issued the notification to amend the minimum requirements for grant of non-scheduled operators' permit on Monday. Stakeholders have to submit their comments by Nov 12, 2014.

At present, DGCA issues permits to carry out commercial operations under scheduled and non-scheduled categories. However, though requirements are different for scheduled, non-scheduled and general aviation aircraft a single certification manual CAP 3100 is used for certification procedures for all commercial operators. The regulator is now in the process of segregating certification requirements and management by tailoring airworthiness requirements specific to each category.

- Source:  http://www.business-standard.com