National carrier Air India (AI), which is in the process of hiving off its engineering division into a separate subsidiary, on Wednesday said it has earned nearly $3,00,000 (Rs 1.46 crore) in December through its alliance with Dubai-based Aerostar Asset management company which provides engine repair management solutions mainly to the West Asia market. Although, this is a modest beginning, the carrier is pinning high hopes of generating as much as Rs 3,000 crore annually from its engineering facility which is four times more than it does currently. Currently, the public sector airline services approximately 100 planes annually.
Recently, AI’s engine overhaul facility, and Aerostar Asset Management, Sharjah, UAE, created an engine MRO brand called ‘The A Team.’ Targeted at the Middle East market, this initiative will provide engine repair and management solutions to all airline operators of the region. Gradually, the venture aims to spread its wings to the Asia-Pacific, Europe and other key regions.
For AI, this venture is a smart business preposition since the passenger fleet in the Middle East region is expected to treble to 1,681 from the 586 passenger aircraft recorded at the beginning of 2009. The region is set to take delivery of 730 aircraft by 2018, with a further 689 on order up until 2028, as per the study done by European aircraft manufacturer Airbus.
Meanwhile, AI’s engine overhaul facility, established in 1966, has been offering third party MRO services since 1999. AI has comprehensive in-house maintenance facilities capable of performing engine overhaul, structure repairs, accessories and components overhauls etc. In addition to its infrastructure which can churn out additional revenues, the carrier has a talent pool 7,500 skilled engineers and technicians, whose talent it can leverage to get more business in the MRO segment.
However, it is not only AI which is taking the MRO route for additional revenues. Crisis-hit airlines worldwide are trying to get a piece of the $600 billion MRO market by offering services to third parties. To name a few, carrier like Malaysian Airlines and Germany-based Lufthansa are eyeing opportunities in the Middle East market since mainstream revenues like passenger yields, revenues from cargo operations have dipped nearly 20% in the past one year for carriers worldwide. Also, aircraft lease market is not fetching good returns currently.