Aircraft upkeep biz to lure foreign investments

Written by Shaheen Mansuri | Mumbai, Aug 27 | Updated: Aug 28 2007, 06:17am hrs
Along with the growth in the aviation sector, the MRO (maintenance, repair and overhaul) business is all set to gain momentum in a big way in India. To tap the significant growth opportunities in the MRO sector, investments by various overseas companies are in the pipeline. A recent report prepared by Ernst & Young estimates that the aviation sector has the potential to absorb up to $120 billion of investments by 2020, in the MRO category alone.

Dinesh Keskar, senior vice-president (sales), Boeing, said, We will invest $100 million to set up a facility in India. In some time, we shall announce a private partner for setting up the facility. Boeing has already tied up with national carrier, Air India for this venture.By December, the name of the third partner will be formally announced.

V Thulasidas, CMD, Air India, told FE, Any other airline wanting to use our engineering services are welcome. In fact, many domestic and international airlines have approached us and in future we shall provide them these services.

Besides Air India, Mumbai-based low cost airline, GoAir has already formed a joint venture with Singapore-based SIA Engineering to establish an engineering facility in India. However, the investment figures have not been announced yet. Other investments in the pipeline include European aircraft manufacturer Airbus which is likely to set up a MRO service in the country by early next year.

Kingfisher Airlines, which has 26% stake in low cost carrier Air Deccan, too is looking at opportunities in the MRO sector. We are looking at the business in a joint-venture partnership with a third party, preferably a foreign provider. The new company would probably be around one-third owned by each of the partners and the foreign provider would manage the operation, informed Air Deccan sources.

Even CAPA (Centre for Asia Pacific Aviation) has estimated that there will be significant investment opportunities in the MRO sector in India which has the potential to service a fleet of 1,000 commercial and 500 general aviation aircraft.