Country?s largest carrier Jet Airways flies all its aircraft to near by Colombo, Dubai or to even to the US to repair and overhaul its aircraft. However, soon it will be able to undertake repair and overhaul of its aircraft in the country itself, thanks to almost eight maintenance-repair and overhaul (MRO) facilities coming up in the country.
According to aviation industry sources, the MROs proposed to come up are set up by Lufthansa Technik, Airbus, Boeing, Kingfisher, Singapore Airlines Engg, Jupiter Aviation, Max Aerospace, Airworks and Indamer.
Airbus Industrie and Jupiter Aviation are planning a joint venture for an MRO targeting the Airbus fleet of various Indian carriers. Pratt & Whitney is entering into joint venture with Hindustan Aeronautics Ltd for commercial aircraft engine MRO in Bangalore while a Boeing Commercial Airplanes-Air India JV for a major MRO facility located at Nagpur is in the final stages.
However, analysts do not seem to be too optimistic about the business prospects of so many aircraft repair facilities. Setting up of an MRO typically costs more than $100 million and companies like Airbus and Boeing are committing $100 million each in the initial phase. It is estimated that an MRO would need to handle about 200 aircraft a year to turn viable.
At present, India has a fleet of 822 aircraft, including around 179 helicopters, 325 private aircraft and 327 scheduled aircraft as per the directorate general of civil aviation’s (DGCA) aircraft register. In the commercial aircraft fleet, Airbus leads the market followed closely by Boeing. Indian carriers spend about $700 million a year on maintaining their fleet ? about 8% of the Asian market ? pegged at $8.7 billion. Globally, the MRO business is worth around $40 billion.
According to Dhiraj Mathur, executive director partner, PwC, ?With the commercial aircraft fleet is expected grow 13% a year till 2015, MROs have a huge market potential. Besides, significant growth is expected in our neighboring countries.? Aircraft fleet in Asia-Pacific region is growing at 4.5% annually. Raajeev B Batra, executive director, KPMG (advisory services) has estimated that the total Aviation MRO market in India is worth around $405 million and the market size is expected to grow to $1.6 billion by 2014.
Batra added the MRO market in India was expected to grow at least 10% in the coming years and this was expected to outpace the growth in the global as well as Asian markets.
“With growth levels being high, India is a strong market to tap into and capture a sizeable share. Domestic and regional aircraft fleet are expected to have a total fleet strength of approximately 3,100 commercial airline aircraft by 2026,” Batra said. “Also, aircraft utilisation has risen commensurate with traffic and it is no surprise that almost every large player in the business is either contemplating or already has set his sights in the MRO space,” he added.
The Boeing facility is expected to be tailored specifically for the Indian market and importantly meet the objectives of lowering maintenance costs for the airlines and improve profitability. The proposed Boeing-Air India MRO would also be capable of handling current generation aircraft such as the 777 as well as future types like the 787. With its three customers-Air India, Jet Airways and SpiceJet, Boeing would have a base of more than 150 aircraft over the next few years.
Nacil already has engine MROs in Delhi (for mainly airbus engines) and Mumbai (for Boeing and some other engines) capable of C checks and some D checks. The MRO in Mumbai does the overhauls for Bangladesh Biman apart from some others and is making a significant amount in revenues.
Jet Airways, having reached the critical mass in terms of its fleet size, has announced its plans to launch an MRO company in collaboration with Lufthansa Technik. Jet Airways over the years has been enhancing its capability to include C checks on 737NGs and has hired several expatriates, including some from Lufthansa Technik to spearhead the project. “MRO’s in India need to be a one-stop-shop for line maintenance, airframe maintenance, engine maintenance, and component overhaul. The potential lies in capturing the majority of heavy aircraft and engine maintenance, which airlines and aircraft owners usually outsource to foreign MRO facilities,” Batra said.
In addition to major maintenance facilities, there is also the need to assist airlines in line maintenance. One of the major advantages of an MRO company in India is low manpower cost, roughly $30-35 per hour or about 60% cheaper than western Europe or the US. Currently, aircraft belonging domestic airlines or business aviation companies fly to either Dubai or Singapore for major checks and overhauls as they cannot find MRO facilities in India. Availability of MROs in India will not only bring down the costs ? given the high aviation fuel prices ? but will also save time. It will provide additional employment opportunities for Indian engineers and skilled workers.
But there in lies one of the biggest problems for domestic MROs. All analysts and airlines agree shortage of skilled manpower would be a major problem in future. “Going forward, the demand for engineers and skilled manpower is going to increase substantially. This is both a challenge as well as an opportunity,? Mathur said. “While most indicators point towards India becoming a formidable destination for aircraft repair, some of the potential hindrances for setting up MRO facility in the country may include the lack of real estate and availability of space to set up the business, an in conducive taxation structure and the availability of technically qualified human resources,” he added.