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A passage to India: Here’s how Indian MROs could end up servicing the world’s aircraft

The aircraft maintenance-repair-overhaul (MRO) industry is labour-intensive and requires skilled technicians. Like Information Technology, where India has become the back-office of the world, certain tweaks in taxation could see aircraft fly to India for MRO visits.

March 05, 2021 / 11:41 AM IST

VT-IEY, VT-SZB and VT-TTD, aircraft registered with IndiGo, Spicejet and Vistara, respectively, were at the same airport for a couple of days. While it would have seemed normal at any Indian airport, this was at Queen Alia International airport, Amman. There is no connectivity between India and Jordan, neither Indian carriers nor Jordanian ones fly to each other’s countries. These aircraft were at Joramco for maintenance, undergoing re-delivery checks before being released by the respective fleets.

For many years, Air Works was the only MRO worth its salt in India. Located at Hosur, near Bengaluru, the MRO was certified to carry out checks for B737 series and the A320 family of aircraft, which is the mainstay of Indian aviation. A couple of years ago, Air Works was joined by GMR Aero Technic at Hyderabad.

The opportunity

At the end of December 2020, IndiGo had 111 A320ceo aircraft in its fleet. The airline is expected to retire all of them by the end of 2022 or early 2023. Almost every aircraft makes a visit to the MRO before leaving the fleet to meet the redelivery conditions laid out in the leasing contract.

Spicejet has over 200 B737 MAX on order while GoAir has over 100 A320neo, which are yet to be delivered. This will see replacement of older aircraft in the respective fleets, something that will require MRO services.

Close

Redelivery is not the only time MRO services are needed. While airlines handle the A and B checks on their own, the C and D check is typically outsourced. While IndiGo is building a hangar at Bengaluru where it will be able to handle these maintenance needs, it may not be sufficient for its entire fleet and the airline will continue to rely on external parties.

Over the next few years, the active fleet count in India will increase from 700 to over 1,200, the majority of which will be narrowbody B737 series and A320 family aircraft, which are catered to by the likes of Air Works and GMR Aero Technic.

While airlines and airports were left in the lurch in the Budget, the stimulus during the peak of Covid-19 had seen the GST rate being reduced to 5 percent for domestic Maintenance, Repair and Overhaul (MRO) services. This was also followed by 100% percent FDI being permitted in MROs via the automatic route.

While the lower taxation helps to go closer to rates offered by foreign MROs, the 100 percent FDI is only an exit route and not a way to build a business.

Recent Developments

Major MROs in India have been on the growth path. Air Works has invested in increasing a bay at its Hosur MRO, to expand capacity. The company has also started a facility at Kochi Airport, which is a two-hangar base/heavy maintenance facility.

For the first time, an Indian MRO worked on parting out (disassembling) a B777 aircraft (ex-Jet Airways), at Chennai. From vying for Indian business, to attracting foreign ones, the last few months have been phenomenal. GMR Aero Technic signed up for a long-term aircraft storage-cum-maintenance contract with a foreign airline, which saw a total of six aircraft (BAe 146) fly in from South Africa, another first for an Indian MRO.

GMR Aero Technic is now debuting with an “inflatable hangar”, which will allow the facility to offer 4-5 end-of-lease checks per year or between 15 to 20 base maintenance checks. The facility is the only one in Asia, according to GMR Aero Technic.

Many more miles to cover

The benefits of lower taxation are yet to kick in completely, but the maintenance/repair/overhaul (MRO) market is cut-throat. The fact that airlines are willing to send their aircraft with crew to a foreign destination instead of opting for a domestic MRO even in current times, when international travel is next to nil and the risks of travel are still high, says a lot.

From fuel being provided by the MROs or staying covered for the crew, the package comes in all shapes and sizes — something that Indian MROs find it hard to match due to underlying costs.

The industry is labour-intensive and requires skilled labour. Like other industries such as Information Technology, where India has become the back-office of the world, certain tweaks in taxation could see aircraft fly to India for MRO visits.

MROs also need to be located at major airports, which helps attract more foreign business. While most major airports do not have space, only Hyderabad had the MRO as part of its initial plan. Yet, it will take significant capital expenditure on the part of the MROs to scale up. Until then ‘VT’ registered planes will still be seen at Amman, Kuala Lumpur, Jakarta and other places.

 
Ameya Joshi runs the aviation analysis website Network Thoughts.
first published: Mar 5, 2021 11:12 am

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