Page 13 - AAA JULY - AUGUST 2013 Online Magazine

FeATure ouTsourcing Mro

With ever increasing
passenger traffic
and fleet expansion,
mainly by low-cost
carriers, the Indian
aviation sector should
see a wide-open gate
of opportunities for
aircraft companies
working in the MRO
segment

International Airport Ltd (CIAL) launched challenge lies in wooing Indian customers “India has the potential to be an MRO
its MRO facility in 2012. Similarly, and providing them with the confidence hub due to its growing aircraft fleet,
Malaysian Aerospace Engineering that MROs in India too can carry out location advantage and availability of
and GMR Hyderabad International the same work and also be competitive technical manpower,” admits Civil Aviation
Airport Ltd has implemented an MRO in the pricing structure,” he adds. This Minister Ajit Singh. “To facilitate the
through an India-Malaysia joint-venture then where the opportunity – and the growth of MRO business and to make them
agreement. The facility at Rajiv Gandhi challenge – both lie. competitive, we have recently announced
International Airport in Hyderabad offers several concessions in the budget, and the
base maintenance services starting with Government help industry has welcomed it.”
C-checks for narrow-bodied aircraft such The burgeoning Indian MRO industry got a And so it should. Labour costs in
as Airbus A320 and Boeing 737, including much-needed boost when the government India are around US$30 to US$35 per
the Classic and NG. announced tax concessions on imports of man-hour, in comparison to US$55 to
Air India is heading towards spare parts and testing equipment for US$60 in Southeast Asia and the Middle
operationalising its subsidiary company aircraft repair work in its federal budget East, and even higher in the US and
Air India Engineering Services Ltd (AIESL) last February. The government also Europe, giving a considerable advantage
for its MRO activity. The airline has built extended the time period for consumption to those companies that can get deals.
up major MRO facilities in a number of or installation of the parts or equipment “Therefore, India has the potential
Indian cities, while Mumbai serves as from a paltry three months to one year. to serve not just Indian aircraft – but
the main base for maintenance of the Air Additionally, the budget proposed to also those from neighboring regions,”
India wide-bodied aircraft fleet. Indeed, exempt basic customs duty for spare parts say research analysts Chethan Kambi
the biggest Air India MRO facility is being and testing equipment for MRO facilities. and Arun Narayanan from consultants
created at Nagpur in western India, where The import duty is currently some 19% Frost & Sullivan.
Boeing has agreed to set up an airframe on spare parts and equipment. The MRO So as Gour says, India’s new
MRO. The airline has also tied up with GE, industry has also been demanding a incentives offer small steps in the right
AeroStar and Pratt & Whitney to offer their reduction in the service tax from 12.5%, direction. But the big question still
MRO services to other airlines. along with an import duty including a duty remains: Will all these ‘tinkering round
“It is pertinent to note that except for of 18.5%. This is not a straightforward the edges’ legislative efforts, and the
Line Maintenance, the majority of (our) issue – according to estimates, the changing attitude of local airlines be
work in other segments is outsourced government earns about 1.5 billion rupees enough to provide the required impetus
to MRO’s outside India,” says the former from the levy of import duty on spares and for the country’s MRO market to lift off?
chief of Air India Arvind Jadhav. “So the equipment each year. AAA is not holding its breath.
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