Page 21 - AAA SEPTEMBER - OCTOBER 2014 Online Magazine

MRO INFRASTRUCTURE

The clear benefits for
the domestic airlines in
availing the MRO services
offered in India include
cost advantage and faster
turnaround time
Air Works, with an EASA-certified The biggest Air India MRO facility is a reduction in the service tax from 12.5%,
facility in southern India, provides heavy being created at Nagpur in western India, along with an import duty including a
maintenance capability for Airbus A320, where Boeing has agreed to set up an countervailing duty of 18.5%.
ATR42/62 and Boeing 737/NG family of airframe MRO. The airline has also tied According to estimates, the government
aircraft. up with GE, AeroStar and Pratt &Whitney earns about 1.5 billion rupees from the levy
Currently, with ever increasing for offering their MRO services to other of import duty on spares and equipment.
passenger traffic and fleet expansion, airlines. “India has the potential to be an MRO hub
mainly by low cost carriers, the Indian “It is pertinent to note that except for due to the growing aircraft fleet, location
aviation sector has opened a gate of Line Maintenance, the majority of work advantage and availability of technical
opportunities for international aircraft related to other manpower. To facilitate the growth of MRO
companies in the MRO segment. segments is outsourced to MRO’s business and to make it competitive, the
Air India and Jet Airways have their outside India. Therefore, the challenge government has taken several steps, and
own or captive MRO facilities. Moreover, lies in wooing the Indian customers and the industry has welcomed it,” says a
there are several MRO projects under to provide them with the confidence that senior official of the Civil Aviation Ministry.
development in India. For instance, MROs in India too can carry out the same Labour costs in India are around $30 to
Cochin International Airport Ltd. (CIAL) work and also be competitive in the pricing $35 per man-hour , compared to $55 to $60
launched its MRO facility in 2012. Similarly, structure and therein lies the opportunity in Southeast Asia and the Middle East and
Malaysian Aerospace Engineering and as well,” says the former chief of Air India even higher in the US and Europe, Frost &
GMR Hyderabad International Airport Ltd Arvind Jadhav. Sullivan analysts Chethan Kambi and Arun
has implemented an MRO through an India- The burgeoning MRO industry got a Narayanan had said in an earlier report.
Malaysia joint-venture agreement. This much-needed boost last year when the “Therefore, India has the potential to
facility at Rajiv Gandhi International Airport government announced tax concessions serve not just Indian aircraft but also those
in Hyderabad and offers base maintenance on imports of spare parts and testing from neighbouring regions.”
services starting with C-checks for narrow equipment for aircraft repair work. As Gour says, India’s new incentives are
bodied aircraft like Airbus A320 and Boeing The Indian government also extended small steps in the right direction... And it
737, including the Classic and NG. the time period for consumption or could provide the required impetus for the
Air India is heading towards installation of the parts or equipment from country’s MRO market to lift off.
operationalising its subsidiary company three months to one year.
Air India Engineering Services Ltd (AIESL) The government exempted basic
for its MRO activity. The airline has built up customs duty for spare parts and testing
major MRO facilities in a number of Indian equipment for MRO
cities, while Mumbai serves as the main facilities. The import duty was earlier
base for maintenance of the Air India wide about 19% on spare parts and equipment.
bodied aircraft fleet. The MRO industry has also been demanding
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