Wednesday, January 6, 2010

SriLankan Airlines Ventures Into MRO With Indian Carrier


AWIN First Jan 05 , 2010
Neelam Mathews

SriLankan Airlines is planning a strategic tie-up for maintenance, repair and overhaul with India’s budget carrier IndiGo.

IndiGo is expected to be the principal stake holder in the venture, which will open up to other carriers in India, according to an airline official.

SriLankan Airlines is in the process of restructuring its operations and has plans to hive off its engineering and ground-handling operations into wholly owned subsidiaries that will function independently. This is a win-win option, said an analyst.

IndiGo signed a year-long contract with SriLankan last year for conducting C checks on 10 of its A320s family. Indigo has now signed another contract for C2 checks with SriLankan Airlines for 2010.

Managing relationships is what Indigo appreciates, and the fact that the airline is in it for the long-term, Paul Dempsey, production planning manager for SriLankan Airlines told AviationWeek.

Growth in India’s MRO business has been shackled by taxes, which make it more expensive to conduct checks in India rather than abroad. And with SriLanka being only an hour in flying time away, Indian carriers can save on fuel and benefit from cheaper labor costs. The MRO capabilities in Sri Lanka has the potential to put companies offering MRO work in other countries, such as Singapore, at a disadvantage.

SriLankan Airlines has a fleet of 14 Airbus aircraft, while IndiGo has 24 A320s, with 76 still to be delivered. By the end of 2010, 10 more deliveries will take the fleet size to 34.

IndiGo, envisioned by InterGlobe's Rahul Bhatia and former US Airways CEO Rakesh Gangwal, launched operations in 2006, and has a business model similar to JetBlue.

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