Thursday, November 18, 2010

AF/KLM Division Moves On India MRO, Eyes China


AWIN First
Nov 16 , 2010
Neelam Mathews 

Air France Industries, KLM Engineering and Maintenance (AFI/KLM) and Mumbai-based Max MRO have gained a first-mover advantage in India by becoming the first to announce a joint venture for a component repair facility.

The two partners did not disclose the details of the joint venture announced Nov. 16 as modalities are still being worked out. The 10,000-sq.-meter facility is expected to be set up in the tax-free zone of Nagpur, where Boeing is setting up hangars for Air India and where Max owns land, or at another location.

“We are trying to develop a global network as the customer wants proximity to suppliers. Our association will empower the JV for transfer of know-how ... it’s a long road and there is no question to limit it to Airbus A320s,” said Franck Terner, president of Air France Industries in India. 

The components business at present is around $100 million, says Terner. “This figure, I believe is grossly underestimated. We expect the business to grow 14% per annum for the next ten years.”

With Kingfisher Airlines and IndiGo, which primarily have an all-Airbus fleet, and also clients of AFI/KLM, the JV will concentrate on components for the A320.

“There are many components that share a commonality between the 737s and A320s such as radio parts, pumps and common Goodrich brakes and wheels that we will look at initially,” said Bharat Malkani, chairman and managing director of Max MRO.

The JV will be dedicated to component repairs with avionics, pneumatics and hydraulics expected to form the major portion of business.

“Our vision for India together is to build a network. Max already has the skills including engineering competency. We will start by focusing on our core strengths in electronics. This sector is the fastest growing in the components area in India. It is also something that does not require a vast quantity of real estate,” adds Malkani.

Unlike China, competition in India is not as fierce. Terner tells Aviation Week that while Lufthansa Technik is a worthy competitor, the main advantage of the JV will be proximity to the customer and flexibility. “You just cannot go to a customer with a [standard] solution. Each customer wants a dedicated solution,” says Terner.

China is the next frontier for AFI/KLM. “We believe we have to start in China as we have done in India. We are respectful of the local market and realize it is very difficult to move without a partner. We are searching for a partner there. We realize major airlines are all linked to MRO. However, we see the market open and view immense opportunities there,” says Terner.

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