Wednesday, November 3, 2010

MRO Sector Sees India Growth Opportunities

Aviation Daily Nov 03 , 2010 , p. 11
Neelam Mathews

India's fledgling maintenance, repair and overhaul industry has the potential to grow exponentially in coming years, says Ravi Menon, CEO and Founder of Air Works India, the country's only third-party MRO provider.

MRO work is typically outsourced to other countries while the Indian aviation industry is expanding rapidly, Menon said during a panel discussion Nov. 2 at AVIATION WEEK’s MRO Asia conference in Singapore.

In addition, by 2015, India will have 125 airports, up from 92 this year, as well as 1,800 aircraft by 2025, which creates enormous scope for setting up MRO facilities, said V.V Surendran, general manager-technical services at Kingfisher Airlines. Opportunities exist in areas such as paint shops, which do not exist in India.

“Less than 5% of MRO work is carried out in India. It all goes abroad,” he said.

The nearly $475 million currently spent on MRO in India is expected to go up to about $1 billion by 2020, said Menon. “MROs in India are more [an] imperative than an option,” he said. The challenge is to build in cost efficiencies. The competitive advantage of low labor cost is lost with the existing constraints of high taxes, regulatory issues, lack of space at metro airports, lack of training institutions and a high attrition rate of skilled labor.

“An airline loses money, while an MRO makes it. There is need for economies of scale and a quality one-stop shop,” said Surendran.

Airlines can make all the difference if they are willing to sign longer maintenance agreements. While the government looks at aviation seriously, it does not consider MRO a priority,” said Fredrik Groth, chief operating officer of InterGlobe Aviation. And it has to be an industry initiative, he added.

Given that Mumbai-Delhi is one of the busiest city-pairs with 48 daily flights carrying 106,000 passengers, the aviation business is growing. Koustav Dhar, CEO of New Delhi’s Jagson Air, however, cautions that neighboring countries—Sri Lanka, Bangladesh and Nepal—may have an edge over India because land is cheaper there.

Dhar says an MRO facility may be announced in Bangladesh in March 2011.

“We haven’t created infrastructure to cater to safety requirements in MROs,” added Menon. Dhar said with upgrades to airports, such as Lucknow and Jaipur in central and northern India, opportunities to set up MROs are increasing.

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