Saturday, January 15, 2011

Air France-KLM Launches Component MRO In India

Aviation Week & Space Technology Jan 17 , 2011 , p. 37
Neelam Mathews

AFI KLM finds Indian partner for component repair center
Printed headline: Component Thrust

India will gain its first component repair shop in a joint venture between Air France Industries KLM Engineering & Maintenance (AFI KLM E&M) and Mumbai-based Max Aerospace and Aviation Ltd.’s Max MRO Services.

Construction is to start early this year and finish in the first quarter of 2013, says AFI KLM E&M President Franck Terner. Terms were not disclosed, but the company, as yet unnamed, is expected to start operations with a 10,000-sq.-meter (108,000-sq.-ft.) facility.

Plants are under construction in Bengaluru and Nagpur, which offer tax-free zones established to encourage industry. Nagpur is home to the maintenance, repair and overhaul (MRO) center and taxiway Boeing is establishing for Air India.

Max Aerospace’s defense arm recently assembled this Korean KT-1 trainer for flight trials with the Indian air force.Credit: MAX MRO SERVICES
“Given the high tax structure [in India], till the facility is set up, the company will import only the most needed components to give us economies of scale,” says Bharat Malkani, chairman and managing director of Max MRO Services. Max Aerospace’s defense arm recently assembled a Korea Aerospace Industries KT-1 trainer in India for trials.

Terner says estimates of $100 million in annual revenues for component repairs are “grossly underestimated. We expect the business to grow at 14% per annum for the next 10 years.”

Initial repair work will focus on avionics, pneumatics and hydraulics for the Airbus A320 family. Malkani says Max’s core strength is in avionics, calling it the fastest-growing MRO sector in the country. Terner adds that repairs will be made using original equipment, not FAA Parts Manufacture Approval parts.

IndiGo will be a launch customer with its 30 A320s, which are now under a 12-hr. parts exchange contract with AFI KLM in Paris. IndiGo expects to save 3% on transportation costs by keeping those components in India. The budget carrier has another 100 A320s on order for delivery through 2016 and is seeking regulatory approval to acquire another 150.

Another AFI KLM transfer customer will be Kingfisher Airlines, which has a parts pool contract for its 34 A320s. Keeping those components within India “will be a breath of fresh air,” says a Kingfisher engineer.
Components sharing a commonality with Boeing 737s, such as radios, pumps, wheels and brakes, will also be serviced, and the company will branch out into turboprops, including the 25 ATR 72‑500s owned by Kingfisher.

Terner says his strongest competition will come from Lufthansa Technik but that locating services in India will give Max an advantage.

Component financing is being considered. “We see more of our customers with an appetite for seeking cash by asking us to buy back or invest [in components],” says Terner. “This is changing the way we are doing business.” He notes that AFI KLM is offering power-by-the-hour service contracts, “a key for getting more business in future.”

Beyond India, AFI KLM sees China as its next frontier. Despite the fact that China’s major carriers are all linked to MRO providers, he says the market remains open with “immense opportunities.”

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