In a few months from now, Indian carriers need not send their planes to Singapore or Germany for repairs. They can very well get it done at home. This is because several MRO (maintenance, repair and overhaul) companies are setting up shops in the country, writes B S Arun.
With the Indian aviation industry booming - one new aircraft landing every week with 450 in orders - the stage is set for Phase II of the revolution in the sector, that of setting up of the MROs.
Already, Lufthansa Technik (LHT), the leading MRO provider in the world, has announced its tie-up with the GMR Group to set-up India’s first third-party MRO at Hyderabad while Air India and Boeing will establish one in Nagpur where the US aircraft major will invest $ 100 million.
Indian Airlines has signed an agreement with the Bangalore-based Jupiter Aviation and Logistics and EADS of Europe (which has plans to invest $2.57 billion over the next 15 years in India) to set up the unit in Delhi and Hyderabad. GoAir, from the Wadia stable, will team up with Singapore Airlines Engineering to set up 13 MROs in the country.
Not to be left behind, Kingfisher Airlines is in talks with GAMCO (Gulf Aircraft Maintenance Company) of Abu Dhabi on MRO in India.
Turboprop manufacturer ATR, which won orders for 30 ATR 72-500s from Air Deccan and 35 from Kingfisher, is establishing a technical support centre in Bangalore. Currently, only IA and AI have in-house maintenance facilities, but both the national carriers too have to outsource maintenance facilities abroad, at times.
All these mean big business. Kingfisher’s Executive Vice President Hitesh Patel speaking to Deccan Herald says: “MRO market in India rose from $570 m in 2002 to $790 m in 2006. Globally, it is a $38 billion industry.” Says AI CMD V Thulasidas, elaborating on the market need for a strong MRO industry in India:
“All airlines need line-maintenance and major maintenance for their aircraft. They also need engine maintenance and airframe components. For all these, you need to have a MRO.”
Indian centre
LHT, having its major bases in Hamburg, Frankfurt, Beijing, London and Sofia, is going ahead with establishing the Rs 100 crore MRO at Hyderabad which will have a skilled workforce of 400.
Speaking to a group of Indian aviation journalists at the LHT facility at Frankfurt, its Executive Board Chairman, August Henningsen said, “India is a growing market and we want to support its aviation industry from the technical side.
We will open our Hyderabad centre by October 2008. We are looking for talent in Andhra Pradesh and will send them for training in our centres in different parts of the world.”
At the Hyderabad unit, the LHT-GMR JV will provide base maintenance services (including heavy maintenance called C and D checks) for Airbus A320 family and Boeing B737s both of which are narrow body aircraft (aircraft).
The facility will have two parallel lines to serve the maintenance requirements of the rapidly growing narrow body fleet of Indian carriers.
Says Aage Duenhaupt, LHT Director of International Communications: “We expect Hyderabad to emerge as a new aviation cluster with some of the country’s best qualified engineers and technicians.” LHT is the major stake holder in Hyderabad MRO holding more than 75 per cent of equity.
Added Mr Henningsen, “As the world’s leading MRO provider, we want to strengthen our existing relationships with the Indian carriers and will expand our support programmes including a regional component pool.”
Product divisions
LHT, whose parent company Lufthansa Group earned a profit of Euro 1 billion last year, is not only a MRO and design organisation but also a manufacturer of aircraft parts. With its worldwide network of 28 subsidiary companies, LHT has more than 540 airlines as customers.
LHT, whose major product divisions include aircraft maintenance, components, engines, aircraft overhaul, VIP jet service and landing gear service, has 65 line maintenance (LM) units all over the world which are handled by its 25,000 employees. The MRO major does 150 heavy maintenance a year and over a lakh LMs.
India is already a big market for LHT and it has set up its Indian subsidiary One Stop Airline MRO Support that will supply technical components for the A320 fleet of aircraft at several centres.
In 2006, LHT signed a Total Component Support contract with Air Deccan while it is the is the sole provider of support services on the V2500 engines of Kingfisher Airlines’ A320s and for component support of that entire fleet. GoAir sends its V2500 engines for repair and overhaul to LHT.
The German company, which repairs and overhauls 30 aircraft types and 15 engine types, supported Jet Airways’ entry into international service of A340 fleet in 2005.
It is giving similar support to Jet’s B777 fleet while the daily operations of carrier’s A340 fleet is backed by a team of technicians from Germany. For legacy carriers such as AI and IA, LHT is providing various component repairs and structural parts.
Normally, service checks of aircraft, done every week, takes less than five hours while line maintenance (called A check) takes one day. C and D checks (heavy maintenance) are done after intervals of 18 months and three years respectively. While C check takes three days, D check needs six weeks.
IA and Jupiter are elatead over the MRO venture. At their Rs 150 crore Hyderabad MRO, the facility will handle the initial maintenance checks on IA’s A320 aircraft and to those belonging to AI.
The IA-Jupiter-EADS MRO at Delhi, according to IA CMD Vishwapati Trivedi, would begin its activities with two A320 hangars. The facility would cater to major maintenance of A320 fleet of Indian followed by check maintenance of ATR and other A320 aircraft in India.
As for AI-Boeing MRO, it is part of a maintenance and training agreement built in to AI’s order for 68 planes. “We believe that Nagpur will be an excellent location for the Boeing MRO facility because of the tremendous investment being made in the area by government and private companies,” feels Boeing Vice President of Sales for commercial airplanes Dinesh Keskar.
Cost advantage
Weighing the pros and cons of MRO business, Kingfisher’s Mr Patel informs: “Aircraft maintenance in India is under a constant economic pressure.
Airline managers need to frequently review their cost versus productivity and move to eliminate waste and delays. Indian carries will cut costs through local MROs as they need not send their planes abroad. Also, planes from other parts of China can be sent here for repairs.”
LHT has a problem though. Argues Mr Henningsen: “Tax exemptions should be given because we are not adding any value for imported components but just fix them to an aircraft. MROs should be situated in tax free zones.” Reaction of the Indian government is awaited.
