Dubai, India Vie For Maintenance Work; Some Warn of Bubble

Dubai: A race to build jetliner-maintenance facilities here and in India shows how the aviation boom is lifting local industries world-wide -- but some warn of an investment bubble.
Dubai, which has used its oil wealth to create a giant carrier, Emirates Airline, and a major aircraft-leasing company, DAE Capital, now plans to become a player in the $41 billion global aircraft-maintenance industry.
Dubai, which is emerging as a hub for global air traffic, aims to tap demand for aircraft maintenance across the Middle East. The MRO market is set to grow by almost 9% annually over the next five years, analysts predict.
A key secondary market for Dubai's operation will be India, less than a three-hour flight away, where deregulation has sparked an air-travel boom. Industry officials estimate Indian airlines will add almost 2,000 aircraft to their fleet by 2025.
The hitch is that India itself now bubbles with plans for at least nine new maintenance facilities backed by titans Boeing Co., Airbus parent European Aeronautic Defence & Space Co. and Lufthansa Technik AG, the maintenance wing of Germany's Deutsche Lufthansa AG. The Confederation of Indian Industry predicts the country's MRO market will generate revenue of $4 billion annually by 2012.
Lufthansa Technik last year linked with Indian infrastructure firm GMR Group to invest $23 million in a maintenance center at Hyderabad International Airport, which is planned to open soon. Boeing will open a $100 million facility with Air India in Nagpur in 2009. Indian carriers Jet Airways (India) Ltd., Kingfisher Airlines Ltd. and Go Airlines also have announced plans to start maintenance centers.
India's maintenance centers are expected to have a home-field advantage because roughly 350 aging passenger planes now fly in India and need prompt attention.
But the competition for customers also hinges on who wins the battle for skilled technicians. Dubai has been hiring maintenance engineers from around the world. India must fill its aircraft-maintenance classrooms quickly to ensure it can both run its new facilities and replace veterans defecting to the Middle East.
07/01/08 Stefania Bianchi/Wall Street Journal

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Categories: Foreign Jan 2008, Indian Aviation- In General Jan 2008