MRO: creating self-sufficiency

The Indian aviation industry is one of the most dynamic industries the world over and has witnessed an exponential growth over the last two decades. The liberalisation of the Indian economy led to the Open Skies Policy which brought about a good many private airlines competing for a market share, which until then was the exclusive domain of the national carriers. This rapid growth and resultant competitive environment fuelled the advent of low-cost airlines like Air Deccan, which pioneered the concept in India, Spice Jet, Go Air and Indigo. Air travel, which was affordable to only a select few, was now available to the “common man”. According to the latest figures released by the DGCA (Directorate General of Civil Aviation), the total number of passengers was 29.8 million in 2009, up 30 per cent from the previous year to grow by a further 19 per cent over the next five years. Interestingly, the Asia Pacific region accounts for 32 per cent of the world's passenger market.
The current fleet size of aircraft is expected to grow from the present 400 plus aircraft to around 720 plus at a compounded annual growth rate (CAGR) of 8.3 per cent. The environment has only gotten more and more competitive over the last decade. According to a report by the Centre for Asia Pacific Aviation (CAPA), the domestic airline industry will incur a combined loss of Rs. 7,000 crore in 2009-10 in addition to the accumulated losses of Rs. 26,000 crore. With the economic climate showing signs of revival, it is time for serious introspection to identify efficiencies, develop strategies, build long-term relationships and cut costs. Airlines will perforce be driven to focus on innovation, formulation of strategies and brand building, if they are to survive. The competition in the region is formidable with well entrenched players and an environment conducive to growth. It is time for airlines to outsource non-essential services such as MRO (maintenance, repair and overhaul) to third party service providers within the country.
The MRO spend by airlines in India now is $500 million and is likely to grow to $1.5 billion in 2020. The Indian MRO is now more of an imperative than an option. There has been much debate and speculation as to whether India has the potential to develop as an MRO hub in the region.
19/04/10 The Hindu

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Categories: Indian Aviation- In General Apr 2010