Saturday, February 04, 2017

Could Time Be Right For Indian MRO To Succeed?

On Dec. 27, 2016, a Boeing 737 operated by India’s second-largest passenger airline, Jet Airways, veered off the runway and spun into a ditch at Goa’s Dabolim Airport in western India, injuring several of the 161 passengers on board. Jet Airways said the aircraft had faced a “technical glitch while aligning for takeoff.” A few crash investigators in their root cause analysis point to a maintenance-related failure.

Although India is well-established as one of the world’s hottest air transport growth regions, with commercial airlines operating more than 400 aircraft, it continues to struggle to develop a comparable MRO network.

Jet Airways and other Indian private carriers are heavily reliant on foreign MRO service providers for maintenance, mainly engine management contracts, component contracts and heavy checks.

According to India’s Civil Aviation Secretary Rajiv Nayan Choubey, 90% of an MRO workscope goes outside of India. “The government estimates Indian carriers alone generate MRO business worth 50 billion rupees ($745 million) annually, and most of that is spent in countries like Sri Lanka, Singapore, Malaysia and the Middle East as India lacks MRO facilities,” Choubey says.

With the fleet size of Indian scheduled and nonscheduled operators likely to double by 2020, the need for a strong domestic MRO industry is critical, he says.

Boeing recently predicted demand in India for 1,850 new aircraft worth $265 billion over the next 20 years. “With an expected growth in fleet size of Indian carriers, the Indian MRO market is pegged at an estimated value of $5.2 billion by 2036,” says Amber Dubey, partner and head of aerospace and defense for KPMG in India.

The new National Civil Aviation Policy formulated by the Indian government last year is likely to propel the domestic airlines to maintain aircraft within the country, as the MRO sector has been given exemption from paying taxes such as customs duty, an airport royalty and value-added tax (VAT).
The policy also made provisions to enable international carriers to keep their aircraft in India for MRO work for up to six months. However, the aircraft during that time cannot be used for any kind of commercial activity, and carriers need permission from the authorities if the duration exceeds six months.
04/02/17 MRO-Networks.com
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