Thursday, January 21, 2021

AAI lines up concessions to attract aircraft repair firms to its airports

Mumbai: Government-owned Airports Authority of India (AAI) plans to abolish royalty and offer steep discounts in lease rent to encourage maintenance, repair and overhaul (MRO) units to set up facilities at its airports.

Around 85 per cent of the $1.4 billion maintenance work of Indian airlines is carried out overseas and the government hopes that policy sweeteners will attract investment in the sector, generate employment and reduce import dependence.

Last year, the government cut goods and services tax (GST) rate on aircraft repair and maintenance work from 18 to 5 per cent. To further incentivise the industry, it will lease out land at airports at discounted rates to repair units. Airports such as Bhopal, Chandigarh, Chennai, Hyderabad (Begumpet), Juhu, Kolkata and Tirupati, among others, have been identified for the purpose. Also, AAI has land parcels in Delhi that are also being considered for lease.

Airports in India charge a minimum 13 per cent royalty on MRO firms’ annual revenue, thus reducing their profit margin.

The civil aviation ministry has in-principle approved the MRO policy and is awaiting AAI board’s nod.

“We are working on a policy to attract MRO investments in India. We have already issued expressions of interest for setting up flying training schools at six airports. We are creating an enabling policy environment for both MROs and training schools. These will lower costs for trainee pilots as well as airlines and reduce foreign exchange outgo,” a senior AAI official said.

21/01/21 Aneesh Phadnis/Business Standard

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