A passage to India: Here’s how Indian MROs could end up servicing the world’s aircraft

VT-IEY, VT-SZB and VT-TTD, aircraft registered with IndiGo, Spicejet and Vistara, respectively, were at the same airport for a couple of days. While it would have seemed normal at any Indian airport, this was at Queen Alia International airport, Amman. There is no connectivity between India and Jordan, neither Indian carriers nor Jordanian ones fly to each other’s countries. These aircraft were at Joramco for maintenance, undergoing re-delivery checks before being released by the respective fleets.

For many years, Air Works was the only MRO worth its salt in India. Located at Hosur, near Bengaluru, the MRO was certified to carry out checks for B737 series and the A320 family of aircraft, which is the mainstay of Indian aviation. A couple of years ago, Air Works was joined by GMR Aero Technic at Hyderabad.

At the end of December 2020, IndiGo had 111 A320ceo aircraft in its fleet. The airline is expected to retire all of them by the end of 2022 or early 2023. Almost every aircraft makes a visit to the MRO before leaving the fleet to meet the redelivery conditions laid out in the leasing contract.

Spicejet has over 200 B737 MAX on order while GoAir has over 100 A320neo, which are yet to be delivered. This will see replacement of older aircraft in the respective fleets, something that will require MRO services.

Redelivery is not the only time MRO services are needed. While airlines handle the A and B checks on their own, the C and D check is typically outsourced. While IndiGo is building a hangar at Bengaluru where it will be able to handle these maintenance needs, it may not be sufficient for its entire fleet and the airline will continue to rely on external parties.

Over the next few years, the active fleet count in India will increase from 700 to over 1,200, the majority of which will be narrowbody B737 series and A320 family aircraft, which are catered to by the likes of Air Works and GMR Aero Technic.

While airlines and airports were left in the lurch in the Budget, the stimulus during the peak of Covid-19 had seen the GST rate being reduced to 5 percent for domestic Maintenance, Repair and Overhaul (MRO) services. This was also followed by 100% percent FDI being permitted in MROs via the automatic route.

While the lower taxation helps to go closer to rates offered by foreign MROs, the 100 percent FDI is only an exit route and not a way to build a business.

05/03/21 Ameya Joshi/Moneycontrol

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Categories: Indian Aviation- In General Mar 2021