The potential of Engine MRO in India
The Indian aviation industry is on a path of unprecedented growth. The numbers are majestic and the market is ballooning. Geographically located at the intersection of Asia and Europe and the Americas, India's future is concrete and undeniable.
Till a few years back, the government concentrated on expansion of road and railway to soothe the growth in transportation. However, with Indian airline carriers upping their competition with affordable pricing and efficient connectivities across the country, the government was made to realize that the cornerstone for a successful and efficient transportation system lay in the growth of the aviation industry.
Such a marvelous growth, however, means the need for efficient infrastructure and support system.
A delayed realization about the potential of the aviation industry in India has also resulted in the hindered growth.
By 2021, the number of commercial aircraft is projected to reach 1000 in India.
The aircraft, which is the heart and soul of the aviation industry, needs a routine maintenance. For a healthy aviation industry to prosper in India, the country needs world-class MRO facilities.
The need for MRO in India was made conscious of in 2015. The increase in commercial fleet population, passengers, traffic growth, various other factors have resulted in the federal government to understand the need to recognize MRO as one of the crucial focal points in the aviation industry.
Until recently, Air India Engineering Services Limited (AIESL) was the only MRO facility in India for both structural and engine maintenance.
Earlier in 2018, AAR announced a joint venture with Indamer for an airframe MRO facility in Mihan SEZ in Nagpur. Many more partnerships have been announced.
The ‘Powerplant’ of an aircraft is the Engine. Currently, worldwide, there are approximately 25,000 active commercial aircraft flying and the number will increase to around 50,000 by 2037. In this, Asia-Pacific will see the maximum growth with a new fleet population near to 20,000. If there are approximately 25,000 aircraft, the number of large commercial engines present today are approximately around 70,000.
India is about to become the third-largest civil aviation market by 2021 and the largest by 2030. However, the dearth of MRO facilities paints a gloomy picture.
Hurdles
Major companies understand the potentials of the Indian market, however, cultural difference, complexities of doing business, and many more reasons have kept the large entities away from the country.
Availability of space near major airports and the cost of such land, which is predominantly owned by the Airport Authority of India (AAI), is a cause of major concern. This makes the process of making a State-of-the-Art MRO facility next to impossible.
The other major hurdle faced today is the access to capital. Interest and lending rates are way high compared to international markets. Long gestation periods make it unviable to borrow money and invest. Also, insistence on 1.5 times the value of borrowing by way of a collateral security, makes the entire project not feasible.
Federal taxes, which are now being relooked, make India not so competitive compared to other South Asian nations.
The Potential
India is blessed with an abundant talent pool. Moreover, the veteran community provides a rich pool of talents that can be leveraged. Their learning needs to be recognized and refreshed towards commercial aviation.
The Mihan SEZ in Nagpur was the first step. Considering the span of India, creating a hub is the logical step. For such an environment to be created, the support and encouragement of large multinational MRO companies are needed.
India already has the likes of Lufthansa, Boeing, Airbus, Safran, etc. present in the country in aerospace. A delayed realization by the federal government about the importance of MRO in India should not hamper the interest of international MRO companies.
By way of partnerships or joint ventures with Indian companies, a successful and healthy future of MRO in India can be ensured.
To create State-of-the-Art MRO facilities like SR Technics, Delta Tech Ops, AFI KLM Engg. & Maintenance, support from the Government — both State and Federal level — is required. Unnecessary rules and regulations need to be abolished.
To replicate world-class MRO facilities, India needs a healthy regulatory environment, wherein, the central aviation nodal authority acts as an administrator and not the enforcer.
To start off, a component maintenance facility catering to different engine types need to be set-up. Lufthansa Technik in Bangalore caters to component services for airframe and not engines.
For this to happen, the state governments need to identify lands near the airports for the building of required facilities.
Industrial policies need to be streamlined — such as regulatory approval for building infrastructure. State incentives, as offered to other industries like automotive and IT, need to be structured for aviation as well.
Airline carriers in India need to look at air operations holistically. Most of the engines are owned by lessors and lessors dictate where their engines have to maintained. With the Indian carriers bowing down to the contracts as provided by the lessors, and not negotiating to their best benefits, this has also created a vacuum for engine supply for maintenance within the country.
A successful running of component maintenance facility can lead to getting certified for overhauling as well.
With the paucity in engine maintenance facilities across the world and overseas facilities running full, creating facilities in India makes optimal sense. Competitive labor costs, geographically well-located, increase in fleet population and federal government's focus on regional airline connectivity (UDAAN scheme), engine shops will have ample business and the aviation industry in India and Asia will also grow.
Till a few years back, the government concentrated on expansion of road and railway to soothe the growth in transportation. However, with Indian airline carriers upping their competition with affordable pricing and efficient connectivities across the country, the government was made to realize that the cornerstone for a successful and efficient transportation system lay in the growth of the aviation industry.
Such a marvelous growth, however, means the need for efficient infrastructure and support system.
A delayed realization about the potential of the aviation industry in India has also resulted in the hindered growth.
By 2021, the number of commercial aircraft is projected to reach 1000 in India.
The aircraft, which is the heart and soul of the aviation industry, needs a routine maintenance. For a healthy aviation industry to prosper in India, the country needs world-class MRO facilities.
The need for MRO in India was made conscious of in 2015. The increase in commercial fleet population, passengers, traffic growth, various other factors have resulted in the federal government to understand the need to recognize MRO as one of the crucial focal points in the aviation industry.
Until recently, Air India Engineering Services Limited (AIESL) was the only MRO facility in India for both structural and engine maintenance.
Earlier in 2018, AAR announced a joint venture with Indamer for an airframe MRO facility in Mihan SEZ in Nagpur. Many more partnerships have been announced.
The ‘Powerplant’ of an aircraft is the Engine. Currently, worldwide, there are approximately 25,000 active commercial aircraft flying and the number will increase to around 50,000 by 2037. In this, Asia-Pacific will see the maximum growth with a new fleet population near to 20,000. If there are approximately 25,000 aircraft, the number of large commercial engines present today are approximately around 70,000.
India is about to become the third-largest civil aviation market by 2021 and the largest by 2030. However, the dearth of MRO facilities paints a gloomy picture.
Hurdles
Major companies understand the potentials of the Indian market, however, cultural difference, complexities of doing business, and many more reasons have kept the large entities away from the country.
Availability of space near major airports and the cost of such land, which is predominantly owned by the Airport Authority of India (AAI), is a cause of major concern. This makes the process of making a State-of-the-Art MRO facility next to impossible.
The other major hurdle faced today is the access to capital. Interest and lending rates are way high compared to international markets. Long gestation periods make it unviable to borrow money and invest. Also, insistence on 1.5 times the value of borrowing by way of a collateral security, makes the entire project not feasible.
Federal taxes, which are now being relooked, make India not so competitive compared to other South Asian nations.
The Potential
India is blessed with an abundant talent pool. Moreover, the veteran community provides a rich pool of talents that can be leveraged. Their learning needs to be recognized and refreshed towards commercial aviation.
The Mihan SEZ in Nagpur was the first step. Considering the span of India, creating a hub is the logical step. For such an environment to be created, the support and encouragement of large multinational MRO companies are needed.
India already has the likes of Lufthansa, Boeing, Airbus, Safran, etc. present in the country in aerospace. A delayed realization by the federal government about the importance of MRO in India should not hamper the interest of international MRO companies.
By way of partnerships or joint ventures with Indian companies, a successful and healthy future of MRO in India can be ensured.
To create State-of-the-Art MRO facilities like SR Technics, Delta Tech Ops, AFI KLM Engg. & Maintenance, support from the Government — both State and Federal level — is required. Unnecessary rules and regulations need to be abolished.
To replicate world-class MRO facilities, India needs a healthy regulatory environment, wherein, the central aviation nodal authority acts as an administrator and not the enforcer.
To start off, a component maintenance facility catering to different engine types need to be set-up. Lufthansa Technik in Bangalore caters to component services for airframe and not engines.
For this to happen, the state governments need to identify lands near the airports for the building of required facilities.
Industrial policies need to be streamlined — such as regulatory approval for building infrastructure. State incentives, as offered to other industries like automotive and IT, need to be structured for aviation as well.
Airline carriers in India need to look at air operations holistically. Most of the engines are owned by lessors and lessors dictate where their engines have to maintained. With the Indian carriers bowing down to the contracts as provided by the lessors, and not negotiating to their best benefits, this has also created a vacuum for engine supply for maintenance within the country.
A successful running of component maintenance facility can lead to getting certified for overhauling as well.
With the paucity in engine maintenance facilities across the world and overseas facilities running full, creating facilities in India makes optimal sense. Competitive labor costs, geographically well-located, increase in fleet population and federal government's focus on regional airline connectivity (UDAAN scheme), engine shops will have ample business and the aviation industry in India and Asia will also grow.
No comments:
Post a Comment