Corporate aviation is fast expanding in India in response to the imperatives thrown up by economic growth. But is the growth sustained by a corresponding quality in MRO services?

Slowly but inexorably, the centre of gravity of the civil aviation industry is shifting to the Asia Pacific region even as Europe and America remain home to the largest aircraft manufacturers in the industry. Spiralling demand for commercial and corporate aviation, emerging (and brilliantly so) markets, mushrooming economies and increasing number of high net-worth individuals (HNI), have all meant that aviation activity is on an ascendant. India’s aviation industry is perhaps the fastest growing in the world in terms of passenger and cargo traffic. A consolidation phase is in progress in the commercial arena and corporate aviation is fast expanding in response to the imperatives thrown up by economic growth. It is not just enhanced buying power that is bringing in growth in corporate flying but also the expedient, nay necessity, of saving busy corporate heads and CEOs the hassles of travelling by commercial flights (albeit first class) with the attendant woes of delays and security checks and so on. The aviation ministry forecasts the number of just the jets in use for corporate and private aviation to go up to 500 in five years—a three-fold increase from present day. So, is the growth in aviation activity matched by a corresponding establishment of MRO services?

At present, the potential worth of the MRO segment in India is estimated to be around $875 million (Rs 3,514 crore). This is the most optimistic figure; a less cheerful one pegs it at $400 million (Rs 1,607 crore), while the projected growth is an estimated $1.57 billion (Rs 6,306 crore) over the next five years. The projected 10 to 12 per cent Cumulated Annual Growth Rate (CAGR) is expected to be manifest for the next 10 years. The government seems to have taken some steps to encourage the setting up of MROs in India. While maintaining the 49 per cent FDI limit in domestic airlines, and up to 74 per cent stake in non-scheduled, chartered and cargo airlines that do not have any participation by foreign airlines, it has permitted a 100 per cent FDI for MRO service providers. The significance of such a measure is immense for the future of corporate aviation in as much as its impact on the maintenance costs for their aircraft would be huge.