The government has permitted 100 per cent foreign direct investment in this sector—which is good news for all airlines.

Considering the Rate at which indian Aviation industry Is growing, the country’s Maintenance, Repair and Overhaul (MRO) market is estimated to reach about $1 billion (Rs 4,720 crore) by 2015. Recognising the importance of MRO requirements of airlines across the country, the government has permitted 100 per cent foreign direct investment in this sector—which is good news for all airlines. A substantial amount of MRO activity is outsourced to foreign vendors at understandably high costs to the airlines. Any step that facilitates the setting up of MROs on Indian soil would thus be a step in the direction of lowering MRO costs.

However, the enthusiasm shown by Airbus and Boeing, among others, during 2006 (there were eight different MRO projects being talked about during 2006-07) started showing signs of a thaw matching the recessionary trends of 2007 despite the consolidation that took place during 2007. Rising fuel costs also lowered the interest levels for MRO establishment with some plans being put on the back burner. Boeing has committed to investing $118 million (Rs 545 crore) in a facility in Nagpur, creating 3,000 direct jobs and many more indirect jobs.

Spinning success, defying stumbles

Unfortunately, the Tata experience in Singur led to the scrapping of a plan to set up an ancillary unit near Kolkata (to serve the Boeing MRO planned for Nagpur) by a joint team from some interested US companies, including Boeing. In another development, a planned MRO venture between Lufthansa Technik and India’s GMR was cancelled in July. The Hyderabad-based MRO, which was expected to offer medium and heavy checks for Airbus A320s and Boeing 737s, was scheduled to open this year; it was speculated that the current market environment and possible consolidation among India’s carriers influenced the decision.

On a positive note, GMR Hyderabad International Airport Limited and Malaysia Airlines have signed an MoU to establish an MRO facility for narrow and wide body aircraft at the Rajiv Gandhi International Airport in Hyderabad. The facility is expected to handle all types of aircraft, from light jets to aircraft such as the Airbus A380. Jet Airways is said to be in talking to GMR Group for a 24 per cent stake in the MRO.