Friday, May 24, 2024

Indian MRO Sector Gets A Boost But Needs To Be More Global

By Bikram Vohra

With India as the tip of the spear where aviation is concerned, there must be a commensurate up in support systems, or the position will be lost and a promise unkept. To mark a 2000 aircraft purchase in the next ten years and the opening of 200 airports to create a robust network demands a commitment to air traffic control, landing aids and safety measures.

Against this ambitious backdrop, what could be the weakest link in the chain is the lag in maintenance, repair and overhaul of facilities. This sector has been neglected and given short shrift over the years for baffling reasons. Yet, paradoxically, a strong MRO is the most catalytic element on the road to progress. With India at number seven globally in market share and slated to be third by 2026, it is gratifying that the government is being a little more serious about giving the MRO sector more than a token nudge. As things stand, nearly 85% to 90% of the requirements are met through imports and the dispatch of aircraft abroad. 

While this dependence on foreign-based MRO entities will continue for some time, seeing as how it is not easy to tool up factories and find skilled manpower, the delayed start must be fast-tracked. 

With Indian aviation being given special benediction, it stands to reason that the growth potential is immense. If things go according to plan, and there is no reason why they should not, India’s MRO bottom line should swell from $1.6 billion in the last year to over $4 billion in 2031. India currently has an outstanding order of over 1000 aircraft in various size categories, and that means over 400 high-intensity checks at a minimum annually. And that is only the civilian side. Add the need for a similar setup for the military expansion of fighters, transporters and choppers, and you can see how the neglect of this sector has been almost criminal in common sense.

In 2021 as Covid restrictions lessened, there came a realisation that the MRO system was not just broken but did not exist anywhere near the level it should to echo the ambitious UDAN and Make in India plans. Between delayed paperwork, a tax rate that only recently was reduced, the brain drain of engineers and aeronautical experts and a generally low priority given to making MRO a vigorous entity has dissuaded investment across the board and increased the admiration of the handful of companies that have worked against the tide to create some sort of infrastructure. 

There are 8 major players operating in the Indian MRO Market, including Air India Engineering Services Ltd, Air Works India (Engineering) Pvt. Ltd, Deccan Charters Limited, Indamer Aviation Pvt. Ltd, Max MRO Pvt Ltd, Taj Air, Bird ExecuJet and GMR Aero Technic Ltd. More organisations, seeing India’s potential, have shown interest in collaboration. How, then, do these pioneering companies who have soldiered on in what are laughable conditions of work hampered by absurd limitations even start walking down the path to becoming the core of a future global MRO hub?

A Deloitte report on this issue makes a very valid series of contentions. Indian technology companies can assist aerospace and defence manufacturers in harnessing the best digital technologies to develop MRO solutions, thereby expanding the MRO ecosystem. These existing MRO players could leverage relationships with aircraft OEMs and international airlines to establish robust MRO infrastructure and order books. Very importantly, set aside ego and parochial pride and consider revising and streamlining workforce certification to comply with regulations of the US’s Federal Aviation Authority and European Union Aviation Safety Agency. The last is a credibility factor, which would give Indian-based MRO activity trust and faith in doing a good job. 

By the same token heavy maintenance and engine repair must be included in the mix. 

None of these suggestions is rocket science. But they should be done with a sense of long-term commitment and encouragement given to MRO companies by way of logical concessions. Snarled by red tape, it will flounder however grand the blueprint on paper. In an ideal situation, a clutch of years down the road, India needs to see itself as a host to serve regional MRO needs. We are looking at 3000 aircraft in various categories between China and India. 

We have some major plus points. We have a huge vat of engineers and technical people who leave our shores for lack of opportunity. Why would they go abroad if they could flourish at home? We are looking at over 100,000 prime jobs in the MRO build if things go right, even more, once the reputation of being as good as it gets establishes itself. This vat of talent can be raised to global acceptance standards in less than normal time since the basics are already in place. 

In September 2021, the government ruefully announced that of the global $80 billion MRO market India, despite her being tipped as the fuel for the Industry’s revival, had only a 2.5% percent share. So that was when a slew of incentives was announced. Royalty to Airports Authority was stopped. The land would now be allotted for 30 years rather than the current 3-to-5-year short leases and would be through open tenders. The lease rentals would be decided by bids and not as per Airport Authority’s demands. While these are sensible moves in the right direction, much more must be done. 

AAI had accepted no airport royalty charges and significantly rationalised land rentals at eight Indian airports: Begumpet Airport in Hyderabad, Bhopal, Chandigarh, Chennai, Delhi, Juhu Airport in Mumbai, Kolkata and Tirupati. The question is how commercially viable these locations are for Indian MROs.

For one, around the world, MRO is seen as a mandatory part of every airport development. This is a logical corollary since it improves safety standards. We still need to see it as a compulsory dimension of airport infrastructure.   

Bharat Malkani, President of the MRO Association for India, has expressed his appreciation for the more open support from the present government, but he does accept that an MRO ecosystem will take at least five years to get up and become a feasible foundation for the subsequent growth of a competitive nature. That said, things are happening. 

Horizon Aerospace, Air Works and AI Engineering Services Limited are involved with Boeing on defence platforms like the MRO for the P81 Maritime and Reconnaissance fleet of 12 Indian naval air wing planes with the intent for six more. Then there is the VIP 737 transport fleet operated by the Indian Air Force (IAF), which is also being looked after at home. 

Air Works is engaged in Phase 32 heavy maintenance checks of six P-8I maritime patrol aircraft in service with the Indian Navy.

AI Engineering Services Limited (AIESL) does the MRO of the 777 VIP aircraft, which are operated by IAF, and the P-8I aircraft fleet. Also, Boeing is looking for collaboration in the overhaul and repair of the landing gear. And there is a collaboration planned under the Boeing India Repair Development and Sustainment (BIRDS) initiative to build India as a regional MRO hub, and this is an initiative that can galvanise this sector. 

BIRDS could create training programmes to hasten the positioning of engineers and technical staff to create a high-quality MRO structure in the country. 

A full-fledged MRO setup helps in faster turnaround times, mission readiness and higher operability. It is also a huge cost-saving exercise and adds to the self-reliance that is currently being advocated. Investment from the private sector can only pay dividends.

What we need in India is a prototype, the setting up of a state-of-the-art unit. Something that even entities like Lufthansa Technik, Air France Industries, and KLM Engineering and Maintenance can admire.

What can possibly be wrong in pushing for a capability that ensures the availability and airworthiness of aircraft, both civil and military? 

Bikram Vohra is a Consulting Editor at IADB

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