Air India looks to tow planes of rivals at repair hub

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By KARAN CHOUDHURY
  • Published 11.11.13
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New Delhi, Nov. 10: Air India

will look for business from its rivals for its maintenance, repair and overhaul (MRO) hub at Nagpur, which will come up by the middle of next year.

The national carrier is targeting a four-fold jump in earning from maintenance, repair and overhaul (MRO) services to Rs 400 crore from Rs 100 crore within four years as part of its financial turnaround plan.

The national carrier has been working hard to get back on its feet ever since its restructuring plan was put in place in April 2012.

“The Nagpur facility will help us showcase our capabilities as a state-of-the-art MRO, which will be on a par with other major global counterparts. We hope to bag major contracts once its starts,” a senior AI official said.

The much delayed $100-million facility is being jointly set up by Air India and Boeing at the Mihan SEZ in Nagpur.

It will service aircraft such as B-737s, B-777s and B-787 Dreamliners belonging to both domestic and international airlines.

AI officials said they were in talks with a number of its competitors, including the upcoming joint ventures of the Tatas with Singapore International Airlines and AirAsia.

“The foreign direct investment deals will not only help airlines but will also help us in getting engineering contracts. Talks have already begun with a number of new and existing carriers,” the official added.

At present, it has contracts with GoAir and international carriers such as Mihin Lanka and Silk Air.

Air India, however, will be able to use the facility for free as part of Boeing’s offset obligation. Also, the facility will have two wide-body hangars and a GE90/GENX engine overhaul shop.

Earlier this year, Air India had hived off its MRO unit into a separate business entity — Air India Engineering Services Ltd — and placed around 7,400 of its workforce under it. Besides undertaking the in-house maintenance, repair and overhaul of the Boeing aircraft, the facility will also fetch business from third parties to make the subsidiary viable.

According to the civil aviation ministry report last year, the Indian MRO industry is expected to triple in size to Rs 7,000 crore ($1,369 million) by 2020 from Rs 2,250 crore ($440 million) in 2010.

However, this is quite small compared with the size of the business in the UAE ($1,565 million) and China ($1,956 million).

Though Air India has been able to streamline much of its operations and has been performing better in the last few months, including gaining back its market share, its MRO unit is still trying to get back on track.

In the the second quarter of this fiscal, Air India witnessed a considerable improvement in its market share, passenger revenue/load factor and on-time performance.

While passenger revenue was up 22 per cent to Rs 3,332 crore in July-September from Rs 2,732 crore in the same period last year, market share grew to 19.8 per cent from 18.5 per cent a year ago.

during the same period in 2012, according to official data.