On Tuesday evening civil aviation minister Ajit Singh will unveil GMR group's maintenance, repair and overhaul unit (MRO) giving a push to Hyderabad's aspirations as an aviation hub.
"A MRO has great synergies with an airport. It will also help build relationship with airlines," a senior GMR executive said explaining the rationale behind this venture. Moreover it will create an alternate revenue stream for the airport developer.
For the last three consecutive quarters the GMR group's airport division has been making a loss largely due to losses incurred at Delhi International Airport Limited.
In the last two quarters, the airport division's losses have been in excess of Rs 200 crore. But Hyderabad airport is faring well and is expected to post a net profit of Rs 20 crore in FY 2012.
Built at a cost of over Rs 300 crore the first phase of the MRO is spread over 30 acres and has three hangars for maintenace work.
The MRO has been developed jointly on a 50:50 basis by GMR Hyderabad Airport Limited and Malayasian Aerospace Engineering.
Jet Airways was to be the third partner in the venture but the airline backed out last year.
The plant and machinery and manpower are geared up but one thing is lacking— customers. The MRO is still to get a 'base load' customer or a dedicated client who will carry out all scheduled maintenance of planes in this facility.
"For over a year GMR group has been looking to secure anchor customer," an industry expert stated. While Air India has its own hangars other private airlines have been sending their planes abroad for checks.
SpiceJet sent planes to Malaysia while IndiGo did checks in Sri Lanka. Kingfisher carried out major maintenance in Malaysia and Turkey, he said.
However GMR group officials are not unduly worried about not having customers from day one.
"In principle, there are few customers who have expressed interest to sign up long-term contracts with us. We are in negotiation process on the same," said a GMR group spokesperson.
"The strategy of our MRO is to provide full scope of base maintenance services to customers not only in India, but also overseas. We believe that we will be able to offer competitive rates, attractive turn-around times, in line with the international quality standards, making a competitive proposition for our customers associated with us," he said.
An another company official said the MRO got certification and licences from DGCA and European Aviation Safety Agency recently and now the airlines will be ready to service their planes here.
He added that this is a project with a long gestation period and from day one it will not make money.
According to a civil aviation ministry report Indian MRO industry is expected to triple in size from Rs 2,250 crore in 2010 to Rs 7,000 crore by 2020.
However, this future size may be small compared to present size of MRO business in UAE (Rs 8,000 crore per annum) and China (Rs 10,000 crore per annum).
“Not even a washer is made in the country,” laments K V Krishnan, vice president, Airline MRO, Airworks, a Hosur based-repair centre, adding, “hence, everything needs to be imported. High taxes are another deterrent to MRO business.
"There’s no mechanism for easy customs clearance in India and regulators don’t understand the urgency of giving clearances," he said
In China, he says, the clearing personnel come to the MRO hanger just as the aircraft is brought in, ensuring that work starts on the aircraft almost immediately, he added.