Scramble for MRO pie hots up

Jet, Kingfisher, SpiceJet, Air Deccan in talks with global majors to set up JVs.

MRO (maintenance, repair and overhaul) is the buzzword in the domestic aviation industry now even as private and national airlines are busy expanding their fleet size.

Jet Airways, Kingfisher Airlines, SpiceJet and Air Deccan are in talks with foreign MRO companies. Not to lag behind, domestic MRO players are also looking for strategic alliances for upgrading their facilities.

Airlines are keen on setting up MRO facilities since a typical D-Check (heavy maintenance of aircraft) results in 45 days of loss of service for a Boeing 737 aircraft.

According to industry analysts, there are tremendous opportunities for MROs with domestic airlines all set to acquire over 450 aircraft within five years.

Average cost of a full-fledged MRO would be in the range of $100-150 million. "Jet Airways is in talks with German company Lufthansa Technik AG for setting up of a full-fledged MRO in the country. Talks are on with three other companies too. However, nothing has been finalised yet," said a senior Jet Airways executive.

The executive pointed out that the proposal is to set up a joint venture or to put in place a special arrangement to share infrastructure and assets.

"We already have a maintenance facility in New Delhi and another leased facility in Bangalore. We are setting up a facility in Mumbai also. Moreover, we had entered into a contract with Lufthansa for repair and maintenance of spares for Boeing fleet," the executive added.

Kingfisher Airlines is also scouting for a strategic partner for setting up an MRO.

Kingfisher Airlines Chairman and Managing Director Vijay Malliya denied that his company was in talks with a domestic aerospace company, but industry sources say the company is talking to a few overseas MRO majors.

SpiceJet is planning to set up an MRO in Kolkata. "Though there were discussions with a global major, now the low-cost carrier is planning to go alone for establishing the facility," a source said. Other airlines, including Air Deccan, are also on the lookout for suitable MRO partners.

Earlier, Boeing and Airbus had decided to set up an MRO in the country with an investment of $100 million each. International MRO majors "� Jordan Aircraft Maintenance, Singapore Technologies Aerospace and Singapore International Airline Engineering Company "� have also lined up for a share in the MRO market.

The Foreign Investment Promotion Board has already cleared the proposal of Lufthansa Technik for setting up a wholly-owned subsidiary, One Stop Airline MRO Support Pvt Ltd.

Domestic MRO players are exploring possibilities for strategic alliances with overseas firms. "We are looking for alliances, which will give us better infrastructure, technology and brands for serving the industry," Air Works India Director Ravi Menon said.

Industry observers point out that 100 per cent foreign direct investment in MRO would eventually kill the domestic players.

"The boom in domestic aviation is a recent phenomenon, and the industry is yet to attain maturity. Moreover, the certification of Indian MROs is not accepted globally while India accepts foreign accreditation," an observer said.