90% of our MRO expenses directed to foreign firms: IndiGo to MoCA

Reach out to aircraft equipment makers to set up MROs in India: IndiGo to govt

Approximately 90 per cent of IndiGo’s expenses on aircraft maintenance, repair, and overhaul (MRO) are outsourced to foreign companies, leaving only 10 per cent of the business for Indian firms, the airline’s engineering head, S C Gupta, told the Ministry of Civil Aviation (MoCA) a few weeks ago.
 

This is primarily because there are no units in India capable of maintaining nacelles, engines, auxiliary power units (APUs), and landing gear, Gupta informed the MoCA, according to its officials.
 

Indian carriers allocate 12-15 per cent of their revenues to MRO, positioning it as the largest expenditure after fuel costs, which account for approximately 45 per cent of their revenues.
 

IndiGo proposed Indian units doing MRO jobs should develop additional capabilities, such as nacelle maintenance, engine maintenance, and component support, in line with prominent international practices, MoCA officials told Business Standard.
 

Since India is going to be the fastest-growing aviation market in coming decades, it should reach out to foreign equipment makers (engine makers, etc) with “competitive benefits” to set up their MRO facilities in India, Gupta suggested.

 

Moreover, considering that most aircraft are leased assets, Indian units doing MRO jobs should engage with international lessors and undertake prestigious projects for “redelivery checks” to instil confidence in the lessor community and enhance their reputation, he suggested.
 

Redelivery checks can be carried out only by MROs authorised by lessors before the aircraft is returned by the airline.
 

Both fuel expenses and payments to MRO units abroad depend on the strength or weakness of the rupee. Fuel expenses are consistently settled in dollars, while airlines pay MRO units abroad either in dollars or local currencies.
 

On Thursday, in response to the substantial surge in fuel prices over the last three months, IndiGo introduced a fuel charge ranging from ~300 to ~1,000, depending on the flight’s distance.
 

IndiGo, India’s largest airline, has a fleet of approximately 330 planes. The airline, which commands a significant 63 per cent share of the domestic passenger market, did not respond to Business Standard’s queries on this matter.
 

The airline works on a hybrid model of maintenance that consists of performing all “line maintenance” activities in-house and outsourcing major maintenance -- related to engine, APU, landing gear, components, and nacelles -- to other outfits.
 

Line maintenance is daily checks that involve correcting minor defects. IndiGo conducts line maintenance at nearly 80 transit stations and 25 night-halt stations, including in-house services for metallic or composite structural repair, battery servicing, and engine or landing gear replacement. The airline has approximately 3,000 engineers.
 

Gupta informed the MoCA the airline allocated approximately $300 million annually for MRO, with foreign units accounting for $270 million of that.
 

He said approximately 60 per cent of the airline’s MRO expenses were on account of engine and APU maintenance.

IndiGo’s aircraft are equipped with engines from two original equipment manufacturers (OEMs): Pratt and Whitney, and CFM. Additionally, the airline’s planes are fitted with APUs from Honeywell and Hamilton Sundstrand.

There are no OEM-approved MRO facilities in India for engines and APUs installed in IndiGo’s aircraft fleet. Therefore, the only “viable” option is to outsource engine and APU maintenance outside India, he conveyed to the ministry.

The same picture holds true for both landing gear and nacelle maintenance. There are no domestic units that can give service on landing gear or nacelles, thus requiring the outsourcing of these tasks to foreign units.

IndiGo’s aircraft fleet features landing gear from Safran, and nacelle components from Safran and Collins.