Bangalore may host aircraft maintenance facility

Hyderabad, Kochi too on the radar of Auk Aviation

Over the next five months or so, either Bangalore, Hyderabad or Kochi may play host to an MRO (maintenance, repairs and overhaul) facility for aircraft. An MRO is a third party maintenance facility for aircraft. India today has an acute shortage of such facilities for high-end checks.

With the open sky policy leading to proliferation of aircraft during the last two years and the expected increase over the next few years, it makes good business sense to base an MRO in India as there is likely to be enough volume to yield a good revenue model.

Auk Aviation Pvt Ltd, a Bangalore-based firm, hopes to set up an MRO facility soon. "We only need to finalise the location of the facility," said Jitendra Bhatia, managing director of Auk Aviation, an IIT-IIM alumnus, who was formerly with Hindustan Aeronautics Ltd (HAL).

Auk is looking out for a JV with a private airport operator to get the project off the ground speedily so as to enjoy the first-mover advantage. There is some urgency as Bhatia believes there is space for not more than one or two MRO players in the country.

A letter of intent is set to be issued in two-three weeks and an MoU in two months with the collaborator, he added.

The project, estimated to cost $16 million, needs 160 personnel to man it. Funding will be leveraged at a debt and equity ratio of around 1.5:1. The equity has been mainly brought in by NRIs in UAE and Malaysia. Auk is in talks with financial institutions and also looking for technical collaboration with an MRO based in the West who could bring in some equity.

The facility will be able to handle Airbus A300, A 310, A320, Boeing 737s, Embraer and ATR aircraft. "It will cater to the needs of numerous domestic airlines that have come up over the last two years and the ones that are set to fly over the next 3-5 years," said Bhatia. By the third year, AUK hopes to capture 15 per cent of the market.

As of now, only Air India and Indian have MROs of their own. They are the only ones which can do from A to D checks. Almost all private airlines today fly their aircraft abroad for the C and D checks.

As per the DGCA classification, the 'A' or the basic checks has to be done after an aircraft has flown 100-150 hours, 'B' check after 700-900 hours, 'C' check after 3000-4500 hours and 'D' check after 18,000-20,000 hours. 'D' check could include the stripping down of the aircraft to check for corrosion and such other major problems.

India's MRO market has been estimated to be around $60 million and in seven years it is expected to grow to some $200 million. Till now most of the maintenance done in India for private airlines has been preventive, not of breakdown. While preventive maintenance includes the 'A' and 'B' checks, breakdown maintenance includes 'C' and 'D' checks. For the 'C' and 'D' checks, airlines often fly their planes abroad, mostly to Singapore.

As on March 31, 2004, there were 171 aircraft and for 2005-2006, the conservative estimate is at 484. The future projection by Boeing is that it will be able to sell 400 aircraft in India and Airbus too estimates a similar figure for its aircraft over the next 10 years.

All about Auks...

Auks are birds that are superficially similar to penguins due to their colour pattern, their upright posture and some of their habits. Nevertheless they are not related to the penguins at all. In contrast to penguins, auks can fly. They are both good swimmers and divers, but they walk clumsily. Due to their short wings, auks have to flap their wings vigorously in order to fly.