Indian Aviation - Indian aviation news May - June 2013
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Indian MRO business need an Industry Status India’s commercial airline fleet today is close to 400 aircraft and in the near future Indian airlines have been permitted to induct another 50 aircraft by the end of this fiscal year. A new airline, AirAsia India will also start operating services in the next few months. Maintenance, Repair and Overhaul (MRO) is a vital segment of the aviation industry, be it civil or military and India is no exception! MRO spending in India recorded at US$ 800 million for 2011 and expected to grow to over US$ 1.5 billion by 2020. This is a well-known statistics that is doing the round in the aviation world. However, there is lack of a Civil Aviation Policy of the Govt of India. Although a draft policy is loaded on the Ministry of Civil Aviation’s website inviting comments and suggestions. This document has been up for the last six months for sure. It is a well-known fact that setting up an MRO is highly capital intensive with a long break-even time. Operating a credible MRO is highly dependent on investing in the right manpower which is regularly trained and optimally utilised with a strong focus on quality and turnaround time. It also requires continuous investment in tooling, certification from safety regulators not only our own DGCA, but also EASA and FAA approvals to meet global standards of excellence and acceptance. Most of the Indian MROs have done so. In addition to this, MRO services in India have the advantages of lower labour costs of around US$ 30 to US$ 35 per man-hour, compared to US$ 55 to US$ 60 in Southeast Asia and Middle East and even higher in the United States and Europe. In spite of all these investments, necessary certifications and cost arbitrage, MRO work of the airlines are going overseas. With regard to preferred destination for MRO services, 57 per cent of the airlines prefer to go to Europe, while 29 per cent prefer South East Asian markets for their MRO work and 14 per cent to the Middle East. The main reason for airline MRO work going overseas is that while signing of lease agreements, airlines do not impress upon the lessors to inspect the MRO capabilities in country. Added to this misery, Indian MRO faces other hurdles such as high taxes, high hangar rentals, airport operators charge them Gross Turnover Tax, high Custom Duties, etc. Although on some items when imported by Indian MROs there is no Custom Duties, the officers cannot interpret the rule and impose duties. Although the Ministry of Civil Aviation is proactive to the woes of the Indian MRO companies, it can do much more to make their business profitable by educating the Ministry of Finance and Revenue under which the Custom Department operates. If the Indian MRO business has to survive, the Government should accord this important segment of aviation an Industry Status.
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