Air Works India Chief : Lot of potential for MRO business in India

SP Guide Publications (SP’s): Air Works India has been in existence for almost six decades. What have been the milestones along the way?

Fredrik Groth (FG): Founded on April 16, 1951 by B.G. Menon and P.S. Menon, Air Works India began with maintenance and overhaul work on a few DC-3s. It soon achieved several firsts for the industry, including cloud seeding for artificial rain by using a modified DC-3 aircraft, aerial advertising by banner towing, infrared scanning, aerial survey and photography, and conversion of a DC-3 aircraft to test the payload of SLV-I and SLV-II created by ISRO, Sriharikota.

In 1982, Air Works established a ground training school, Aeronautical Training Centre, at Mumbai with a Directorate General of Civil Aviation (DGCA) approved and certified curriculum. Operational for almost two decades, the school has provided over 1,000 qualified mechanics to the aviation sector in India and across the globe. In 1993, Air Works established an airline division to provide maintenance and support services for two years during the set-up of Jet Airways Private Limited and conducted the first DGCA-certified Ground Proximity Warning System installation on a corporate aircraft in India in 1998. In 2007, Air Works attracted two strategic investors—Global Technology Investment Group, LLC, a New Yorkbased private equity firm, and Punj Lloyd, a transnational company specialising in the energy and infrastructure sectors, headquartered in Gurgaon, India—to broaden the equity and strategic reach of the company.

Last year, Air Works set up the nation’s first third party airline maintenance, repair and overhaul (MRO) facility at Hosur airport and also became India’s first DGCA approved Commercial MRO. In addition to the existing 24,500 sq ft hangar in Hosur, the company has plans of building four state-of-the-art fully equipped hangars, including a dedicated paint hangar.

Recently, Air Works partnered with Kingfisher Airlines to undertake maintenance of its fleet of ATR aircraft. Under this agreement, Air Works will carry out CChecks for ATR 72 in Hosur. This makes Air Works the first Indian MRO company to undertake airline maintenance.

SP’s: What types of business aircraft are operated by Air Works for its air charter segment?

FG: Air Works operates on business aircraft such Gulfstream G-IV, Gulfstream G-200, Citation 650, Hawker Beechcraft B200, Bell 412, Bell 407, Bell 206 L-4 and Enstrom 48B.

SP’s: What is the demand for air charter in India? What are the short and long term future prospects for the country’s air charter companies?

FG: Despite the slowdown in the market, the demand for air charter in India has been on a constant rise. Aircraft charters offer the flexibility, efficiency and privacy that may not be found in a commercial airline, especially when travelling to different cities for business. With election time in India, the helicopter charter industry has left the recession-hit market far behind and seems to have overtaken all expectations in this regard. The government, too, has been comparatively liberal this year in granting import permissions to private charter companies.

So far as the short and long term prospects for air charter companies in India are concerned, we would say that the charter business is still in its infancy but has been growing rapidly in the past decade. The industry adds few aircraft every year and these numbers have been constantly increasing. So, you can say, that the percentage of change over the next few years will exceed that of over the last 10 years. Private charter is no longer a luxury item for a select few; instead, it is becoming more of a necessary business tool required to operate effectively in the world.

SP’s: What are the necessary policy changes to promote business aviation in India? What are the impediments, if any, in operating from metros or other major airports such as Bangalore or Hyderabad International Airports?

FG: To leverage the business aviation sector in India, policy changes will have to encourage airlines at the highest management levels to utilise the capabilities within the country and support continued development. Government should also address the present customs and VAT regulations, which affect the business aviation sector adversely as compared to its competitors in the region.

SP’s: What is the current overall situation regarding availability of MRO facilities in India with respect to airlines and general aviation aircraft?

FG: The past few years have witnessed a phenomenal growth in the MRO sector in India, especially in terms of general aviation aircraft. In order to assure safety of passengers, Indian carriers need world class maintenance for their aircraft. They also need heavy airframe and engine maintenance, as well as component repair and overhaul facilities. Currently, a vast majority of the airlines in India outsource their maintenance to foreign companies, while the same is available in India at a lower cost. With the current potential and the rapidly growing Indian aviation market, large deals and joint ventures with global aviation majors may be expected soon and India should position itself to emerge as an MRO hub for the Asia-Pacific region.

SP’s: With its strategic location between the East and the West, India has the potential to become a regional MRO hub. What, in your view, has been the biggest hindrance till now and what would be the remedial steps?

FG: A number of domestic airlines continue to send their aircraft for MROs abroad, which means that India is losing out on a lot of business. This is mainly a result of stringent government policies that hinder the setting up of MRO business in India. High tax liabilities, especially import duties for aircraft spares and difficulty in acquiring land near airports discourage MRO business in India. Hence, there is a lack of adequate utilisation of the expertise available in India.

To leverage this potential, MROs in India will need assistance from the government to encourage the highest management levels of the airlines to utilise the capabilities within the country and support the continued development of the domestic MRO industry. The government should also guide and lead MROs in their efforts to address the present customs and VAT rules, which adversely impact the Indian MRO industry vis-à-vis its competitors in the region.

SP’s: There are reports in the media about major foreign players exploring possibilities of establishing MRO facilities in India through joint ventures. Who are the players and what has been the progress made so far?

FG: Foreign companies, such as Airbus, Boeing and Malaysian Airlines, are looking to set up MROs in India. A majority of them only operate through joint ventures as opposed to their own wholly owned facilities. For example, Airbus has a joint venture with Jupiter Aviation; Boeing has a pact with Indian Airlines in Nagpur and Malaysian Airlines with GMR.

SP’s: What is the capacity and clientele available with Air Works at the Mumbai MRO facility? Does Air Works have the facility to carry out all levels of inspections, overhauls and major structural repairs?

FG: Air Works Mumbai:

• Has the capacity to maintain airframe, avionics, electrical, wheels and brakes, batteries and hydraulics. Complete aircraft modifications, paint, spare part sales and distribution.
• Is approved by DGCA under CAR 145 for maintenance of Airframe, Engines and Avionics on Agusta Westland, Bell Helicopter, Bombardier, Cessna, Dassault, Eurocopter, Gulfstream & Hawker Beechcraft.
• Appointed by Honeywell (Aerospace) International for providing sales and service support for Honeywell products exclusively in connection with the BGA Aircraft business covering the Indian Sub-Continent.
• Has approval to service over 40 different types of aircraft. Currently, Air Works has 70-plus aircraft under maintenance.

SP’s: What are the plans for the new MRO facility created by Air Works at Hosur and how many aircraft have been handled so far?

FG: Air Works launched India’s first commercial MRO facility in Hosur, near Bangalore, in October 2008. The MRO facility in Hosur is equipped to carry out C Check for different types of aircraft. We recently signed an agreement with Kingfisher Airlines to perform C Check for its ATR 72 fleet at the facility. Air Works signed a 25-year lease in May 2008 committing to provide an existing hangar plus four more to be constructed in the future. The plan is to encourage domestic airlines to use MRO facilities in India instead of going abroad. Air Works expects to receive approval from DGCA for heavy maintenance of the Boeing 737. The Air Works Airline MRO has also met the European Aviation Safety Agency approval requirements and is awaiting audit of the facility by May 2009.

SP’s: Establishment of an MRO facility calls for heavy investment in infrastructure and qualified manpower. What has been your experience with regard to availability of technical manpower in terms of numbers, skill and quality of basic training?

FG: India has a vast pool of technical manpower as compared to Western Europe and the US. MRO manpower costs in India vary from $30 (Rs 1,500) to $35 (Rs 1,750) per hour, which is almost 60 per cent cheaper in comparison to the West. There is a shortage of skilled labour in developed countries as the existing workforce is ageing while new talent is unavailable. As stated earlier, the ground training school, Aeronautical Training Centre, at Mumbai contributed over 1,000 qualified mechanics to the Indian as well as global aviation industry. Even today we get scores of requests to revive the training school.