India’s Tata Group is in talks with the country’s airport regulator to establish an aircraft maintenance, repair and overhaul (MRO) unit.
“Currently, the group is trying to get space for the MRO operations and is in discussion with the Airport Authority of India, which manages the majority of the country’s airports to secure its permission,” a government spokesman says.
The proposed facility is likely to be used for maintaining aircraft for Tata’s two proposed airlines, as well as for other companies, the spokesman adds.
He did not disclose a timeframe for the proposal or any other details. The Tata Group could not be reached for comment.
India’s burgeoning MRO industry was boosted in February when the government announced tax concessions on imports of spare parts and testing equipment for aircraft repair work. The Indian government also extended the time period for consumption or installation of these parts or equipment from three months to one year.
India’s aviation ministry is looking at small and medium airports to set up MRO facilities. The MRO business in India currently is estimated to be worth $800 million and likely to grow to $1.5 billion by 2020, according to the country’s aviation regulator, the Directorate General of Civil Aviation (DGCA).
“Space is a major constraint in setting up such facilities,” Director General of Civil Aviation Arun Mishra says. However, “this can be made possible in some places like Hyderabad and Bangalore where we [the DGCA] are giving land to set up MRO facilities.”
He adds “a robust MRO is the need of the hour” to shore up India’s fast-growing aviation industry.
The country’s MRO capacity has been lacking, and existing facilities are not able to fully meet airlines’ requirements. As a result, most of the airlines—aside from national carrier—send their aircraft to foreign maintenance providers, mostly in the Middle East or Singapore.
The decision to establish an MRO center comes soon after the Tata conglomerate signed a deal withto launch a full-service airline in India.
Under an agreement unveiled Sept. 19, Tata will own 51% of the new carrier; the Singaporean operator will hold the remaining 49%.
The proposed airline, which currently is seeking approval from India’s Foreign Investment Promotion Board, will be based in New Delhi.
This proposed airline is in addition top Tata Group’s plan to partner with Malaysian low-cost airlineand Telestra Tradeplace to launch a low-cost Indian airline. This will be the first foreign carrier to enter India’s aviation sector since the government changed its foreign direct investment rules in September of last year to allow foreign carriers to own up to a 49% stake in domestic airlines.
AirAsia India’s operations are expected to begin from Chennai International Airport in southern India by year-end. The Tata Group will hold 30% in the joint venture, while Telestra Tradeplace will have a 21% stake. The remaining 49% will be owned by AirAsia.