MRO Memo: Could AIESL Sale Reshape India’s MRO Industry?
Air India’s former maintenance arm, AI Engineering Services (AIESL), is progressing toward a sale by its government owner, an official source has told the Deccan Herald.
The Indian newspaper reported that a government committee is deciding upon the terms, timing and pricing of the sale, which it expects to complete in the 2023/24 financial year.
AIESL and several other Air India units were not included in the sale of the flag carrier to Tata in 2021.
Under the takeover, Tata assumed $2 billion of Air India’s $8.2 billion legacy debt and acquired a 100% stake in Air India and subsidiary Air India Express.
Since then, Tata has moved to merge its two other Indian airlines—Vistara and AirAsia India—into the flag carrier and its low-cost subsidiary, which potentially provides an attractively large, combined fleet for any buyer of AIESL to seek work from.
Plus, this fleet is set to grow substantially following Air India’s huge order for 470 Boeing and Airbus aircraft.
One might assume that, given its former ties and status as the largest MRO provider in India, AIESL would be in pole position to benefit from these developments, but this may not be the case.
Speaking to Aviation Week last summer, AIESL chief executive Sharad Agarwal said that while the MRO company was still picking up legacy Air India work, the flag carrier’s new management “might explore other options for an MRO partnership.”
“Air India management is maintaining a stoic silence about future maintenance needs,” he added.
Agarwal has also highlighted the need for India’s onerous and complex tax regime, which in some cases makes it cheaper for Indian carriers to maintain their aircraft outside the country.
Indian maintenance companies also need to develop overhaul capabilities on new-generation narrowbody engines to support the massive fleet growth that is coming.