To a query from Business Standard about its plans, Safran
said, “As a long-standing partner of the Indian aerospace industry, Safran is committed to supporting growth in the Indian market.”
“Given the fast expansion of the CFM fleet in Asia and in India specifically, we are considering the possibility of building a new Safran shop in this region of the world to address the growing MRO needs. This new shop will represent an investment of more than $150 million," adds Safran.
Currently, only Air India has capabilities for in-house maintenance of aircraft engines, while all other carriers send their engines overseas for overhaul and major repairs. A domestic MRO will help Indian airlines to reduce costs and save on foreign exchange, besides generating employment for engineers and technicians.
A team of Safran executives visited Air India's MRO facilities in Mumbai a few months ago to check the airline's capabilities. An Air India executive said labour costs in India were half of those in Europe or the US and that would make a maintenance unit attractive for other airlines.
Safran Group is discussing issues related to tax and regulatory framework for MROs with the civil aviation ministry. In India, an 18 per cent goods and services tax is applicable to aircraft maintenance jobs and airport operators charge high royalties on units, making the MRO business in India unattractive. An investment decision will depend on favourable policy decisions, it is learnt. Safran declined comment on the issue of tax structure in India.
According to the MRO Association of India, the size of Indian repair and overhaul market is $1-1.2 billion. "More than 90 per cent of business generated by Indian commercial airlines is being carried out overseas by large MRO companies
in Singapore, Germany, Turkey, Sri Lanka, and Malaysia," the association said.
Wings of Opportunity
Size of Indian maintenance, repair and overhaul (MRO) market
1,000: CFM engines likely to be in service in India in the next five years
40-45%: Share of an airline's maintenance expense related to engines
Air India carries out in-house maintenance of aircraft engines. All other airlines send engines overseas for overhaul