Airbus to Finalize Indian Partners for Maintenance Facility this Year

Airbus is also focusing on making aircraft parts in India; sourcing of engineering services from India rose to $300 million in 2013

March 13--HYDERABAD -- Airbus SAS, the Toulouse-based aircraft maker, is expected to finalize partners for its proposed aircraft maintenance facility in India by the end of this year as more Indian airlines buy its planes.

Srinivasan Dwarakanath, chief executive officer of Airbus India Operations Pvt. Ltd, said his company is in talks with a clutch of global maintenance, repair and overhaul (MRO) firms to start a facility in India.

"We are talking to our partners. Earlier, we were talking to some companies, but it did not work out. We will be finalizing new partners this year," Dwarakanath said in an interview.

He did not elaborate on investments or the location of the proposed MRO facility.

"We don't run MRO anywhere in the world. We will bring partners to set up an MRO. We may pick up a stake. The equity structure is not yet finalized," Dwarakanath said.

Asked whether the MRO facility was a part of Airbus' agreement to sell 43 A320 aircraft to state-run Air India Ltd in 2005, he said the plane maker was obliged to help its airline customers, though it has not pledged to do so.

Rival company Boeing Co. of the US on Thursday said it would set up an MRO facility in Nagpur by the middle of this year. Boeing had pledged to set up the facility envisaging a $100 million investment in return for Air India's order for 64 Boeing planes that was signed in 2006.

India's current MRO market size is estimated to be around $700 million per year, according to a Thursday report by consultancy firm KPMG.

By 2020, the total Indian aircraft fleet would double in number, making it critical to have a strong domestic MRO industry, the report said, adding that merely 5 to 10 percent of the MRO work for domestic scheduled carriers is done in India, with most of the maintenance activities outsourced to third-party service providers outside the country.

Indian carriers plan to double their fleet size by 2020 to around 800 aircraft, KPMG added. Currently, Indian carriers operate a fleet of at least 170 Airbus aircraft.

"Time is now right for an MRO," Dwarakanath said.

Airbus is also focusing on making aircraft parts such as doors, flap-track beams and other parts in India through local companies, he said, adding that sourcing of engineering services from India rose to $300 million in 2013 from $25 million in 2006.

Airbus had on Tuesday said it was clubbing its activities in India under one roof by creating a fully owned subsidiary called Airbus India to manage its Indian operations.

Airbus' current market share of sales in India represents over 60% of the country's total aircraft backlog.

In addition, since 2005, Airbus has enjoyed over 60% market share of all new orders.

Copyright 2014 - Mint, New Delhi