Air India is looking for a private player to operate and manage the air frame branch of maintenance, repair and overhaul (MRO) facility that Boeing had set up at Mihan in Nagpur and handed over to the carrier about half a year ago.
The contract is expected to be given on revenue-sharing or any other mutually agreed terms. On Sunday, the airline issued a tender stating, "Expression of interest from interested parties having technical/ financial capabilities for operating and managing Air India's Air Frame MRO which is already set up in Nagpur and functional on revenue-sharing basis or any other viable business proposal."
Boeing had helped in setting up over Rs 600 crore facility as part of its MoU with Air India in bargain for purchasing of over 100 aircraft way back in 2006. However, the MRO project at special economic zone of multi-modal international cargo hub and airport (Mihan) in Nagpur had got delayed for several reasons including that of land acquisition.
As per the officials, the facility has two 100x100 metre hangars for wide-body aircraft and another 24,000 square metre area for other related work. Each of the two hangars can house four wide-bodied aircraft and six narrow-bodied aircraft at a time.
Currently, due to lack of adequate world-class MRO facilities in India, many airlines, especially the low-cost carriers, have been taking their planes to other nearby countries including Singapore, Dubai or Colombo, because of which India loses millions in foreign exchange. Better tax laws and cheaper cost are also a factor. Maintenance accounts for approximately 10% of airlines' cost.
According to aviation advisory firm CAPA, the global MRO business is estimated to be over $50 billion. The largest providers typically offer the three main MRO capabilities: air frame, engine and component services. Engine maintenance makes up the largest proportion of the global market (35%), followed by component (22%) and airframe heavy maintenance (13%).
According to CAPA, in the past, most maintenance work was conducted in-house, but in the 1990s, there was a shift towards outsourcing the work to independent and third-party providers, led by the emerging LCCs. Most airlines which outsource work to a third party do so to allow them to focus on their core business, which is commercial flying.
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