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Air India's subsidiary AIESL has forged a partnership with Singapore Airlines' engineering arm, as AIESL seeks to get a foothold in the global MRO market besides tapping the local business.
Under a non-binding Memorandum of Understanding (MoU) signed between Air India Engineering Services Limited (AIESL) and SIA Engineering Company (SIAEC) last week, the two "will collaborate to offer line maintenance and ancillary services at various airports in India as well as engineering training".
Besides, the two companies will offer a wider spectrum of services and customised packages to domestic and foreign airlines operating in and out of India, AIESL said.
According to a recent industry report, the global aircraft maintenance, repair and overhaul (MRO) market is estimated to reach to 85.4 billion by 2021, whereas a KPMG report last year had projected the domestic market to touch $5.2 billion by 2026.
"The partnership will help us grow in the international market where we don't have any presence at present while the SIAEC will have an opportunity to tap the huge local business here with us," AIESL Chief Executive Officer H R Jagannath told PTI.
The tie-up will also help AIESL adopt the best international practises and benchmarks, he said.
The collaboration will draw on AIESL's extensive infrastructure and resources within India and its local knowledge and expertise in the Indian market, and SIAEC's comprehensive MRO service offerings and maintenance capabilities including the offerings and capabilities for new-generation aircraft, as per a statement.
AIESL currently has around 10 hangars in different parts of the country including three at its state-of the-art MRO facility in Nagpur, which has been designed for undertaking maintenance of any type and size of aircraft, including A380.
At present it has the mandate to perform maintenance work on Boeing 737 and 777 fleet besides conducting up to 4A checks on Airbus A320 aircraft as well.
The MRO space provides significant growth opportunities in India, more so because there are not many players in this fast-growing segment of aviation. While Air India does all these works within the country, most airlines send their planes overseas for maintenance, at a much higher cost.
"This collaboration will complement AIESL's efforts to become a leading one-stop MRO service provider in India," Jagannath said in the statement.
A senior official said the partnership will also help AIESL to enhance its brand value, which in turn may fetch higher valuation to the company if the government decides to sell Air India's subsidiaries separately.
The cabinet committee on economic affairs had in June given in-principle approval for strategic disinvestment in Air India and five of its subsidiaries.
SIAEC has a client base of more than 80 international carriers and aerospace equipment manufacturers. It provides line maintenance services at 37 airports in eight countries, as well as airframe and component services on some of the widely used commercial aircraft across the world.
Apart from this, it has as many as 25 ventures with original equipment manufacturers and strategic partners across eight countries including the US, Australia and Japan, as well as approvals from 27 national aviation regulatory authorities to provide MRO services for aircraft registered in the US, Europe, China and other countries.
Commenting on the tie-up, SIAEC CEO Png Kim Chiang said, "SIAEC is delighted to enter into this collaboration with AIESL to expand into the India market. This collaboration will allow SIAEC to offer our integrated MRO and Technical Support solutions to airline customers.