Air India inks pact with SpiceJet for MRO facility

SpiceJet will maintain Air India's Boeing 737 aircraft and landing gear replacement

National Carrier Air India's maintenance overhaul and repair facility at Nagpur got a shot in arm as it signed a Memorandum of Understanding (MoU) with private airline SpiceJet for maintenance of its Boeing 737 aircraft and landing gear replacement.

This will mean additional revenue for Air India. Air India's engineering services was hivedoff as a separate subsidiary in 2013 as part of its turnaround plan and last January it received approval from the Directorate General of Civil Aviation (DGCA). 

According to Arun Kashyap, VP, with engineering and maintenance of SpiceJet, the airline will save nearly 25% of total maintenance cost due to the tie-up. 

At present, Indian carriers outsource about 90% of their repair and maintenance work to companies abroad. This is partly because of the limited capabilities of domestic service providers and partly because of the high tax structure in India. 

The MRO unit has been unable to secure substantial third-party business till now and has grappled with labour issues and an unsuccessful litigation against the hive off of the unit. 

Air India's aircraft maintenance repair and overhaul unit (MRO) aims to nearly double its third-party business revenue to Rs 130 crore in FY2017. It also plans to hire 150 engineers and 450 technicians to cater to growth and replace 15-20 engineers retiring each month.