Air India's MRO biz gets DGCA approval

Company targets annual revenue of Rs 750 crore

Having secured approval for its maintenance, repair and overhaul (MRO) unit from the Directorate-General of Civil Aviation (DGCA), Air India is targeting Rs 750 crore in revenues in the next financial year.

However, the division's success will depend on whether the government relaxes tax rules for the MRO business and how well the carrier markets its services to secure third-party business, aviation experts said.The engineering department of the airline was hived off from Air India as a separate MRO unit to a fully-owned subsidiary company - Air India Engineering Services - to provide maintenance services for Air India fleet as well as that of customer aircraft, engines and components. The setting up of the new company was part of a turnaround plan approved by the Centre.

"We have the largest MRO network in India with facilities across various cities. DGCA's approval is significant and we are stepping up our marketing and also eyeing for contracts from Indian Air Force and the Indian Navy," said an Air India spokesperson. Its new MRO facility in Nagpur is expected to be operational in three months. While Air India carries out routine maintenance work for several domestic and foreign airlines, major overhaul of engines and airframe work on Indian planes is done abroad because it costs 30-40 per cent less outside India. The MRO sector has been lobbying with the government to do away with the value-added tax on spares and the service tax on MROs - two taxes which make the business in India non-competitive.

"Air India MRO will have to secure third-party work or else will only be left with captive business from the parent. It needs dynamism and aggressive marketing," said an aviation expert.