GMR-Malay Air arm to set up MRO unit

GMR Hyderabad International Airport (GHIAL) today forged an agreement with Malaysia Airlines’ fully-owned subsidiary MAS Aerospace Engineering (MAE) to form a 50:50 joint venture — MAS-GMR Aerospace Engineering Company — for setting up an airframe maintenance, repair and overhaul (MRO) facility in Hyderabad.

The Rs 400-crore facility, the first overseas venture for MAE, will come up on 25 acres in two phases at the GMR Aerospace Park special economic zone, which lies to the east of the Rajiv Gandhi International Airport, an area dedicated to aerospace-MRO activities.

“The first phase, for which 10 acres have been identified, will house two-bay narrow-bodied hangers to handle Boeing 737 and Airbus 320 and will be operational by the third quarter of 2010, while the second phase will have wide-bodied hangers. The total time scale for both the phases is 24-30 months,” Ravindran Devagunam, vice-president (planning and strategy initiatives) of GHIAL, told mediapersons here. The MRO facility, which will be the first anchor tenant of the aerospace SEZ, will have a 60:40 debt, equity component and the joint venture is considering equity from its prospective customers, Devagunam said.

“Once completed, the facility will have the capacity to handle 60-80 aircraft annually, which should give us a headstart in the current downturn. We are aiming for a capacity utilisation of 85 per cent and the JV is expected to break-even by 2011-12,” he added.

The MRO industry is currently pegged at $60 billion globally. In India, it is pegged at $450 million, which is growing at a compounded annual growth rate of 13 per cent.

GMR Group Chairman G Mallikarjuna Rao said despite the economic slowdown, there are over 350 aircraft in operations currently. More than 200 new aircraft are expected to head to India in the next few years, with a possible 10-fold increase of 2,000 new planes in 10-15 years. “All this makes us bullish for the future,” he said.

Devagunam said the aerospace park will house several manufacturers of component and sub-systems, civil and military original equipment manufacturers R&D and engineering, aerospace-related services like aviation training and ancillary tenants.

“Optimistically, we will get two to three large facilities and seven to eight smaller facilities over the next five years, which will create 3,000 to 4,000 high-paying jobs,” he said.