Mumbai: Even as Indian and multinational companies rush to set up maintenance facilities in India, Mumbai-based Livewel Aviation Services is headed in the other direction—to Dubai—because of lack of good locations for the same in India.
Livewel plans to invest Rs320 crore in a maintenance, repair and overhaul (MRO) facility in Dubai that will initially handle mid- and large-size aircraft manufactured by Boeing company and Airbus SAS.
Shifting focus: Aircraft at Mumbai airport. Livewel Group’s M.F. Daver said there is not enough land at Indian airports to build a large MRO.
“Since there is no available land to build a large MRO at the Indian airports and the available remote airport locations lack infrastructure, we have moved to Dubai,” said M.F. Daver, chairman and managing director of Livewel Group. “With airports undergoing thorough modernization process, the land cost is...not affordable for smaller players. India has the only advantage of lower labour cost,” Daver added. He said despite higher labour costs, Dubai was a better location for the company’s MRO because of the “business potential” of the region. “It is easy to link to Dubai from other parts of the world.”
Livewell, which ended the year to March with revenues of Rs450 crore, employs 6,000 people across airports in Mumbai, New Delhi, Bangalore, Hyderabad, Goa, Kolkata and Chennai. The company offers services such as aircraft cleaning, apron maintenance, runway maintenance, cabin crew training. A May 2006 report by the Aeronautical Society of India, an industry body, said the Indian MRO market would exceed $1.1 billion (about Rs4,350 crore) in revenues by 2010.
Livewel’s decision to look at Dubai for an MRO comes at a time when firms such as Boeing, Airbus, Lufthansa Technik AG (Germany), Gulf Aircraft Maintenance Co. of Abu Dhabi, SIA Engineering Co. of Singapore, Sabena Technics TAT of France and El Al Israel Airlines Ltd are looking to set up maintenance facilities in India.
Indian firms such as Jupiter Aviation and Logistics Ltd, Taneja Aerospace and Aviation Ltd,and Air Works India Engineering Pvt. Ltd are also exploring the possibility of setting up MRO facilities in the country.
“Airlines such as Air India, Indian Airlines, Jet Airways, Kingfisher Airlines and GoAir are setting MROs on their own with international partners. A small-time domestic player cannot withstand the competition posed by these players,” said a Mumbai-based aviation analyst who works for an international brokerage and did not wish to be identified because he is not authorized to speak to media. His reference is to Livewel and the reason for its decision to base its MRO in Dubai. “The airline business is booming in Dubai. For Livewel, Dubai makes commercial sense with the kind of commercial airplanes and private jets it has. Dubai is also facing shortage of engineering skills. Indian carriers are taking brand new airplanes and it will take some time to get MRO business on track,” this analyst added.
The analyst said airlines prefer (to have their aircraft serviced in) key locations such as Dubai or Singapore rather than Kochi or Nagpur (where Boeing is building an MRO).
Daver, who is also the founder of Livewel, said the company already has a presence in Dubai and the requisite approvals to set up a MRO there. Livewel’s facility is coming up at the Jebel Ali airport in Dubai’s World Aviation City and would be operational by 2009, he added. According to Daver, Livewel could form an alliance with an international MRO operator for technical expertise for the proposed MRO, which will be capable of handling Airbus A380, the largest-ever civilian aircraft.
Dubai Aerospace Enterprise, a company promoted by investment house Istithmar and others, recently announced a global aircraft and engine MRO in Jebel Ali.