Mumbai: India’s largest private airline, Jet Airways Ltd, is in talks with with Bangalore-based infrastructure developer GMR Group to buy a stake of at least 24% in a proposed aircraft maintenance, repair and overhaul, or MRO, venture being set up at Rajiv Gandhi International Airport in Hyderabad, a senior Jet Airways executive said.
GMR Hyderabad International Airport Ltd, or Ghial, a company started by GMR to run the airport, is building the facility in partnership with Malaysia Airlines Ltd to provide maintenance services on narrow- and wide-body aircraft.
Earlier, GMR had tied up with Lufthansa Technik AG for a venture in which the latter would have held a 75% stake. However, Lufthansa later backed out for undisclosed reasons.
“We are very keen on (the) MRO project at Hyderabad airport,” said the senior Jet Airways executive, on condition on anonymity. “It makes commercial sense to have a repair centre nearby and stake in that. Besides making financial investment, Jet Airways can also pick up stake through offering guaranteed slots of airplanes for repair,” he added. Jet Airways, along with its subsidiary JetLite Ltd, operates 109 planes.
According to data on the website of India’s Directorate General of Civil Aviation, there are 311 passenger aircraft in operation in the country. More than 200 new aircraft will be headed for India in the next two years, while 2,000 new planes are expected in the next 8-10 years, said an August joint statement by Malaysian Airlines and Ghial announcing the project.
Tan Wai Fong, head of media relations at Malaysia Airlines, declined comment.
A GMR Group spokesperson confirmed the development.
“Jet Airways is talking to us. but it is premature to comment about its participation as the business model for the MRO is yet to be finalised,” he said.
“We have just signed a term sheet agreement with Malaysia Airlines for setting up an MRO,” the spokesperson said. “The equity structure, exact location and size of this project will be finalized in (the) next two months.”
“Jet Airways’ participation will ensure a steady business for GMR Group,” said an aviation analyst with a Mumbai-based brokerage who declined to be named because he is not authorized to speak to the media. “Lufthansa backed (out) because of (a) lack of commitment from airlines. Jet and Malaysia will solve that problem.”
Tengku Azmil Zahruddin, chief financial officer and executive director of Malaysia Airlines, had in an August statement said that current MRO providers in India were unable to cope with volume, resulting in most aircraft being sent to Malaysia.