Mumbai: India will soon have an aircraft maintenance facility in Hosur, Tamil Nadu, which would be operated by Air Works India Engineering Pvt. Ltd.

“We are in the final stages of securing approvals from regulator director general of civil aviation," said Ravi. S. Menon, director and group head of business development at Air Works, a firm in which publicly traded engineering company Punj Lloyd Ltd and US-based private equity firm Global Technology Investment Group hold 33% stake each. The remaining stake is held by domestic aircraft maintenance firm Air Works India.

The new maintenance, repair and overhaul, or MRO, workshop—which has seen an initial investment of $20 million (Rs97.6 crore)—opens for business at a time when domestic aviation has hit a rough patch reflected in falling passenger numbers.

The Hosur MRO will be the third such facility in the country and the first to be run by a non-airline company. National Aviation Co. of India Ltd, or Nacil, operates one in Delhi and Blue Dart Aviation Ltd has one in Mumbai. However, both service their own planes first and cater to others after that.

Most airlines in India, therefore, have no recourse but to send their planes to Europe, Dubai or Singapore for mandatory checks.

“This MRO will be able to do first four ‘C’ checks of ATR planes," Menon said. A ‘C’ check is airframe maintenance conducted every year for the first four years of a plane’s life. The aircraft then has to undergo more extensive, or ‘D’, checks. These checks are separate from engine maintenance.

New avenues: An aircraft being repaired in Europe. Lower labour costs will make repair operations profitable for service providers in India. Bloomberg

In 2005-06, when Indian aviation was on an upswing, several airlines, Indian and overseas corporations, airline manufacturers and MRO operators had announced plans to set up such facilities.

Carriers such as Nacil, Jet Airways (India) Ltd, Kingfisher Airlines Ltd and Paramount Airways India Pvt. Ltd announced plans to start MROs, while firms such as Taneja Aerospace and Aviation Ltd and Jupiter Aviation and Logistics Pvt. Ltd had similar plans.

Last week, Nacil and aerospace firm European Aeronautic Defence and Space Co., or EADS NV, signed a 50:50 venture agreement for an MRO at Delhi airport that will also repair non-Airbus planes. Nacil is a major Airbus operator, and is inducting 43 new A320 class aircraft in its fleet that currently has 75 Airbus planes.

The facility will also cater to markets in South Asia. By 2013, the centre will employ 250-300 Indian technical personnel, and service at least 100 single-aisle and about 10 wide-body aircraft a year. The total investment is estimated at $40 million in five years.

Nacil has also tied up with US-based Boeing Co. for an MRO in Nagpur, Maharashtra. However, since these Boeing planes are almost new, there’s no urgency to make the project operational, said Dinesh A. Keskar, senior vice president of sales and president of Boeing’s aircraft trading division.

According to a report on the Indian aviation industry released on 16 October by consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd, the Indian MRO market is growing at about 15% a year and the Asia-Pacific market is estimated at $12.90 billion in 2011.

India’s lower labour cost advantage—roughly half of that in Europe and the US—will make MRO operations profitable for service providers, the report said. Air Works’ Menon, however, said the labour will be offset by 28% duty on inventory, spares, tooling, and test equipment required at the workshop.

Nevertheless, “it will be significant savings for domestic carriers considering the flying time and cost to Germany or Singapore for repair," he said.