As India’s general aviation sector limps back to life after temporary stagnation, Middle East companies have been reaping the results of its tax-infused, straight-laced policy on maintenance, repair and overhaul (MRO).
The country is fast losing the advantage of its strategic geographic position that places it midway on the vital Middle East and Southeast Asian routes that could enable faster turnarounds. Another merit in India’s favor, namely a pool of qualified engineers that speak English, is getting eroded and diluted as the workforce moves to Middle East countries. It is losing its inexpensive-labor/high-skills edge as neighbors hasten their efforts to keep up with changing trends, adopting newer technology and serving a growing base of dedicated customers.
India’s inert market, tied as it is with stringent policies, has resulted in an exodus to the Middle East and Singapore of trained engineers who are looking for opportunities. With MRO growth not apparent, “people are not willing to return to India,” Sunil Ahluwalia, president sales and marketing for Schneider Airservices India, told AIN.
Increasing business with the Middle East makes it one of the busiest routes for business aircraft from India. “Numerous operators head to the Middle East for heavy maintenance not available in India, to established companies [such as] Jet Aviation and ExecuJet. Long-range charters are also tapped. Royal Jet, based at Abu Dhabi International Airport, is a popular provider,” he said. Interestingly, Indian operators use Middle East-based companies for stocking spares “because duty regimes are prohibitive in India,” said Ahluwalia.
India’s recent customs duty waiver on spare parts has not helped MRO providers to bring down costs, as it is applicable only if owners import spare parts for their own use. In addition, an MRO company is required to pay customs duty if imported spares are not used within 90 days from the date of import. “This defeats the purpose of stocking. Given that we maintain numerous aircraft types, it is not practical for us to forecast spares utilization,” said Dhiraj Chhabra, associate v-p, marketing, Air Works India Engineering.
Indian operators traditionally head for Europe or the U.S. for interior refurbishments. A recent Frost & Sullivan study pointed out that the Middle Eastern, Chinese and Indian markets will together comprise 27.3 percent of global demand for cabin interiors by 2020.
The Middle East is self-sufficient from an aviation point of view, said Nick White, vice president business and general aviation for Air Works Engineering, and formerly COO at Joramco in Jordan. “What we can offer to the Middle East is price, and that is what I will be doing.” White believes that once the domestic market is tapped for avionics upgrades and interiors, the company will look at the international market. He acknowledged it will be tough to break into the Middle East market initially, as it is “a more mature business and [more] likely to guarantee turnaround time.”
Global players such as Jet Aviation and ExecuJet, which are very active in the Middle East, “can’t break into India as it is difficult…Attempts by Lufthansa and Airbus have been thwarted in the past. That is why we are meeting with Jet Aviation to look at opportunities to work together,” added White.
If the deal goes through, Jet Aviation’s jets that come to India will be supported by Air Works. “The benefit we have is lower labor rates,” said White. The company expects to get EASA certification to overhaul Hawker models 750 to 950XP at Delhi airport by the middle of this month.
Meanwhile, Jet Aviation has received CAR-145 approval from the Director General Civil Aviation (DGCA) in India. With this, Jet Aviation Dubai is authorized to perform line and base maintenance on aircraft registered in India that include the Gulfstream GIV-SP, GV-SP, G200, G500, G550; Embraer 135; Dassault Falcon 900EX and 2000; and line maintenance on the Falcon 7X.
Jet Aviation Dubai vice president and general manager Michael Rucker said in June, “This approval recognizes the ability of our facility and our professionals to meet the highest quality standards, designed to ensure the safety and security of our customers.”
While focusing on the Middle East and China as significant growth areas, an official of ExecuJet was quoted as saying Indian clients are actively buying aircraft, “but there is a trend toward registering the aircraft outside India while the infrastructure grows in accordance with the demands of the owners.”
As part of its expansion into Asia, ExecuJet signed a memorandum of cooperation earlier this year with Angkasa Pura 1 to design, construct and manage general aviation terminals at 13 Indonesian airports that company manages.
In a reverse strategy, but in the commercial arena, Sharjah-based Aerostar Asset Management’s agreement with Air India’s engine shop was signed to provide impetus to market capabilities to customers in the Middle East and Africa. Aerostar uses Air India’s EASA- and FAA-approved facility in Mumbai, sourcing business for the carrier.