What
is the Potential of India Aviation MRO Market?
The Indian MRO Market is in its growth stage. Due to lack of proper
MRO facilities and high taxes on MRO services in India, ~% of the Indian MRO
work is outsourced to countries such as Singapore, Dubai, UAE, Sri Lanka and
others. There are 8 major players in the Indian MRO Market including, AIESL,
Air Works, Indamer Private Limited, Deccan Charter and Max MRO and others. Presently,
the market is concentrated with more than ~% of market share captured by these
8 players. The major factors which drive the growth in the Indian MRO Market
are increase in air passenger’s traffic, increase in fleet size, government
investments, and new policy implementations, expansion of MRO facilities,
investments and entry of low cost carriers.
Indian MRO Market has grown
from USD ~ million in 2012 to USD ~ million in 2017. This growth was driven
mainly by growth in the aviation industry in India which was valued at USD ~
billion in FY’2016. The air passenger traffic of scheduled airlines grew from ~
million in 2013 to ~ million in 2017. This increase along with growth in
airline fleet sizes has increased demand for MRO services. There has been a
recent development of airports and airstrips in India along with huge
investments from the government to boost the Aviation Industry. Such
investments are likely to have a positive impact on the demand for MRO services
in India.
What is the need for MRo in India Aviation market?
Increase in fleet size: A
rapid increase in the fleet size in India puts a lot of pressure on the MRO
sector to be properly developed in order to cater to the growing demand.
Increase in Air Passenger:
Increase in the air passengers puts pressure on the Air Line companies to
further increase their fleet size and increase the number of air trips of each
airplane. This increases the need for Air Operators to get their aircrafts
serviced and maintained more frequently.
Entry of Low Cost Carriers:
A large number of low cost carriers have entered the
Indian
Aviation market. Due to their entry, the existing airline companies are
forced to compete with their prices. This has forced the existing airline
companies to cut costs by getting MRO services domestically as abroad trips are
expensive and the aircraft has to be out of operation for longer time. This
increases the need for MRO facilities in India to cater to the increasing
demand.
Outsourced MRO: ~% of the
MRO work for Indian Airlines is done outside India. This is very costly for Air
operators and involves high turnaround time. Airline companies get MRO services
from abroad due to lack of MRO facilities in India. This increases the need to
develop MRO in India because of the huge demand and low supply. Moreover, Air
Operators are driven abroad due to the availability of globally certified
standard of quality. Indian MROs have also started attaining global
certifications for their services which is attracting many Air Operators and
putting pressure on MROs to expand and make their services available all across
India.
What is India’s Current
Position in Global MRO Market?
The number of aircrafts in the global Aviation Industry has increased
manifold over the review period. The 2 biggest aircraft manufacturers, ~ and ~
have reported that they expect ~ aircrafts to be manufactured per month in 2019
up from ~ aircrafts per month in 2015. Worldwide fleet size is expected to
reach ~ in 2028 from ~ in 2018. Such a rapid surge in the number of aircrafts
has raised the demand for MRO services globally. There has been an increase in
the GDP of both developed and developing countries. In addition, there has been
an increase in the disposable income and middle class families. Air travel
rises in tandem with GDP and disposable income. As the disposable income
increase, the number of air passengers is expected to rise simultaneously.
The revenue generated globally from MRO services has increased from
USD ~ Billion to USD ~ Billion in 2017 registering a CAGR of ~%. The top 5 MROs
in the world are ST Aerospace (Singapore), HAECO Group (Hong Kong), AAR (USA),
AFI KLM E&M (China), Lufthansa Technik (Germany) and GAMECO (China).
What is the Competitive Landscape in the market?
India aviation MRO market is concentrated with major ~ players
constituting more than ~% share in FY’18.
Market Entry: Indian
Aviation MRO market has few players operating in the country. The services
offered by the existing MROs are very limited as they lack world class
infrastructure and technology. Due to the absence of MRO companies ~% of the
MRO work is outsourced to Singapore, Sri Lanka, UAE, Europe and others. Only ~%
of the MRO work is done in India. Due to this, MRO is an untapped market in
India.
High Cost of Setup:
Establishing an MRO facility involves huge initial cost. The whole
infrastructure, machines and equipment used for MRO are very expensive. MRO
facility also has very high operating cost as the facility needs to be upgraded
constantly to increase the hangar size or improve the infrastructure to provide
better and higher quality services. Due to such high initial and operating cost
many players are not able to enter the market.
Competition Parameters: The
major parameters on the basis of which Indian MROs compete are regional
presence, types of maintenance service (Line or Base), and types of overhaul,
facility size (number of hangars), turnaround time for aircrafts, approvals
from global regulators and OEMs and others.
Latest Trends: MROs have
started opening up of their facilities in SEZs because of the incentives
provided by the government. Another new trend in the Indian MRO market is that
the companies have started forming alliances with foreign MROs.
What is the value chain in the India Aviation MRO market?
OEMs: Original equipment
manufacturer are of 3 types; Aircraft OEMs, Component OEMs and other Hardware
OEMs. Major Aircraft OEMs are Airbus, Boeing and Embraer. The OEMs issue a TBO
(Time between Overhaul) which specifics the time limit for each part and component
separately. OEMs specify various checks to be performed on the aircraft namely,
A, B, C, and D Checks. The interval of each check is determined by number of
flying hours or the age of the aircraft. Keeping all factors in mind, OEMs
issue TBO for all components and parts.
Air Line Companies: Air
Line companies like Air India, Indigo, Spicejet, Air Asia, Vistara and others
have to get their aircrafts serviced periodically as mentioned by the OEMs. A,
B, C and D checks have to performed as mentioned by the OEMs. Moreover, Engine
and Component Overhaul also have to be performed periodically as mentioned in
the TBO.
MRO Companies: MRO
companies are the final service provider of maintenance and repair work. MRO
services include line maintenance, heavy maintenance, engine overhaul and
component overhaul. MRO companies provide some services at the airports such as
line maintenance services which include A & B Checks, AOG support and other
regular services. MRO companies also have their own facilities where they
provide Heavy maintenance, Engine Overhaul and Component Overhaul. The Air
Operators have to fly their aircrafts to the MRO facility to avail full
aircraft overhaul. For engine and component overhaul they send the specific
part that needs to be serviced or repaired.
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