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Air India MRO struggles for forex earnings.

Date: 14-08-2017
Subject: Air India MRO struggles for forex earnings
Nagpur: The maintenance repair and overhaul (MRO) depot at Mihan-SEZ took in the first third party aircraft belonging to SpiceJet on Sunday. It was a landmark development for MRO unit run by Air India Engineering Services Limited (AIESL). Operational since 2015, till now it was doing maintenance of only Air India aircraft.

Now business of MRO that employs 400 is expected to expand. The strength is expected to be taken to 1000 when operations increase. However, located in a SEZ, the MRO has to predominantly export its services. Getting foreign airlines' to Nagpur, however, appears a distant dream.

At present, AIESL is insisting that both Air India and SpiceJet pay it in dollars, at least for the services they would have otherwise taken from MROs abroad. This can help AIESL meet its net foreign exchange (NFE) earning commitment, said AIESL's managing director H R Jagannathan.

Tax incentives are available for units in a SEZ, if their net earnings are in foreign exchange. For that, the MRO will have to ideally cater mostly to foreign airlines. To get foreign airlines come to Nagpur, the MRO will need approval from European and US safety regulators. AIESL has approached them for getting a general approval for Boeing and Airbus aircraft but has met with little success so far.

"The agencies are not willing to give a general approval and are insisting for a specific tie up with a foreign airlines first. The question raised is why should an Indian MRO need an approval if it does not have a tie-up with any European or American airlines. Also, many foreign airlines are not finding it feasible to fly their planes to Nagpur to get maintenance done," Jagannathan told TOI at the sidelines of the function. Nagpur MRO has an approval from directorate general of civil aviation (DGCA), which is an Indian agency.

Despite difficulties, it has secured an approval from FAA for servicing Boeing 777. But a majority of planes in the market are Boeing 737 and Airbus 320s for which there is no approval yet, he said. AIESL is in talks with some foreign airlines. There has been some success with Kalitta Air of US so far, said Jagannathan.

On the brighter side, AIESL will be starting its engine testing facility for Boeing 777 aircraft at the MRO by next month. It awaits a DGCA approval for the operations. By 2019, it is expected to be ready for complete overhaul of 777 as well as GE's GenNext engines, he said.

Source: The Times OF India

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