TIMCO: latest and fastest entrant in MRO race

With forecasts that India’s commercial aircraft fleet size is set to grow manifold in the next couple of decades, there’s a mad rush among world leaders in aircraft maintenance, repair and overhaul services to set up shop in India to capture the emerging multibillion dollar business.

By Shahid Faridi

With the Union civil aviation ministry’s Vision 2020 envisaging a fleet size of about a 1000 planes in the commercial airline sector involving an additional investment of US$ 80 billion in the next 13 years, a slew of aircraft maintenance, repair and overhaul companies from across the world are preparing to set up shop in India.

While industry leaders such as Boeing, Airbus, Lufthansa Technik AG, Singapore Technology Aerospace, Singapore International Airlines Engineering Company, besides new entrants into the industry such as Jordan Aircraft Maintenance Ltd (JorAMCo) have already initiated the process, the company that seems set beat them all is TIMCO, which is the largest independent maintenance, repair and overhaul (MRO) company in the US. Lufthansa Technik could be its only real competitior.

TIMCO chairman and chief executive officer John Cawthron and executive vice-president and chief marketing officer R Gene House, who “together make the board of the company”—as Cawthron puts it— were in India in the last week of June to start executing their plan to set up an MRO facility here.

“India is where it’s all happening at the moment. We wanted to extend our stay at the hotel in New Delhi by a couple of days, but the hotel apologised and said it was all booked in advance and could not give us a room. We were actually asked to move out. That we got lucky at the last moment is besides the point. The rate at which Indian aviation industry is growing, the passenger growth, and the large number of aircraft being bought by airlines in India require a world-class MRO facility to service the aircraft and keep the aviation industry’s flag flying high,” Cawthron told Realpolitik.

He said, “A TIMCO MRO in India will not only service Indian aircraft but also those from countries in West Asia and Southeast Asia. We provide a very high quality service within a very reasonable time. If we promise to deliver an aircraft in a month, we do it. There have been times when we refused to take aircraft because we realised that we could not deliver it within the time we were asked to deliver.”

Cawthron said that the decision-making process was the fastest in his company as “Gene and I make the board. So, you have the board here with you to take on the spot decisions.” He said that during their visit, they’d already met Union Minister of State for Civil Aviation Praful Patel, CMD, Air-India, V Thulasidas, CMD, Indian Airlines, Vishwapati Trivedi, and chairperson, Airports Authority of India, K Ramalingam.

TIMCO is looking at Mumbai, Delhi, Hyderabad and Bangalore as possible bases. Milan R Zatakia, whose Millennium Aero Dynamics Pvt Ltd works closely with TIMCO and will be part of the proposed MRO in India, said that TIMCO was one of the most professionally-run MROs of the world. “The standard of service that TIMCO will bring to India will go a long way in making our country a major MRO hub in this part of the world,” he said.

Industry analysts say that the market for MROs in India, even excluding Air-India and Indian Airlines, is estimated at over US$ 100 million per annum.

Putting up an MRO facility that offers complete technical services solutions, including maintenance, repair and overhaul of engines and airframes, engineering, design and certification services, line maintenance etc can cost anywhere between Rs 750 crore and Rs 1,500 crore. So far, the Foreign Investment Promotion Board has cleared only the proposal of Lufthansa Technik for setting up an MRO as a wholly-owned subsidiary.

Meanwhile, Boeing has named Nagpur city, located in Maharashtra in central India, as the location for its proposed MRO facility. Nagpur is not only the geographical centre of the country but also next door to Gondia, from where the present civil aviation minister hails.

The company’s senior vice-president, sales, Dinesh Keskar said, “Boeing believes that Nagpur will be an excellent location for the Boeing MRO facility because of the tremendous investment being made in the area by both government and private companies. Boeing is committed to helping strengthen India's air transport infrastructure by investing up to US$ 100 million in this MRO facility.”

Boeing agreed to establish an MRO facility and provide training as part of a 68-aircraft order placed by Air-India in December 2005. This is the largest commercial airplane order in India's civil aviation history. It includes Boeing 777s, 787s and 737s that Air-India will use for renewal and expansion of its all-Boeing fleet.

Boeing expects India's requirements over the next two decades to be 856 new aircraft—three times the size of the current commercial fleet valued at US$ 72 billion (or US$ 84.1 million per aircraft).

Boeing’s rival Airbus had upgraded its 20-year sales forecast for India from 800-1,000 aircraft to 1,100, valued at US$ 105 billion (or US$ 95.5 million per aircraft). Airbus estimates that the Indian air travel market will grow at an average of 7.7 per cent annually over the next 20 years, compared to the worldwide average of 4.7 per cent per annum.

Airbus has also announced its decision to set up an MRO facility in India next year to service the fleet of a large number of aircraft, both of public and private carriers. Airbus recently bagged an order to supply 43 aircraft to Indian Airlines. Besides this, Airbus has cornered most of the private players including Kingfisher, Air Deccan, Go Air, Indigo and Spice Jet. Jet Airways remains the only staunch Boeing customer among the Indian private players.

Indian Airlines has also signed an agreement for setting up such a facility with Jupiter Aviation, authorised by European aircraft manufacturer Airbus. The facility will initially cover the Airbus A320 family aircraft. It is likely to come up in two years and would eventually service 300 aircraft a year. Delhi, Mumbai and Hyderabad have been identified as the three possible sites.

But while the Boeing and Airbus MROs are far from taking shape, Lufthansa Technik, which had the first-mover advantage, said it will become the first international MRO provider to set up base in India with the opening of its 20,000 sq m facility outside Hyderabad, Andhra Pradesh, at the end of next year.

A Lufthansa Technik release said that “with over 400 aeroplanes on order, Indian aviation market is one of the fastest growing in the world. The new facility will complement the existing MRO support provided to new as well as existing fleets in India and ensure an optimal MRO support within the country.

“It said that the Indian civil aviation market is under-served in terms of MRO facilities. There will be room for more MROs, because airlines in India have announced that they will be acquiring 400 aircraft. These aircraft need to be maintained. Our MRO will serve both Boeing and Airbus aircraft, and will be open to all airlines, because it is a third-party facility.” The company will begin training technicians and engineers immediately in partnership with Lufthansa Technical Training. Dominik Wiener-Silver, managing director of the new facility, said that he plans to hire more than 400 employees and expects Hyderabad to “emerge as a new aviation cluster with some of the country's best-qualified engineers and technicians.”

As a member of Lufthansa Technik's existing worldwide MRO network of 28 companies, the new venture will be the backbone for MRO services for short and medium-haul aircraft in India, he said.“The setting up of an MRO facility by Lufthansa Technik is an important step to establish a full-service world-class airport to match Hyderabad's status as the economic power-house of the region,” GMR Hyderabad International Airport Ltd chief operating officer T Srinagesh said.

Hyderabad's geographic location makes it a strategic hub for domestic and international air traffic, a vantage point for the first dedicated third-party MRO facility in India, he added.