As India’s biggest independent MRO, Air Works Group in its seven decades of presence has come a long way transforming the Aviation MRO capabilities of the nation. As the outset of 74th year of presence, Mr. Anand Bhaskar, Managing Director and Chief Executive Officer, Air Works in an exclusive interview with Vishal Kashyap, Managing Editor, Aviation World shares his views on various key aspects related to the Indian MRO ecosystem.

Q: 73 years of presence in Aviation MRO Business. Your views on the historic milestone of Air Works Family?

A: Air Works was founded in Mumbai on 16th April 1951 by 2 close friends – (Late) Mr. BG Menon and (Late) Mr. PS Menon –aircraft engineers, who worked with Indian National Airways at the time and were extremely passionate about aviation. At Air Works, we celebrate this day as our Founders’ Day.

And our recent Founders’ Day was indeed a poignant moment for the entire Air Works family, as we take strides towards completing 74 years next and achieving the magical 75 number. The milestone is especially important for us and for Indian aviation, considering that only a few select brands – perhaps an Air India, who’ve stayed relevant and reached this iconic landmark.Through you, I take this opportunity to express our gratitude to our customers, our employees, our partners and all our well-wishers who’ve been supporting and inspiring us over these past decades.

Beginning with Dakota DC-3s and Twin-Beech aircraft of leading industrialists,we’ve come a long way, where our customer portfolio today covers every aviation segment – Business, Commercial, Cargo and Defense, supported by a pan-India network and strong logistics relationships, that ensure that our customers can rely on us 100%.

Even with reference to capabilities, we have come a long way after setting up India’s first independent EASA certified based maintenance facility in 2009. Today, Air Works Group is India’s biggest independent line maintenance service provider, assuring close to 40,000 flights annually, which translates into 1 out of every 3 flights of foreign carriers taking off anywhere in India.

I consider myself blessed to have been part of the Group’s journey, including also driving its destiny in part, especially during the unprecedented pandemic period. Looking ahead, the rapidly transforming civil aviation sector continues to bring attractive opportunities and by virtue of our values, we remain confident of addressing them to stay relevant for our customers and become India’s first independent MRO to eventually reach the 100 Year milestone.

Q: Indian Aviation has witnessed a sea change in last few years in a holistic way. How do you see this transformation?

A: The ongoing transformation driven primarily by enhancements in airport infrastructure, technology adoption, huge aircraft and engine orders, as well as the entry of larger businesses has definitely expanded the size and visibility of the sector. It has also added scale, and all this is indeed a welcome and a much-awaited change since it also heralds opportunities for MRO and other related aviation services.

However, more needs to be done to become Atmanirbhar as is our overarching ambition as a country. From an MRO perspective, some of the priorities include, a strong need to expand Business aviation including enhancing the role of helicopters in our economy, reduction taxes and duty structures – for the interim – to a level that enables indigenous MRO to compete with pre-existing regional maintenance hubs and attract business as well as support capability building, increase collaboration between civil and defense verticals to realize scale and efficiencies in MRO, as well as facilitate the creation of component manufacturing and repair ecosystem within the country to realize our national ambition of Viksit Bharat. Equally importantly, we also need to harmonize our regulatory ecosystem with the prevailing global one for standardization, easier compliance and faster decision making.

It is critical that India does not lose the ongoing momentum that has been created with great difficulty and with considerable effort to ensure that we catch up with the larger global developments.

Q: What are the significant steps being taken by the government to strengthen the Indian MRO sector?
A: I admire and appreciate the Govt. for taking several steps over the last decade to transform the sector, which to varying extent, have facilitated the sector’s evolution. Policy changes for various sub-sectors such as Ground handling/ MROs / Airlines/ Cargo operators/ NSOPs/ Security set up/ Airports/ Regulatory ecosystem/ aircraft financing/ Manpower training/ ATCs/ FAL setups/ Airspace harmonization – have all been steps in the right direction and have been welcome.
The industry recognizes that Rome was not built in a day and that it does take time to change or undo historical measures that were perhaps relevant for the time when they were taken. The more important need as I mentioned above, is to continue this momentum for another decade. Given that the aviation world around us has been evolving in parallel and we’re trying to catch up with the market, we obviously have to move faster than we have done earlier, to be able to achieve what we wish to realize.

Q: We often hear that Indian MRO ecosystem has still not nurtured upto its maximum capacity. What are the bottlenecks?

A: India is primarily an Airframe MRO market, geared to handle maintenance of narrow body aircraft that comprise 70% of our domestic fleet, which isexpected further increase to 80% as per some reports over time.Indian MROs have sufficient capability and capacity to manage the needs of domestic as well as regional fleet from APAC and the Middle East to some extent, in that context. However, capacities and capabilities to do wide body checks – need to be added in time, as the induction of wide body aircraft gradually occurs.

While the country is also good and sufficient in Line Maintenance, emerging and more lucrative areas of the value chain such as Component and Engine MRO remain outside the reach of most indigenous MROs, due to several bottlenecks, some of which include:
(a) High Capex requirements, which typically have been outside the scope of Indian MROs given the scale of their business.
(b) IP security/ sharing: Being technology-intensive components, the IPs of these sensitive and high-priced products continue to be retained by OEMs.
(c) Lack of Business Case/ Scale: Given that airlines secure multi-year PBH (component) contracts with domestic airlines, leaves little or no opportunity for an indigenous ecosystem to be created, which will anyways take a few years to mature, making the whole investment unviable.

Other challenges comprise the exceedingly high rentals at airports, royalties, high costs of hiring and upskilling talent as well as a web of complex tax and duty structures that restrain the true potential of the Indian MRO sector.

Q: Both OEMs and MRO owners raise their voice for various taxation issues. What’s the key reason that is not going in pursuit with the government to address it fully?

A: I would refute your statement by stating that an increasingly positive sign of resolution is the extensive and growing frequency of dialogue that the MRO industry and the Govt. and its concerned agencies have been having lately. That by itself indicates that progress is being made and both sides have a common objective of working together to resolving the various challenges.

To recall, the MRO industry had invested significant time to resolve the contentious GST issues and that required explaining as well as understanding the perspective, nuances, and limitations of either side to find a median and an amicable way of working and that exactly is what is being done even now.

On behalf of Indian MRO, I would like to say that we are being listened to and am hopeful of their successfully resolution soon.

Q: What steps are required to be taken so that Indian carriers feel home more attractive for their maintenance needs?

A: Indian carriers remain supportive of indigenous MRO for capabilities that are already well developed within the country. For example, C Checks that used to be done outside the country even as recent as 5 years ago, do not out of the country anymore. That gives scale to Indian MROs and saves costs for local carriers and forex for the country. In fact, Indian carriers and even global lessors and OEMs for that matter, are increasingly trusting Indian MROs such as Air Works with complex projects such as End of lease projects, aircraft storage, Painting, Cabin interiors refurbishment. In fact, Air Works also re-delivered (end of lease) India’s first A320neo last year for IndiGo. As you would have seen, even in projects of national importance such as Phase 32 checks for Navy’s P-8I, heavy maintenance of BBJs and HU/ LU-192 monthly checks on IAFs Embraer Legacy aircraft, Indian MROs have proven themselves worthy of delivering outstanding and globally accepted quality and workmanship.

Indian MROs have been growing organically and given the endeavor of Indian carriers to reduce maintenance costs as well as asset downtime, preferring to work with domestic MROs is the way ahead for mutual advantage. However, that still leaves the tricky engine and component related work, for which we collectively need to find a solution.

Q: The aircraft orders made by Indian carriers have surprised the world. What potential it creates for the Indian MRO industry?

A: Immense!The sheer size of the maintenance opportunity given the number of aircraft proposed to be delivered not just in India but even across the region, is extraordinarily immense. A back of the envelope calculation suggests that this opportunity will be upwards of $34 billion in terms of value, which is more than eight times the size of India’s current MRO market.

It will also not be possible for any single MRO to address it on their own, given that new and varying system capabilities would have been developed in the coming years in tandem with the needs of the market and indigenous MROs will need to collaborate/ partner with regional peers or even OEMs to create capabilities to seize chunks of this massive market.

Q: At various MRO conference in India, speakers mention about the unfriendly Aviation MRO policy. How do you want to address them?

A: Any policy defines or outlines a common way of working and at no point will it appeal to all and sundry in all aspects. At the same time, every policy is open for review and further improvement that will be achieved basis dialogue.

For example, the current policy is good in terms of the long tenure 2-3 decades being offered to serious and long-term MRO players to build and grow the business. It also identifies certain locations in the country where according to the Govt., MRO capabilities can be built up. However, are these the only cities where capability can or will be built up…not quite since the list will have to evolved for it to remain relevant to the needs of the market. Similarly, rates for rentals and certificate renewals differ from city to city and it can be extremely challenging for anyone, including the Government to define a framework that addresses all of this at a point in time, since these aspects change with time or because of demand & supply parameters.

I of the firm view that that no policy can exist in isolation and the document or a policy is a starting point for issues to be debated as part of a common framework, at a point in time, for all stakeholders to agree, and then collaborate and improve it over time for greater mutual relevance.

Q: In recent times, many new entrepreneurs have ventured in the MRO business. Your advice to them?

A: Congrats to them! The industry needs fresh blood, especially women and new ways of thinking. People who are professionals and at the same time, passionate about aviation!

This business isn’t for the faint hearted and can be challenging at times, given aviation’s dynamic nature, high capital requirements, rigorous compliances that keep it safe as well as an extensive web of global relationships between institutions, enterprises, and upcoming entrepreneurs.

Newcomers would do well to prioritize their area of business and to develop their core competencies – given that a host of opportunities are expected to emerge in the times to come.