Boosting the growth of MRO Industry
Dr. Praveen Srivastava, Founder & CEO – AeroChamp, in conversation with our Special Editor Rohith Reddy on the reforms needed in the industry
AU: You have taken an unusual path covering various studies and leveling up in the Aviation industry. Could you brief your multi faceted profile to our readers?
With a Bachelors in Science from Mumbai University, MBA from Pune University and PhD in Aviation MRO, I have handled senior management positions in the aviation industry over past 2 decades. My in-depth research in aviation maintenance gave me an opportunity to acquire knowledge, which I utilized during my professional journey in the aviation industry. My doctorate in MRO (aviation maintenance) helped me gain insights on the challenges faced by the MRO industry in India, which according to me is still in the nascent stage. My passion towards learning and knowledge enhancement, encouraged me to do LLB from Mumbai university in the year 2018 and I specialize in the Indian Aircraft Act.
Having travelled to 32 countries multiple times, I network well with the global aviation fraternity and have been advising Aviation companies in the US and MROs in the Middle East and South Asia on their organic and in-organic growth strategies.
AU: How did this experience paved way for your ventures? What ignited you to establish ‘AeroChamp’?
My educational qualifications combined with senior management industry experience was the right mix to setup an aviation enterprise differentiating itself from others. We are knowledge partner for aviation companies in India and abroad. Our team consists of highly qualified and experienced industry professionals, specializing in commercial and business jet maintenance. We expertise in maintenance cost optimization and offer complete engineering services as an extension of EASA DOA and FAA DER.
In the past I have executed major avionics and structural modification programs; for the first time drilling the fuselage of a mid-size business jet to install Inmarsat antenna, cabin wi-fi and mobile controlled wireless cabin entertainment system along with cockpit upgrade. Such major modification was never done in India before and it required the depth of knowledge and capability to execute such a project for the first time in India.
I am on a mission to make India the MRO hub of South Asia. Some of the investor driven airframe maintenance organizations have not developed engineering capabilities to match global standards, hence operators continue to fly their business jets to Dubai, Singapore and Europe for major maintenance and upgrade, thus burdening the exchequer of India with outflow of foreign exchange. This has always concerned me, so we established AeroChamp to offer our expertise to the MROs and aircraft operators.
AU: What are the various services that you are offering at AeroChamp Aviation?
At AeroChamp our core expertise is maintenance cost optimization through indigenization of non-critical components, developing repair schemes and repair procedures. We also offer maintenance support and complete engineering services as extended EASA DOA and FAA DER. We are in the process of setting up a world class engineering design center in Navi-Mumbai to support the civil and defense aviation.
Other than MRO support services, AeroChamp also specializes in cabin interior refurbishment, upgrade and modification of commercial and business jet aircraft. We have been associated with major modification projects for both civil and defense aircraft. Recently our expertise was recognized at global level and my editorial interview on Asian Market was published by Business Jet Interiors International magazine.
AU: Both Civil and Defense Aviation in Asia and Middle East regions are experiencing the highest demand in the recent past which has increased the backlogs in the manufacturer`s order books. How is MRO industry preparing to meet up with the maintenance of expanding number of aircraft?
Since the beginning of 21st century, observing exponential growth in this region, aircraft manufacturers started viewing the Asia and Middle East markets differently. Both civil and defense aviation in this region have displayed highest growth, encouraging the manufacturers to develop local manufacturing capabilities. In my opinion, aviation industry would have to follow the same path as automobile industry and setup more manufacturing and assembly units in this region. The process has already begun and many more will follow soon.
With so many aircraft being inducted, the need for maintenance would obviously grow. It makes no economic sense to fly an aircraft overseas for maintenance, especially to locations where the costs are higher. While countries in Asia and Middle East are slowly becoming self-reliant in airframe inspection, this region will have to focus on major maintenance and component over-haul. High value rotable parts like the engine, landing gear, nacelle and avionics are still being sent outside of this region for over-haul. MROs will have to collaborate with the OEMs to setup over-haul facilities in this region.
Defense aircraft maintenance has been largely controlled by the government, which in many countries has been counter-productive. It is high time private MROs should be allowed to handle maintenance of defense aircraft in a phased manner, with checks and balances from the defense forces. This will give impetus to the MRO industry and encourage investment. Leading civil MROs in this region would be willing to expand their capabilities into defense aircraft maintenance.
AU: Can you provide an insight into MRO market in Civil and Defense segments? What are their key differences?
Aviation is the mode of transport of 21st century, whether civil or defense. Countries across the globe have been strengthening their air-force, which means induction of more aircraft into their fleet, thus more maintenance. Same is the case in civil aviation too. Low-cost and now ultra-low-cost airlines are making air travel more affordable. The passenger growth trajectory of most countries in Asia and the Middle East in last 20 years is a proof that next 2 decades belong to aviation. When more people fly, there will be more aircraft in the air, which means more need of MROs.
There is surely a difference between Civil and Defense MRO based on the criticality, air safety, airworthiness and regulations. Anything which flies up in the sky has to meet stringent air safety and airworthiness criteria. But it is not difficult for the civil MROs to upgrade themselves to defense MRO. Most countries in the region have skilled manpower who can be upgraded to defense aircraft maintenance, as they understand air safety through their experience in civil MRO.
Some of the key differentiators between civil and defense aircraft maintenance are as follows:
- Regulatory compliances (DGCA, CEMILAC and DGAQA)
- Turn-around time
- Souring and logistics of components and spares
- Qualifying criteria of certifying staff
- Air safety and airworthiness criteria
AU: Can you give us an overview into India, Middle East and South Asia market in terms of services that you are providing? What are the major challenges that you are facing in each of these regions?
India – Indian buyers have a typical mindset, they want the best quality at the cheapest price. Quality and Price are directly proportional, good quality cannot be delivered at the cheapest price. In the government and defense sectors, due to the defined tendering process, it is very difficult to offer an exclusive product or service. The norms are very clear – for a pre-defined quality, L1 wins the bid. This becomes a challenge for a highly specialized technical products and services company like us.
Middle East – UAE & the Middle East markets have started accepting Asian products and services, which over the last 2 decades have matched the European standards, offering cost benefits. We are quite excited about the growth in the middle east market. We see UAE emerging as an aviation hub and taking lead position in MRO business in this region.
South Asia – this is the market of the next decade post Pandemic, for both civil and defense MRO. With highest growth in air transport and defense budgets of many south Asian countries, this is a promising market. Due to similarity in culture and less time difference between countries, we see better collaboration opportunities.
AU: What are some of the important points to be noted based on your observations on the MRO industry, more specific to India?
The future of MRO industry is undoubtedly bright. As stated above, more the number of aircraft, more the need for MRO services. However, there is a need for close association between MROs to consolidate their capabilities.
I have carried out in-depth research on the Indian MRO industry as a part of my PhD thesis, which was published in 2011. This has enriched my knowledge, backed by my experience working at senior management positions for leading MROs. My views on the Indian MRO industry are as follows:
- The MRO industry in India is in its growth phase and it will continue to grow for next 20 years before it reaches the plateau of maturity stage.
- Most MROs in India are playing their own trumpet and they come together only to demand tax rebates and other benefits from the government by painting a mis-leading picture of the MRO industry, which is unfair. This is a niche business, which needs to take the shape of a self-sustaining industry.
- MROs must demand regulatory reforms from the government, rather than asking for rebates and concessions. They should work towards bringing down the operational costs, and pass-on the cost benefit to the airlines, private jet operators and defense forces. My five-point observation could help grow the MRO industry in India:
- Optimize costs by improving efficiency and productivity – why is our manhour output still much below the global standards ? This nullifies the cheaper infrastructure and manhour cost benefits.
- Follow outsourcing model for specialized tasks – when you establish specialized repair capabilities in-house, you increase your capex and opex costs, which will be obviously passed-on to the customer. At the same time, it is practically impossible for an airframe MRO to deliver the level of quality and competitive price what a specialized repair shop can.
- Focus on repair, than replacement – there are hardly any core repairs done in India, so where will the cost benefit come from? Over last 2 decades, since the airframe MROs did not pay much attention to develop third-party component repair shops, they still depend on overseas vendors for repair, over-haul and exchange of components, which is a major cost.
- Encourage Part 21 (J) & (G) design and manufacturing capabilities in India – MRO industry collectively should encourage vendors who are interested to setup design and manufacturing capabilities. Under EASA and FAA, DOA and DER can develop engineering design and repair schemes even for critical components, this has been long neglected in India, which adds to the cost of aircraft maintenance here. Similar third-party design and manufacturing should be encouraged in defense MRO also.
- While the civil MROs scale-up to handle defense aircraft maintenance, there are underutilized infrastructure and repair capabilities with the defense establishments and public sector organizations, which should be offered to the civil MROs under PPP arrangement.
- Most airframe MROs in India like to build in-house capability for everything, which is not required, neither a practice across the globe. Why do they want to follow a restrictive trade practice? Instead, why don’t they encourage ancillaries or vendors to develop those specialized capabilities, while they focus on their core competency of airframe inspection and maintenance? This would bring down the cost and improve the quality.
For example: Aircraft Interior and Exterior is a highly skills job, which can be best done by an outsourced specialized vendor.
AU: And the changes you wish, if implemented could promote the MRO industry would be?
In my view, MROs in India have been myopic. The total employment generated by private MROs collectively (not including transit line inspection) is below 5,000 people. Public sector MROs in civil and defense are over employed with very poor productivity levels.
Some of the changes policy makers can consider to boost the growth of MRO industry in India:
- Rationalize import duty on all aircraft parts whether imported by MRO or a third-party supplier. This will discourage restrictive trade practices, bring-in efficiency and price competitiveness; which in-turn will bring down the maintenance cost.
- Regulatory reforms to encourage component repair shops including engine and landing gear overhaul facilities.
- Encourage startups and MSME sector to setup Design and Production (DOA, POA) facilities to support airframe MROs.
- Regulatory reforms to facilitate airframe MROs carryout structural and other repairs based on DGCA approvals.
- Diplomatic pressure on EASA and FAA to accept DGCA approved design organization repairs on lease return aircraft. This can be achieved only if DGCA is sensitized.
- Open public sector civil and defense MROs to work under PPP model for optimal utilization of existing infrastructure and repair capabilities.
- Reform endorsement of certifying maintenance technicians by adopting international standards. This will help in generating mass employment and bring down the manpower cost in MROs.