Ravi Sharma

U.S. firm to partner HAL in the $75-m venture

HAL likely to contribute 45 p.c. of the capital

MRO will be equipped to service

Boeing and Airbus aircraft

BANGALORE: The public sector Hindustan Aeronautics Limited (HAL), which had a sales turnover of more than $2 billion in 2007-08, will soon sign up with a partner for the setting up of its long-awaited, full-fledged commercial aircraft maintenance, repair and overhaul (MRO) business. This could happen in “a month or two,” according to the HAL sources.

The sources said that an American company, a worldwide leader in the commercial aviation MRO business, had agreed to partner the HAL in the $75-million venture. Said an official: “Final talks on sewing up the partnership are going on, we shall make an announcement soon.”

The HAL is likely to contribute 45 per cent of the required capital with the American company putting up the rest.

The American company has been chosen after the HAL evaluated offers from a handful of major commercial aircraft MRO players, including Singapore Airlines, Germany’s Lufthansa and Israeli’s Bedek Aviation.

The MRO will be equipped to service both the Boeing and the Airbus families of commercial aircraft. And will be operable for both wide-bodied and single-aisle aircraft.

The HAL expects sufficient business opportunities at the MRO with around 25 to 30 aircraft being serviced during the initial years of operation. It will also be looking to ramp up the two-bay hangar MRO to a four-bay hangar operation in the next phase.

Indian carriers now go to Singapore or Dubai for the MRO services. Some such as Air India and the Jet have basic facilities, though these are insufficient even for internal risings.

The HAL itself provides limited assistance by way of manpower and equipment to a private player, who has leased out space at the HAL airport, Bangalore, and has been providing ‘C’ level checks.

Global studies have shown that the worldwide MRO business totals around $49 billion.

The MRO market is also highly fragmented and has been experiencing consolidations, acquisitions, joint ventures and partnerships, with outsourcing driving its growth.

The HAL is hoping that profits from the MRO venture will offset some of the revenue losses suffered on account of closing down of commercial operations at the HAL airport.

Last year, the HAL had an accrual of around Rs.225 crore, including from landing and parking fees, on account of commercial operations at their airport.