Vol 3 Issue 1 FEBRUARY 2019

A UNITING FORCE FOR THE INDIAN MRO INDUSTRY AERO MRO DIGEST

A QUARTERLY NEWS DIGEST FOR INDIAN MROs

India will be the third largest aviation market by 2025

Aero MRO A&D 2018 concludes on a high note

Vision 2040 for Civil Aviation Industry in India AERO MRO DIGEST CONTENTS COVER STORY BUSINESS DECLARATION

(1) Aero MRO India A&D 2018 concludes on a high note (18) BLADE to start operations in India soon (10) Vision 2040 for Civil Aviation Industry in India (22) to commence flights soon

(17) India will be third largest aviation market by 2025 (22) Rolls-Royce signs contract with MEA

IN THE NEWS LATEST TRENDS

(7) Pradeep Singh Kharola appointed Civil Aviation Secretary (20) Additive manufacturing to reduce aircraft repair costs (7) Ashwani Lohani appointed CMD of (21) Aircraft inspection robots get an upgrade (8) Global Aviation Summit 2019: Setting pace for exponen- (23) GI Aerospace develops Blockchain solution for tracking tial growth in India's aviation sector aircraft parts (16) Indian Aviation Highlights in 2019 (28) Indian made Aircraft to decorate the skies soon (18) WIN start part supply delivery to Boeing TOP MANAGEMENT APPOINTMENT (19) MRO Industry still combating GST barrier (21) Execujet Dubai FBO & MRO relocation (29) Top Management Appointments (23) to phase out foreign pilots AVIATION EVENTS (24) SpiceJet & TruJet show interest in upcoming airports (24) New commercial aircraft delivery record for Airbus in (31) Forthcoming Aviation Events 2018

(25) United Airlines lashes against Gulf carriers (25) Go Air and Oman Air pitch for services between Gulf countries & Kannur (26) New aircraft delivery record for Boeing

(26) Govt steps up to roll out in-flight mobile services (27) Air India to be professionalized at all levels (28) Orvakal Airport inaugurated: Kurnool on airmap NOTE: This edition was delayed to accommodate a spe- (28) Boeing forecasts a demand for 2300 aircraft in India cial event—’Global Aviation Summit 2019’. We apologize (29) UDAN Round 3: Seaplanes to fly on 18 routes to our readers for the delay.

Disclaimer : The views expressed in the articles are those of the author and do not necessarily represent or reflect the views of the publisher or the publishing house. Unless otherwise noted, the author writes in his/her personal capacity. They are not intended and should not be thought of, to represent official ideas, or policies of any agency or institution mentioned thereof. The information in this newsletter is for information purposes only. The articles may also be from a syndicated source, but are rewritten (retaining origi- nal facts, to the best of our knowledge) to meet the office policies. MRO Association of India assumes and/or bears no liability or responsibility for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon. The information contained about every individual, event or organization is known to have been provided by such individual, event organizers or or- ganization without verification by us. Sources of information may vary. Feedback is welcome.

Vol 3 Issue 1 A February 2019 AERO MRO DIGEST believe that we can hit US$ 5 billion revenue. We are going Aero MRO India A&D 2018 concludes on to achieve.” a high note Stephane Lauret, Chief Executive Officer of Safran India in his ad- dress said, “Safran has been part- nering with this event for the last five years now, it shows that MRO is a key issue for us in India. With the growth that Indian aviation is witnessing, it will surely become the third biggest market in the MRO Association of India held India’s Only MRO Forum, Aero world by 2024 or 2026. Challenges MRO India Aerospace & Defence, December 5-6, 2018 in we know in the MRO and the infrastructure as well. In Safran New Delhi. we see that the Government is working on these issues. The The expo was inaugurated by Pradeep Singh Kharola, IAS, growth will only come with the development of infrastruc- Chairman and Managing Director of Air India and Air India ture.” Engineering Services Ltd. He took lots of interest in visiting “On the civil side, it is a growing market for Safran on civil all stalls of exhibitors and discussed with them about their engines, but also on landing gears and harness as well. On products and services. December 1, we acquired Zodiac and now it is a new market The two-day conference was inaugu- for us in seats. We look at more business in India and we are rated by Ms. Vandana Aggarwal, IES, happy about that,” he said. Economic Adviser to the Ministry of Luigi Celmi, Chief Executive Officer, Civil Aviation. Lufthansa Technik Services India said, In his inaugural address Bharat Mal- “It is a pleasure to be at Aero MRO kani, President of MRO Association of India, where we have been partici- India while welcoming the gathering pating at least for five years. It is a said, “India is acknowledged as the real added value to be part of MRO world’s fastest growing aviation industry and as you all know Association of India for someone like MRO in an inherent part of that requiring tremendous engi- us as a foreign MRO. The Association neering skills, discipline, knowledge and, most of all, is the is actively engaged to bring up issues change in aircraft that we see today, adaptability. Growth of of the industry and sit across with Indian fleet from 600+ currently to 1000+ in 2024, it is going the stakeholders and the authorities to take huge efforts from the Indian MRO players to support to solve the issues of the industry thereby helping the indus- these aircraft.” try.”

“As for the information “It is also quite rare to find authorities which so openminded we have the Ministry of today for the last few years, who are open to discuss the Civil Aviation, total size of challenges of the industry, who wold like to bench-mark MRO ending 2018-19, this themselves with other locations in the world,” he said. fiscal year, should hit US$ Drawing from his personal experience with the Indian Avia- 1.4 billion, expanding to tion industry, Luigi said, “I first time landed in 2006 in Banga- another US$ 3-3.5 billion lore in the old airport and since then, I am witness to the when the 1000 aircraft growth of aviation infrastructure in India, in less than ten come in. For those who years every city in India has a brand new airport and if we are not in the industry yet talk of MRO infrastructure, we have seen a similar amazing gives you an opportunity to come to a very large sector, reg- growth, just to mention few are Air Works in Hosur, GMR ulated…yes, complex…yes, but definitely, an opportunity. AeroTechnic and AIESL facility in Nagpur, just to mention a And what we have is a real growth trajectory by the Govern- only a few. These is no shortage of good infrastructure, tal- ment and the Ministry of Civil Aviation has really supported ents, ideas or funds as that is why I also see no reason why us,” he said. the MRO Industry cannot be successful in India. And we The President went on further to say, “Our vision is not to strongly believe in this. take back the US$1.4 billion that we import, but I see no rea- Delivering the keynote address of Pradeep Singh Kharola, son that we become a net exporter for the next 4-5 years by CMD Air India, ABK Rao, Executive Director AEISL said, “India building adequate infrastructure. The target MRO Associa- is turning out to be a lucrative investment destination for tion of India is committing that by 2024, we have reasons to MRO Firms across the globe with factors like strategic loca- Vol 3 Issue 1 1 February 2019 AERO MRO DIGEST tion, large population of skilled labour at a low cost and in- tary fleet which throws up a huge opportunity to the Indian vestor friendly government schemes the MRO sector is gain- MRO Industry.” ing a firm foothold in Indian soils not only for domestic play- ers, but foreign players as well. India’s current size for MRO Ms. Aggarwal said, “While there is no shortage of entry level, is estimated to be around US$ 750 million and as per manu- there is a shortage of senior and mid-level engineers, who facturers it is estimated to grow at 7 per cent compound an- can be drawn from the public sector. The Ministry of Civil nual growth rate in the next coming years to reach US$ 1.4 Aviation under the Government of India initiative has formed billion.” a committee of Aero Majors, which tries to bring in projects which are specific to serve the MRO industry in India. We “In the years to come with the fleet size likely double, a de- started with an accelerated AME Apprenticeship Training mand for a strong domestic MRO Industry is need of the Programme between AIESL and Boeing, which is first of its hour. Various policies initiate by the Indian Government like kind in India, it’s a one-year programme, it is recognised by exemption of Custom duties, long term window restrictions DGCA. It is using state-of-the-art computerised training aids. for using duty free parts, 100 per cent FDI for MRO has given We hope to much more such initiatives. You can gain from much needed impetus to the MRO Industry. This is also very the defence-civil sector cross fertilisation because a defence attractive for the foreign investors to invest in India. This in personal retires at an earlier age and they provide you pool turn leads to more domestic and international airlines to of a very experienced and disciplined people who can be en- avail of MRO services in the country.” gaged in civil MROs.”

“The MRO business in India has the potential of creating “Another area where there is a huge opportunity lies for the 600,000 new jobs over the next decade. Both OEMs and for- MRO sector in India is from the initiatives to make aircraft, eign carriers and MROs have tremendous interest in setting components and all parts in India. There are various com- up of MRO operations in India. These features have led to mittees which are looking at these initiatives as well as build- major MRO plans in setting up shops in India. The DGCA is ing a regional transport aircraft. And we hope the engine also upgrading its process, bringing it at par with EASA, OEMs, present here will partner with us,” she said. which in turn will lead to international carriers bringing their aircraft to India. This is a big opportunity,” he said. “Under the RSC Udaan Scheme already energised 49 airports in two phases and in the third phase, the international “There is a tremendous interest by foreign players in setting Udaan, 2 routes would be offered. I suggest MROs should up MRO facilities in India, keeping this in mind the Indian factor this scheme in their growth plan. The Phase 3 of the DGCA is in the process bringing it at par with EASA, which in scheme brings in the possibility of doing MRO business for turn it will lead the international carriers to send their air- foreign airlines as well,” the EA said. craft for MRO work here. The MRO sector has huge potential to absorb investments in India, with international and do- “Normally among the challenges it is said that Government mestic traffic growth the country is expected to emerge as a regulations, taxations, infrastructure like land availability, leading MRO destination in the Asia-Pacific Region,” Rao hangar space at airports, I would say that the market struc- said. ture of the MRO Industry globally as well as in India could be count towards challenges for all of you” she said. “I have “South Asian market is expected to show an annual com- been hearing a lot about heavy taxation in India on the MRO pound growth rate of 4.6 per cent and the emerging eco- side, without overlooking the country’s huge development nomics in Asia like India and China are major divers to global deficit to overcome. If we can bring the total MRO work to GDP and air travel demand.” India, we would be able to gain some financial benefits to the MRO industry. Delivering her inaugural address, Vandana Aggarwal, IES, Economic “The material cost is an issue, not withstanding the high tax- Advices to MoCA said, “let me share ation, we should look at creating centralised warehouse fa- some of the perspectives. I am told cilities in SEZs, I would like you to tell us how the Govern- that in the civil aviation sector, the ment help you address this. An opportunity that can be read- only people those make money are ily realised by the MROs,” Ms. Aggarwal said. the financiers and the lessors and the amount of returns on investments do Giving view points on the Indian they make, I found that majority of MRO Industry, Rohit Tomar, As- them make not less than 16 per cent sociate Director, Strategy and per annum in dollar terms. Then I Operations, Aerospace and De- thought who makes the second-best fence of KPMG India said that amount of money, I found that it is one set of MROs, which not withstand the current situa- makes money and that is where ever a MRO is tied up with tion that the and an OEM. So, I would nudge all of you to look to make money MROs are facing, the interna- by engaging with an OEM. The other area to boost your MRO tional investors and finance business is to look at the General Aviation fleet and the Mili- firms are looking towards India Vol 3 Issue 1 2 February 2019 AERO MRO DIGEST as airlines are inducting aircraft and the fleet size in growing GLIMPSES FROM THE EVENT phenomenally. (Presentation attached with the digest).

“Our association has been holding the Forum since 2011 which is supported by the Ministries of Civil Aviation and Defence, the Directorate General of Civil Aviation and the Min- istry of Skill Development & Entrepreneurship. Since the last eight years, the association, through the Forum and regular inter- actions with various Gov- ernment bodies, has been able to bring considerable chang- es to the Indian MRO Industry. We know that these changes are not enough, we will strive to continue our journey, said Pulak Sen, Founder Secretary General, MRO Association of India delivering his vote of thanks.

“During the two day, December 5-6, over 60 eminent speak- ers from the abovementioned Ministries, the Indian Defence Forces and from the Industry will discuss, debate and delib- erate on various issues of MRO. Concurrently, a dozen com- panies exhibited their capabilities and services that they have to offer the Indian MRO Industry. They included Air In- dia Engineering Services Ltd, Hindustan Aeronautics Ltd, SpiceJet Technic, GMR Aero Technic, SpiceJet Technic, Avi- Oil India Pvt. Ltd. Hi-tech Milispec Tools & Calibration LLP (India), Graphications, Maarg Technologies, SEC Industries GUJSAIL, a Government of Gujarat undertaking.

“A special thanks to our Sponsors Air India Engineering Ser- vices Ltd, Aman Aviation, Aerospace Assets Avi-Oil, Bird Ex- ecujet, GMR Aero Technic, Hindustan Aeronautics Ltd, Hori- zon Aerospace, Lufthansa Technik, Safran India, SpiceJet Technic. We also would like to thank our new exhibition par- ticipants Hi-tech Milispec Tools& Caliberation LLP (India), Graphications, Maarg Technologies, SEC Industries. We thank specially our State Partner, GUJSAIL, who have extend- ed their support from the inception of the event.

“I would like you to block your calendars on December 5-6, 2019 when we will the next edition of India’s Only MRO Fo- rum, Aero MRO India Aerospace & Defence in New Delhi,” he concluded.

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Vol 3 Issue 1 6 February 2019 AERO MRO DIGEST MRO Association of India welcomes its ration (BMTC), the city bus service into profitablity in 2000, the new members first in the country. As Managing Director of Bangalore Metro Corporate Members Rail Corporation of India he has played a key role in kick starting Bengaluru Metro. Spicejet Technic Bird Execujet Affiliate Members Ashwini Lohani appointed CMD of Wg. Cdr. Jaydev Desai (Retd.), STOE Consultants Air India Prejit Chandran, Boysen GmbH & Co. Ashwani Lohani, Former Railway Board chairman, has been appoint- ed chairman and managing director MRO Association of India welcomes the new members (CMD) of Air India. The appointment wholeheartedly and assure to strive together for the better follows an approval by the Appoint- future of the Indian MRO industry and by large, the Indian ments Committee of the Cabinet on th Aviation. 13 February 2019. His has taken place with Prime Minister Shri Nar- endra Modi's approval.

Pradeep Singh Kharola appointed Civil Mr. Lohani completed his schooling at St. Aloysius High School Aviation Secretary in Kanpur and studied engineering at Indian Railways Institute Pradeep Singh Kharola, IAS former of Mechanical and Electrical Engineering (IRIMEE), Jamalpur. He CMD Air India has been appointed holds Mechanical, Electrical, Metallurgical and Electronics & the new Civil Aviation Secretary Telecommunication Engineering degrees. He also holds an ome- ga aquaterra 2017 Limca Record for having four engineering on February 6, following the su- degrees. He was appointed as the Railway Board chairman in perannuation of Rajiv Nayan August 2017, and retired in December 2018. As the Railways' Choubey, IAS on January 31. Since senior-most bureaucrat, Mr Lohani brought the prestigious bul- then Choubey has been appointed let train to India. He is credited for being the man behind Train as a Member of UPSC. 18, India's fastest train, whose inaugural run from Delhi to Vara- nasi is scheduled to be launched by Prime Minister Narendra An IAS officer from the Modi on 15th February 2019. He has efficiently headed the India Cadre of 1985 batch, Kharola was Tourism Development Corporation (ITDC), and has also worked Principal Secretary to the Chief with state-wise tourisms. He has also fulfilled the position of Minister of Karnataka from 2012-13. He also led Karnataka Ur- Director for the National Rail Museum. Mr. Lohani is also credit- ban Infrastructure Development and Finance Corporation ed with restoring the world’s oldest working steam locomotive (KUIDFC), which was involved in raising funds from internation- for running the Fairy Queen between Delhi and Alwar. He start- al institutions to build infrastructure across cities. ed the Delhi-San Francisco nonstop in winter of 2015 as a thrice weekly flight. That flight is such a hit now that AI currently oper- As Joint Secretary of National Administrative Reforms Commis- ates this route nine times a week and still most seats for this sion he aided in the formulation of governance reforms in pub- summer are sold out. AI's success on this route has led to US lic administration. He brings with him an extensive and rich ca- major United deciding to operate this route on a seasonal basis reer-experience of 30 years holding key portfolios in Urban from this winter. First appointed as AI CMD by the Modi gov- Governance, Urban Public Transport and Policy making. He has ernment in September 2015, Lohani was moved as Railway also won the National Award for- e Governanace in 2012 and Board chairman in November, 2017. He retired as Railway the Prime Minister’s Award for Excellence in Public Administra- Board chairman on December 31, 2018, and has now been brought back to head AI. The Appointment Committee of the tion in 2013. Cabinet, that is headed by the Hon'ble Prime Minister, on He is a Mechanical Engineer and graduated from University of Wednesday issued the order appointing Lohani as CMD for "a Indore in 1982 and post graduated in Industrial Engineering period of one year or until further order". The AI chairman's from IIT Delhi in 1984. He has a Diploma in Management from post had fallen vacant on January 31, 2019, when then CMD P S All India Management Association, New Delhi and a Masters in Kharola was made aviation secretary. Development Management from Asian Institute of Manage- Ashwani Lohani is a 1980 batch Indian Railway Service of Me- ment, Manila, Philippines. He also holds a PhD in Public chanical Engineers officer who retired as Rail Board chairman. Transport systems from IIT-Delhi. During his long years of service in railway, tourism and AI, he earned the reputation of a turnaround specialist. He has the distinction of turning around a public transport un- dertaking. He revived Bengaluru Metropolitan Transport Corpo-

Vol 3 Issue 1 7 February 2019 AERO MRO DIGEST Global Aviation Summit 2019: Setting fastest growing aviation sectors and all players of the sector pace for exponential growth in India's must come together and talk about ideas, said Minister of aviation sector Civil Aviation and Commerce and Industry Suresh Prabhu. A first-of-its-kind event, Global Aviation Summit 2019, was He said, the summit is a union and it will address the prob- held in Mumbai with the participation of 13 transport and lems being faced today. highlighted the on the need for civil aviation ministers, 36 civil aviation authorities, 800 dele- technology to pervade all aspects of aviation. He said that a gates, more than 35 exhibitors from over 80 countries across summit of this stature is necessary to ensure collective think- the world. The inaugural session was graced by Devendra ing that helps in combating challenges of the aviation sector Fadnavis, Chief Minister of Maharashtra, Suresh Prabhu, and bring about greater reforms. The rise of fuel prices has Minister of Civil Aviation and Commerce and Industry, Gov- been an issue in recent times but can be dealt with through ernment of India; Dr. Olumuyiwa Benard Aliu, President of an exchange between the minds in the industry. He also said the Council ICAO, Jayant Sinha, MoS, Ministry of Civil Avia- there will be zero tolerance for any safety violation and as tion, R N Choubey, Secretary, Minister of Civil Aviation and Sandip Somany, President, FICCI.

the demand for air travel keeps rising, they need to ensure safer, sustainable and smoother trips. The inaugural session primarily focused on the summit's “We are working on getting aircraft financing and mainte- main theme of 'Flying for all' which focussed to make air nance, repair and overhaul (MRO) industry in India, which travel affordable for citizen of every class in this country. The will also increase jobs in the country," Prabhu said. summit, which is historical in opening a dialogue on several verticals like importance of drones, affordable air travel, use Besides the ambitious plan of manufacturing indigenous of sustainable fuels in future, infrastructural development in drones, robust air cargo policy for greater trade and more a compact two-day event, seeks to pave the way for greater transparent policy logistic study is also on the cards, the min- ister said. With greater demand in air travel, comes the necessity to ensure sustainable flights and reduction of carbon emission, Dr. Olumuyiwa Benard Ali, President of the Council, ICAO said. The ICAO president said that if the growth momentum of the Indian aviation market continues, then very soon the country is going to be the third largest aviation market in the world. He also focused on the need for better skill develop- ment of the next generation aviation professionals. The reason behind the choice of Mumbai as the preferred destination for this summit was explained by both Prabhu and CM Devendra Fadnavis who spoke about the city being growth in the aviation sector through better policy-framing. one of the oldest and the most dynamic. The state of Maha- The aviation industry in India has been experiencing expo- rashtra will have nine airports connecting different parts of nential growth with the domestic aviation market growing at the country with the geographically prominent Nagpur air- 20 percent annually for the last four years. India is one of the port being developed to connect both national and interna-

Vol 3 Issue 1 8 February 2019 AERO MRO DIGEST now worth Rs 2 lakh crore, the same as telecom and rail- ways. That gives you the scope of how aviation is growing." A report titled India-Next Gen Aviation Hub by Airport Coun- cil International released at the Summit forecasts that avia- tion’s centre of gravity is moving eastward.

tional flight routes. He said, "PM Modi's dream of Flying for the man wearing chappals is already becoming a reality here." Devendra Fadnavis said, by the beginning of 2020, the state government will make New Mumbai's airport functional, India to become the third-largest aviation market worldwide which has the capacity to add 1 per cent to GDP. in the next decade, it said in the report. The aviation industry All the panelists and ministers together unveiled the Vision in India is not yet on a sound financial footing and this re- 2040 document which aims to have 1.12 billion air passen- mains a work-in-progress for the industry and its key stake- gers in 2040 from 187 million air passengers in 2018. Follow- holders, including policymakers, it said. ing the unveiling of the vision document, Jayant Sinha, MoS, “While the industry has demonstrated resilience in the face Ministry of Civil Aviation mentioned how Prime Minister Nar- of various shocks and disruption, including the global finan- endra Modi's motto of "reform, perform, transform and then cial crisis and airline exits, financial stability is a key factor for inform" is becoming a reality in the aviation sector. With 100 the industry to be able to successfully develop and grow," according to the ACI report. The rise of developing and emerging economies in the top- 10 country markets by air passengers foresees a reversal of the advanced-to-emerging market ratio of 60:40 currently to 40:60 by 2040. Asia-Pacific countries, including India, are also projected to substantially increase their market share from 35.5% in 2016 to 46.2% in 2024 with resulting global shift in aviation's centre of gravity eastward. After an unprec- edented double-digit and highest rate of aviation growth

billion air passengers in the last four years, Sinha said it has been a steep climb for the industry. The minister said that despite the growth, no compromises have been made and instead safety standards have improved greatly in the last few years. The session concluded with the minister setting the tone for a discussion on Drones later in the day. He said air travel in India is cheaper than auto rickshaw rides if one calculates per kilometer mileage and this can be better understood with a discussion on the future of drones. among the world's large economies in the last four years, Talking about the exponential growth of the sector, Sandip over the next two decades India has been predicted to Somany, President, FICCI said, "Aviation market in India is achieve a CAGR of 7 per cent per annum; it has the third-

Vol 3 Issue 1 9 February 2019 AERO MRO DIGEST largest aircraft order book after the US and China; and air- clude Project Rupee Raftaar on Aircraft Financing and Leas- craft movements and air cargo are also predicted to grow at ing in India; Vision 2040 for ; National the fastest rate in the world. Air Cargo Policy Outline 2019; Drone Ecosystem Policy Roadmap; and, National Green Aviation Policy Roadmap. Growing over the last decade from 4 out of the world's 18 largest airports with a capacity to cater to more than 40 mil- Vision 2040 for Civil Aviation Industry in lion passengers per annum, Asia-Pacific region now has 21 India out of the world's 50 such airports. India has 2 of these pres- ently, and an accelerated programme has been taken up to enhance the airport capacity in cities of all sizes is being de- veloped which would add capacities equal to 100 airports in the next 15 years to improve the airport coverage across the country and unlock economic value of growing demand for air traffic. The strategic elements for achieving the development of next 100 airports, which may include promotion and encour- agement to serve as global aviation hubs in India, would in- clude the following:

• Leveraging the strength of India's domestic carriers in non -stop direct flights.

• Building strong Indian global airlines and imparting eco- nomic and financial strength to them.

• Leveraging the combined available seat capacity of do- mestic carriers to serve a number of city pairs and the flow of passengers between those city pairs.

• Leveraging the combined passenger capacity of cities with two or more airports like Bengaluru, Delhi, Hydera- bad, and Mumbai through suitable connectivity between them. The Vision 2040 for the civil aviation industry in India a paper • Leveraging the unique capacity addition of unserved and prepared by KPMG India was released at the Global Aviation underserved airports through Regional Connectivity Summit. A well written document covering all aspects of the Scheme-Ude Desh Ka Aam Naagrik (RCS-UDAN). Indian Aviation Industry in the current state and steps to be taken to fuel the growth of industry to reach higher position • Leveraging the multimodal transportation capacity of In- over the two decades. We bring to our readers the executive dia to connect every remotely located passenger or sup- summery and the chapter on Maintenance, Repair and Over- plier or consumer of goods by developing multimodal haul (MRO). integration at logistics hubs across the country. India is the seventh-largest country by area and the second- • Leveraging technology in air traffic management, espe- most populous with over 1.35 billion people. It is one of the cially for drones and other next-gen carriers. fastest growing economies of the world and is likely to be- • Developing airport terminals that facilitate all forms of come the fifth largest in 2019. transfers among domestic and international passengers. The Indian aviation market is on a high growth path. Total • Establishing appropriate flight schedules by Indian carri- passenger traffic to, from and within India, during Apr-Nov ers that enable convenient, short- duration transfers 2018 grew by around 15% year on year as compared to among high traffic destinations. around 6% globally. India is now the seventh largest aviation market with 187 million passengers (to, from and within In- • Enabling efficient slot management across the aviation dia) in FY 2017-18. It is expected to become the third largest network. by 2022. Five more reports were released on the occasion. They in-

Vol 3 Issue 1 10 February 2019 AERO MRO DIGEST This growth is being driven by a growing economy, rising in- cept of land pooling may be used to keep land acquisition comes, intense competition among airlines and a supportive costs low and to provide landowners with high value devel- policy environment. The National Civil Aviation Policy (NCAP oped plots in the vicinity of the airports. 2016) signaled the government's intent to radically alter the Air cargo throughput is projected to quadruple to 17 million sector's growth trajectory. NCAP's flagship program - Region- tons in FY 2040. Cargo processing will be completely paper- al Connectivity Scheme (RCS or UDAN) is taking flying to the less and dwell times reduced to just 1-2 hours. India's masses by offering subsidised fares as low as US$ 35 for a freighter fleet is likely to expand multifold with the growth in one-hour flight. The government decided to privatise its na- e-commerce. India will gradually become a trans- shipment tional carrier Air India and helicopter company , hub for entire South Asia. something unthinkable in the past.

Initiatives like Nabh Nirman (for airport capacity augmenta- tion), Digi Yatra (for paperless travel) and AirSewa (for online passenger grievance redressal) etc. are bringing in radical changes. The tax structure for Aviation Turbine Fuel (ATF), Maintenance, Repair and Overhaul (MRO) and aircraft leas- With conducive policies and a large fleet of over commercial ing may be gradually aligned with leading global jurisdic- and military aircraft, India will build its indigenous aircraft tions. manufacturing industry in collaboration with global OEMs. If the trend continues, India would become one of the top By 2040, India will assemble nearly 70% of its commercial aviation hubs by 2040. The passenger traffic is expected to aircraft demand and also export to other countries. grow six-fold to around 1.1 billion. India has one of the larg- India will establish its own aircraft leasing industry which est aircraft order books currently with pending deliveries of may handle almost 90% of aircraft being ordered in India by over 1000 aircraft. Its commercial airline fleet is likely to 2040. India's tax structure and repossession processes will grow from 622 in March 2018 to around 2359 in March be equally or more attractive than those in leading global 2040. jurisdictions. India may have around 190-200 operational airports in 2040. A significant course correction in policies, taxation and cus- Its top 31 cities may have two airports and cities of Delhi and toms procedures will enable growth of India as a global MRO Mumbai three each. The incremental land requirement is hub by 2040, handling nearly 90% of the MRO requirements expected to be around 150,000 acres and the capital invest- of large Indian carriers. General aviation (GA) will become an integral part of India's aviation eco-system, driven by remote area connectivity, tourism and disaster management programs. The elitist tag and high tax incidence on GA may gradually go away. By 2040, India will witness a boom in usage of drones and helicopters, especially in urban commuting and medical

ment (not including cost of acquiring land) is expected to be around US$ 40-50 billion. The government may consider establishing a Nabh Nirman Fund (NNF) with a starting corpus of around US$ 2 billion to support low traffic airports in their initial phases. The con-

Vol 3 Issue 1 11 February 2019 AERO MRO DIGEST evacuation. With a supportive policy regime, India could be- gether. India will also need to collaborate with aviation lead- come a global leader in research, design and manufacturing ers across the globe for knowledge and advice. of drones and anti-drone systems. There could be over 200 With the right policies and a relentless focus on execution, amphibious aircraft located across India's coastline and wa- India can surprise the world by not just meeting but exceed- terbodies. ing the Vision 2040 targets. Over the next 5-8 years, all Indian aircraft will be flying on Maintenance, Repair and Overhaul the satellite-based GAGAN system developed by AAI and ISRO. This will lead to better airspace utilisation and safer Current status operations despite reduced aircraft separation. GAGAN sig- With its growing aircraft fleet size, strategic geographic loca- nals will also be used by other sectors like shipping, high- tion, rich pool of engineering expertise and low labor cost, ways, railways and agriculture etc. India has a huge potential to be the global Maintenance, Re- Ground handling and airport operations will be highly auto- pair and Overhaul (MRO) hub given a long-time perspective. mated and driven by electric ground support equipment. Check-in, bag drop, immigration clearance, retail shopping etc. will be automated, with minimal human intervention. Indian airports will invest heavily in cloud computing capabil- ities, which will enable integration of different safety and security data sets such as security camera feeds, facial recog- nition, luggage scans, security incident reports etc.

The current market size of the MRO industry in India is as- sessed at about US$ 700-800 million which is expected to reach US$ 1.2 billion by 2020. India has the potential to be- India will witness a massive upgrade of its aviation education come the third largest aviation market by 2022. India has and skilling infrastructure. Its affordable and high-quality long been viewed with interest from MROs globally seeking a aviation education system will attract students from across valuable gateway between the Middle East and Asia-Pacific. the globe. According to Aviation Week Fleet and MRO Forecast, the DGCA may be converted into a fully-independent Civil Avia- MRO market in India is expected to grow at 7.7% annually tion Authority, with its own sources of funding and freedom over the next decade, which is more than three times the to recruit professionals at market-linked salaries. Most trans- global rate. actions with DGCA will be automated with minimal human This demand is being driven by a fleet growing at 9.9% annu- interface. ally, from around 620 in FY 2018 to a projected fleet of over Vision 2040 is only as good as its execution. Implementation 2,300 in FY 2040. With over 1000 aircraft currently on order, of Vision 2040 will require a robust monitoring mechanism India is likely to become the third largest buyer of commer- under the leadership of the Hon'ble Minister of Civil Avia- cial passenger planes in the world, only behind the US and tion. A duly empowered Vision 2040 Program Management China. Unit (VPMU) will need to be established. It will be supported The growth is being boosted by the expansion and develop- by Vision 2040 Task Forces (VTF) for separate sub-sectors. ment of new airports, fast expanding LCCs, a liberal FDI poli- VTF's monthly report should be shared with the public. cy, rising adoption of new technology and focus on regional Indian aviation's Vision 2040 targets are lofty and aspiration- connectivity etc. al. The road to 2040 will not be easy. The Indian govern- ment, industry and academia will need to work closely to- Vol 3 Issue 1 12 February 2019 AERO MRO DIGEST Key challenges a 3-5 years mission, involving continuous dialogue between central and interested state governments, DGCA, airlines, Despite a rising fleet, Maintenance, Repair and Overhaul OEMs and the MRO industry. (MRO) industry continues to struggle for relevance. The big- gest challenge is the severe tax anomaly with foreign juris- Indian Airlines usually spend about 12-15 % of their revenues dictions. This is despite the widespread appreciation of the towards maintenance, which is the second highest cost item fact that, with a fast expanding fleet, India needs to build a after fuel. Generally, airlines carry on-tarmac inspections (A/ robust domestic MRO eco-system. More so, given the gov- B checks) in-house and work with third-party MROs for en- ernment's avowed commitment to push for 'Make in India'. gine, heavy maintenance (C/D checks) and modifications. Due to a limited MRO eco-system and a sub-optimal tax structure, most Indian carriers carry out MRO in Sri Lanka, South East Asia, Middle East or Europe. This entails addition- al cost of empty ferry flights, additional logistics costs and payment in foreign exchange. That it still works out cheaper and better than doing MRO in India does not show India in a great light. There are about 40 overseas entities approved by DGCA to conduct MRO on India-registered aircraft. These account for over 90% of the MRO expenses of Indian carriers.

Currently GST on aviation MRO is levied at 18%. In Singapore Nearly 60% of the MRO spend is on engine and component and Malaysia, tax is levied at 7% whereas in Sri Lanka there is repairs. This is where India has to focus on. none. Procedural reforms under NCAP 2016 The next graph shows the total MRO spend by region in 2018 The landmark NCAP 2016 removed many procedural hurdles and 2028 (Billion USD). India may continue to remain an in- faced by MRO industry and have been duly welcomed. significant player unless drastic policy interventions are un- dertaken in line with the provisions of NCAP 2016. The duty-free period for component imports was increased from one to three years. Foreign aircraft were allowed to come to India for MRO for a period of 6 months (instead of 15 days earlier) without any permission. MROs were required to provide proof of their requirements of parts, or orders from their client airlines. This has been done away with. Foreign pilots and MRO experts will be pro- vided visas and Temporary Landing Permits promptly. Air- port royalty and additional charges will not be levied on MRO service providers for a period of five years.

In January 2017, low cost carrier SpiceJet confirmed a deal To facilitate repairs of damaged sub-assemblies like engines worth US$ 22 billion to buy 205 aircraft from Boeing. The and landing gears of foreign carriers, the notification has airline has tied up with Air India Engineering Services Ltd been revised to enable advance export of serviceable parts. (AIESL) for using their MRO facility at Nagpur. In February Taxation anomaly 2018, AAR Corps, a global provider of aviation service to The benefits of NCAP 2016 have been completely undone by commercial airlines, announced a joint venture with Indamer the tax regime applicable to MROs. GST on MRO providers in Aviation, a leading aviation company in India, for the devel- India is 18% for most items as compared to 0-7 percent tax opment of a new airframe maintenance, repair and overhaul in competing nations in Middle East and SE Asia. (MRO) facility in Nagpur, India. Other OEMs and airlines need to be persuaded to strongly consider setting up their The government of India does impose a GST of 5% on the MRO facilities in India on their own or through third parties. invoice value of the MRO done abroad, but airlines can take a setoff against the same. The significant tax differential be- It is not easy to wean away Indian carriers from their well- tween Indian and global MRO providers renders MRO in In- established MRO service providers outside India. It has to be Vol 3 Issue 1 13 February 2019 AERO MRO DIGEST and help establish the industry. It will also create incremen- tal GDP, employment and government taxes (corporate tax, income tax, GST on consumption by employees etc.). Interestingly, by zero-rating GST on MROs, the government will suffer no loss of GST revenue since MRO is a B2B busi- ness. E.g., if an MRO doesn't charge GST to an airline, the said airline will not get any input tax credit on the same - the government loses nothing. The so-called revenue loss is no- dia a non-starter. tional and non-existent. Some argue that since airlines get an input tax credit for GST Airlines will need a complete MRO eco-system in India in paid on MRO, there's no problem at all. The reality is that order to switch from their current service providers. The LCC's pay only 5% GST on economy class tickets whereas MRO ecosystem includes repair shops for airframe, engine many of their input services incur GST of 5-28 percent. At and components; component suppliers, warehouses and times, LCCs do not have adequate GST credits to offset the training facilities. The entire MRO zone should be notified as 18% GST paid to Indian MROs. The 18% GST then becomes an SEZ and subject to zero taxation on all MRO activities. an additional cost that airlines, operating on thin profit mar- The MRO industry globally has been developed on the back gins cannot absorb. of foreign investments and players. Singapore and Dubai em- There is also a cash-flow issue. Most Indian carriers are fac- barked on this journey in the early 1980s. Foreign OEMs and ing a cash crunch. They do not want to pay 18% GST today MROs see India's long-term potential and are keen to invest. and then claim a setoff later. It's much simpler to fly the air- Investments from foreign OEMs and MROs are subject to craft abroad and work with established global MRO provid- dividend tax. These entities have already invested in MRO ers. facilities in India's neighbourhood. An investment in India The tax anomaly is worse for Indian MROs importing tools, will cannibalise their own investments and hurt the volume test benches and consumables. An Indian MRO importing commitments that they may have made to their business tools and test-benches is subject to 18% GST as against 5% partners. OEMs and foreign MROs need to be incentivised to charged on aircraft components. balance out these constraints. MROs importing consumables like adhesives, paints and var- Airport royalties nishes are perhaps the worst off. Consumable are slapped Airports in India charge royalties on the invoice value of with a 10% import duty and then a GST of 18%. Note the MROs, over and above the space rentals that MROs pay to anomaly - the same paint applied in Singapore and Dubai on the airport companies. This is a violation of Clause 18B (f) of an Indian aircraft will suffer a 5% GST, but if an Indian MRO NCAP 2016 that stipulates removal of all such royalties and imports the paint, the airline will pay a 10% import duty, add-on costs for a five-year period. The said Clause needs to compounded by 28% GST. There's almost zero probability of be enforced with immediate effect. an Indian airline getting its aircraft painted in India. Re-delivery maintenance Some feel that if a zero rate of GST is applied on aviation MRO, every repair shop for autos, cars, trucks and trains may With the prevalence of sale-and-lease-back model among demand the same. This is an incorrect analogy. One cannot Indian carriers, redelivery maintenance forms a major part of take one's car or truck physically to Singapore or Dubai for an airline's and lessor's MRO requirements. This presents a MRO. In case of aviation, the vehicle flies. It can fly to any large opportunity for both component repair and heavy country that provides reliable MRO services at a lower cost. maintenance. Currently this is done mostly outside India, This is the simple reason why most progressive countries due to various legal and technical reasons. apply a 0-7 percent rate of tax on their MRO sector. Cost advantage in India Giving rebate in GST for car or truck repair shops may lead to If there is a continued push for tax and procedural reforms, reduction in GST revenue and no major gains in jobs. In con- aircraft servicing in India can be 20-25 percent cheaper than trast, as highlighted earlier, nearly 90% of the MRO expense its competing nations. It will help transform the moribund of Indian carriers is incurred abroad. Applying a zero rate of Indian MRO industry from mere line or base maintenance GST on aviation MRO will bring back the revenue forgone providers to value providers.

Vol 3 Issue 1 14 February 2019 AERO MRO DIGEST New business models # Entity Status There is a possibility that aircraft OEMs and lessors may Boeing and Air India provide aircraft as a service, selling seat- hours instead of Established a $500 million facility 1 Engineering Services at Mihan SEZ Nagpur aircraft. MROs will then shift into being asset management Ltd. platforms instead of simply fixing defects and performing An avionics maintenance centre is 2 Thales International planned checks. This may require a radical change in mind- already operational. Established up an MRO at Hosur, a sets, capabilities and financial strength of Indian MROs. 3 TAAL and Airworks private airfield Revival of Air India's MRO facility GE and Air India Engi- Established a GE90 Engine Testing 4 neering Service Ltd Cell at a cost of $90 million The AIESL facility at Nagpur is a national asset. Unconfirmed Established a new MRO in Mihan reports reveal that it is utilised only to the extent of 20 per 5 AAR Corp and Indamer SEZ Nagpur under Make in India cent. AIESL's losses in FY 2016 and FY 2017 were INR 559 Established an Engine Training Cen- 6 CFMI tre in Hyderabad in 2010 to train engineers Establish a Customer Training Cen- 7 Pratt & Whitney tre In Hyderabad in 2017 Air Works India Engi- Has JV agreements with Empire 8 neering Pvt Ltd Aviation, Acumen Aviation Has a JV with Air France KLM Engi- 9 MAX MRO Services neering & Maintenance Vision 2040 crore and INR 505 crore, respectively. It is now trying to offer The Vision 2040 for MRO industry is as follows: its services beyond the parent Air India. • India shall be a global MRO hub, handling nearly 90% of In 2016, AIESL signed a contract with to carry out the MRO requirements of Indian carriers. C checks on their Boeing 777s at Nagpur AIESL now also ser- • At least 20% of the Indian MRO industry's revenue shall vices Jet's aircraft at Mumbai. come from foreign-registered aircraft. AIESL has signed an agreement with SpiceJet. Talks are un- • Nearly 90% of redelivery maintenance shall be done with- derway with another Indian LCC. Under an agreement with in India. Boeing, AIESL can undertake MRO work on most aircraft Key steps to achieve Vision 2040 types. In 2017, the Nagpur facility has been approved by MRO taskforce DGCA to carry out maintenance of Airbus A319, A320 and A321 aircraft, which opens up a huge window of opportuni- A high-power task force for promotion of MRO needs to be ty. formed under the leadership of a Joint Secretary of MoCA. The task force may have members from relevant ministries AIESL has started tests and minor repairs on GE's engines and regulators. It should also have five representatives from that power Boeing 777s. There is a possibility that AIESL may the airlines, OEMs and MRO providers. The task force may get the approval for complete overhaul of engines in the analyse the various options and action steps required to near future. This engine overhaul facility, the first of its kind make India a global MRO hub; develop a clear roadmap; and in India, can undertake repairs of all GE engines. report actions and outcomes to the aviation minister. AIESL is willing to let a reputed private player take over the Tax disparity Nagpur facility on a 30-year lease under a revenue-sharing agreement. This option needs to be pushed hard with lead- MROs and component warehouses need to be declared as ing airlines and global MRO providers. There may be some free trade zones with zero- rate of GST and a ten-year holi- liberal terms that may need to be built in in the lease agree- day on corporate tax, capital gains tax and dividend distribu- ment to attract reputed operators form India and abroad. tion tax. There is no loss of indirect tax revenue since the GST will be recovered from the end consumer - the airlines. Other facilities There will be no loss of direct tax revenue since the MRO Some upcoming MRO facilities are as follows: industry is almost non-existent today. Disrupting existing relationships between Indian carriers and foreign MROs is not easy. The MRO task force may consider Vol 3 Issue 1 15 February 2019 AERO MRO DIGEST additional incentives like capital subsidy and interest subsi- Indian Aviation Highlights in 2019 dies to attract investments. Presented by ‘The Week’, here are a few highlights of year In order to build an MRO ecosystem in high-tech systems like 2018, in Indian Aviation. engines and avionics, there could be additional incentives provided for MROs investing in these categories. Navigating through tail winds and air pockets, the country's aviation space recorded high passenger growth, battled oil Import restriction shocks as well as survived mid-air scares in 2018. The government may consider restricting airlines from taking In the new year, the government would focus on making fly- Indian aircraft abroad for repairs, except in cases where the ing "as good as possible", according to Civil Aviation Minister infrastructure and technical knowhow is not available in In- Suresh Prabhu. dia. Such a restriction may be applied five years after the tax anomalies are removed, giving ample time to develop the From spiraling costs and cut-throat competition pushing air- MRO eco-system in India. lines into the red to government initiatives aimed at boosting the fast-growing sector, a mixed baggage greeted Alternate locations the stakeholders this year. MRO eco-system needs to be established near large airports. India remained the world's fastest growing domestic aviation Many busy airports like Mumbai are already congested. This market with 51 straight months of doubled-digit traffic creates an opportunity for progressive state governments to growth but the woes of passengers as well as carriers mani- create an incentive package over and above the central fested in myriad forms. package and attract large OEMs or MRO providers to their state. While the country's largest airline IndiGo faced brickbats, including from a Parliamentary panel, 25-year-old Jet Air- Airport royalties ways and national carrier Air India continued to grapple with In line with Clause 18B (f) of NCAP 2016, MoCA may issue a financial woes. notification abolishing, with immediate effect, all royalties "We will try to make air travel as good as possible. We are and charges (other than reasonable lease rentals) levied by working on many issues related to that," Prabhu said when airport operators on MROs for a period of five years. asked about priorities for next year. Illustrated Parts Catalogues Apart from existing initiatives, the Civil Aviation Ministry is to Components, tools, test benches and consumables related to unveil an integrated cargo policy as well as Vision 2040 docu- MRO should be subject to immediate clearance by Customs ment for the aviation sector next year. without any harassment and delays. The Illustrated Parts Despite high passenger growth, domestic airlines remained Catalogues (IPC) issued by OEMs should be treated as ade- financially vulnerable as surge in oil prices, rupee deprecia- quate proof of the genuineness of the aircraft component. tion and inability to raise fares amid intense competition Any violation by an MRO may invite cancellation of license crimped their earnings. In the three months ended Septem- and appropriate penalties to serve as a deterrent. ber, all the listed carriers—IndiGo, Jet Airways and Skill-building SpiceJet—were in the red. The MRO facilities will require ancillary industries and ser- On the safety front, India retained the highest rating in the vices. These include repair and testing facilities for avionics, audit done by the Federal Aviation Administration (FAA) and electrical equipment, hydro-mechanical and pneumatic com- improved its score in the audit carried out by UN aviation ponents, composite structures and aircraft interiors etc. watchdog ICAO. There will a large requirement for super-specialised training However, Pratt & Whitney (P&W) engine problems contin- facilities. This shall need to be captured in the incentive ued with A320 neo planes operated by IndiGo and GoAir, package in close coordination with the Aerospace and Avia- which has resulted in incidents of mid-air engine shutdowns. tion Sector Skill Council (AASSC). An incident involving Jet Airways flight where 30-odd pas-

sengers suffering nose bleeding due to a sudden drop in cab- in pressure also raised safety concerns while a private plane crash at Ghatkopar in Mumbai this year killed five people,

including one bystander. Vol 3 Issue 1 16 February 2019 AERO MRO DIGEST Disinvesment-bound helicopter services provider Pawan aircraft fleet is likely to double over the next few years," he Hans saw a major accident in its history when the chopper said in a communication. carrying seven persons crashed into the sea off Mumbai Around 600 aircraft are flying in the Indian skies. coast. The total number of operational airports rose to 100 with Though many new routes and unserved airports came into the aerodrome at Pakyong in Sikkim. the aviation map with the ambitious regional connectivity scheme UDAN (Ude Desh ka Aam Naagrik), the trajectory seems bumpy, with at least three carriers—, Air India will be third largest aviation mar- Deccan and —suspending services due to their own troubles. ket by 2025

After the strategic sale of ailing Air India failed to attract any In an Interview with Livemint, during the Global Media Day bidders, the government is charting out new strategies and is event, Alexandre de Juniac, Director General of IATA, spoke continuing with fund infusion. Transfer of non-core debt and about Indian Aviation. Following article is derived from the assets to a special purpose vehicle, differentiated business interview. strategies for each of the core businesses and roping in pro- India is on a path to become the third largest aviation mar- fessionals for top management positions through global ket, after US and China, in 2025, says International Air search are among the revival proposals on the anvil. Transport Association (IATA). It also expects the aviation in Bogged down by financial problems, Jet Airways continues to India to grow in double digits over the next few years, where face turbulent times and its staff are getting deferred salary as other developed countries are expected to see a slower payments apart from overall rise in operational costs. The aviation growth. In order to achieve this, IATA mentions, In- airline, which has significant overseas presence, is looking at dia will need to address several obstacles, which lead to a various options to raise funds. slower aviation growth. Recommended measures include increment in number of airports & resolution of infrastruc- IndiGo grabbed headlines for bad as well as good episodes. tural issues at major cities, reform the taxation structure for Apart from P&W engine woes, the airline saw the departure Jet fuel, to lower the cost, measure to improve MRO services of its long-standing chief executive Aditya Ghosh in May ap- & other hindrances. parently over differences with one of its promoters. Speaking on the On the flipside, IndiGo became the only carrier to have 200 ‘bottlenecks which needs aircraft in the fleet with the induction of an A320 neo in early to be addressed immedi- December. It also took delivery of A321 neo plane. ately’, Mr. Junaic said that Becoming the sixth domestic airline to start international the airport capacity is a operations, GoAir commenced services to Thailand and Mal- problem in cities like Mum- dives. The carrier saw ex-EasyJet executive Cornelis Vrieswijk bai, where a second airport joining as its chief executive. SpiceJet operated the first bio- is imminent. The taxation fuel-based test flight with a Bombardier Q400 plane from structure for fuels and re- Dehradun to the national capital. sulting fuel costs are too Next Generation Airports in Bharat (NABH) Nirman to pre- high, which results in a pare for one billion passenger trips and DigiYatra that seeks stunted growth for avia- to provide hassle free travel with the option of biometric tion. Besides the consternate financial situation of the Indian identification for passengers are among the initiatives being carriers, there is a ‘price-war of sorts’ going on, as men- rolled out. tioned by Mr. Juniac. He also mentioned that India has very low prices, which is a driving factor for growth, and stimu- In flight wi-fi connectivity would soon be a reality, enabling lates demand; but ends up being expensive for airlines. passengers to use Internet while flying in the Indian airspace and registration for flying drones have commenced. When asked if consolidation was the way forward for Indian airlines, Mr. Junaic stated that consolidation has happened According to Prabhu, domestic and international passenger in the US and Europe too; however, he mentioned, that it is numbers are forecast to have almost double-digit growth in not happening in Asia, due to the limitations in foreign own- the coming years. "With such robust growth, India's current ership. He further added that having a foreign ownership

Vol 3 Issue 1 17 February 2019 AERO MRO DIGEST limitations act as obstacles for international consolidation. And more people today in India and China can afford to fly. Highlighting the improvement in FDI Limitations, he men- And this number will only increase. tioned the example of the Singapore Airlines joint venture in

India. Understanding the objective behind the FDI Limita- tions, Mr. Juniac stated that from a practical economic point BLADE to start operations in India soon of view it is an obstacle to consolidation. He also mentioned Founded in 2014, BLADE, a digitally-powered aviation com- that consolidation happened in Europe when International pany based in New York, is planning to start its operations in barriers were lifted. India. It works on an aggregator model wherein it ties up with charter flight operators. Blade is all set to formally launch its pilot programme, Urban Air Mobility, in March 2018. In the primary stages of operations, Blade plans to connect Juhu and Mahalaxmi to Shirdi and Pune. Presently, Blade is pursuing to acquire the requisite permissions and clearances from Airports Authority of India and the Civil Avi- ation Ministry, in order to set up lounges, for their routes. Despite being headquartered in the nation capital, Blade has decided to start their operations in Mumbai, owing to some security concerns in Delhi.

When asked, how long is the price war expected to long, Mr. Rob Wiesenthal, CEO of BLADE, while speaking to Business- Juniac said, “If airlines are forced to implement a pricing poli- Line, mentioned that, presently charter flight between Ma- cy, where you are losing money, it’s definitely a problem. It halaxmi and Shirdi costs approx. $8000, but with Blade’s depends on how long airlines can continue with price wars.” business model, passengers will be able to share the helicop- He added stating IATA estimates, where airlines in Asia- ter ride, by booking a single seat. This strategy is expected to Pacific are expected to report profits to the tune of $10.4 bring down the flight costs making the Charters available at a billion in 2019. He also informed that Indian airlines have not cheaper rate. Blade works on an asset-light model, wherein, fared good in 2018, and they will probably make a loss they will tie up with charter service providers on a contractu- though most other airlines in the Asia-Pacific will report al basis. Blade will act as a service aggregator, by providing a profit on falling oil prices. The $10-12 billion profits are esti- platform to book a seat on flight. Blade will use integrated mated to come from China, Indonesia, Australia and other technology in three formats. The app, which will be available emerging countries in the region. on Android and IOS, an accounting dashboard, will monitor Mr. Junaic was asked about the issues which were flagged to the back-end work and a cockpit software. the Indian government, he replied that Indian government Blade has formed a Joint Venture with Hunch Ventures for has been requested to abolish the GST (Goods & Service its India operations. Karanpal Singh, Founder of Hunch Ven- Tax), which is against ICAO rules. Further, the government is tures said, “Mumbai is the financial capital and has a large also asked to reduce the taxes on aviation fuel. The prices scope because several people use the Mumbai and Pune were lowered earlier but further action is suggested. Men- routes regularly which create friction in travel and thus, it is tioning the steps taken by Indian government, he stated the an opportunity for us.” Amar Abrol, ex-AirAisa CEO and Man- government has implemented a few corrective measures like aging Director, who is appointed as a consultant to lead the building a second airport, lowering taxes, implementing re- India operations, said that initially, Blade will operate three gional connectivity. Infrastructure has also been pushed, but or four times a week. However, they intend to cater to a it needs additional development. Overall, aviation has been larger audience, in multiple cities after a couple of quarters. one of the top priorities.

When asked, how long will India be able to hold the growth momentum, he affirmed that India is expected to grow in WIN start part supply delivery to Boeing double digits in years to come. The general rule around the Wipro Infrastructure Limited (WIN), aerospace business unit world is that when people can afford to buy an airplane tick- of Wipro Ltd., has initiated shipment of part supplies to Boe- et, they fly. This is true in India, China and all over the world. ing. Manufacturing of parts was done at Devanahalli plant of Vol 3 Issue 1 18 February 2019 AERO MRO DIGEST "Indian MRO companies are shutting down because they are not able to fairly compete with overseas players because of dis- criminatory taxes, which has put them at a cost disadvantage. We are paying 18% GST on sale price while overseas players are paying 5% at cost price. So, the gap is Wipro. WIN has received contracts to manufacture strut as- effectively around 21-22%," he semblies, for 737 Max and Next Gen 737, from Boeing. said. He further added, "We (MAOI) don't want concession or subsidies. We want a level Pratik Kumar, CEO, Wipro Infrastructure Engineering, said, playing field. If 18% is my GST, you (government) put an 18- “Original Equipment Manufacturers (OEMs) like Boeing 20% duty on imports. (US President Donald) Trump is impos- source systems and components from India, and our exper- ing a tariff for protecting domestic industry. Here, we are tise with aerostructures and actuators provide a viable op- trying to protect a foreign industry by giving it a subsidy of tion for OEMs.” Further, he added, “This gives us the confi- 13%." dence to engage with Original Equipment Manufacturers (OEMs) like Boeing and others for more of their future pro- Mr. Ravi Menon, ED – Air grammes.” Ashwani Bhargava, director, Supply Chain, Boeing Works & Vice President – MRO India said, “Boeing’s partnerships with Indian suppliers play Association of India, said the an important part in Boeing’s global strategy. Boeing’s agree- domestic MRO industry has ment with Wipro Aerospace demonstrates our commitment made huge investments in in- to developing the aerospace industry here.” frastructure, manpower and tooling, but the high GST acts Set up in 2013, the aerospace business of WIN is a solutions provider for actuators (cylinder and piston), aero structures, as a threat to all this. Mr. Men- machining, sheet-metal, assembly and testing in the aero- on said, “It's taken a lot in space sector. Previously, WIN has provided various aero- terms of investment, infra- structures and componentry for the 737, 767 and 787 structure, material, training of manpower, investment in Dreamliner programs through its facility in Israel. tooling and all of that. Today, we are ready to undertake the base maintenance checks on narrow-body aircraft, including MRO Industry still combating GST barrier Airbus 320 family, Boeing 737 family, the ATR-72s and the The MRO industry in India is aggressively lobbying with the Q400s. It primarily became a credibility and trust-building government, to create a level playing field against their for- approach with the airlines in India, with us telling them that eign counterparts. The lopsided taxation structure has left we have the necessary skill sets, competencies to undertake the Indian MRO players clawing for sustenance opportunity. the base maintenance checks very effectively. While all this While speaking to DNA, President - MRO Association of India was in the process, GST got introduced and it has put us at a & CMD - Max Aerospace, Mr. Bharat Malkani said that India disadvantage position with foreign players,” Mr. Menon feels was losing close to 90% or $1.4 billion (FY18) of MRO busi- that the current taxation structure was penalising local play- ness to overseas players due to discriminatory levies. While ers and incentivising overseas players by giving them a cost there was a goods and services tax (GST) of 18% on domestic edge. Before GST was launched, service tax and value-added MRO services, the customs duty on imported MRO was just tax (VAT) was being levied on MRO, which was waived off to 5%. He said such a discriminatory tax regime was making promote MRO growth. "We are being penalised and the re- domestic MRO companies less competitive against their for- eign counterparts. Mr. Malkani said the difference in levies between domestic imported MRO services was roughly 13%. This made it more cost-effective for local airlines to send their aircraft to mar- kets like Singapore, Sri Lanka, Dubai, Malaysia, Middle East, Germany and other countries for maintenance checks. Vol 3 Issue 1 19 February 2019 AERO MRO DIGEST gion (Sri Lanka, Middle East, Malaysia, Germany, Singapore ernment allowing 100% foreign direct investment (FDI) for and others) is being incentivised. Our demand is to make it a MRO, not a single FDI is established. A few like Lufthansa level playing field and take it one step further to incentivise Technik Services India and others made a hasty retreat on India's growth and development of MRO services. Perhaps, realising that it was difficult to make money in India. India's give a GST break or a GST waiver for first five or 10 years to import-driven policy had led to 90,000 direct jobs being lost allow the MRO industry to stabilise so that it becomes sus- to countries like Sri Lanka, Singapore, Thailand, France and tainable for the future," he said. Germany. Mr. Malkani said,"These jobs can easily be brought back to India by correcting the fiscal tax imbalance that has MRO, like the aviation industry itself, is an emerging field. affected this industry since independence. Indian engineer- Before the government’s privatization efforts in 1993-94, Air ing is among the best in the world and allowing this drain of India has and in-house facility. It was only after introduction precious skill and forex to foreign locations is unwarranted." of private airlines like East West and Damania, the aircrafts were being sent abroad for maintenance purposes. "We are now looking at MRO import bill of $3 billion in the next six years. There is something fundamentally wrong with our pol- Additive manufacturing to reduce air- icy. How can you ignore the Indian industry? If we are price- craft repair costs insensitive, the industry will automatically cease to exist. RUAG Australia, A 100% owned subsidiary of the RUAG Giving subsidy to foreigners to do work in India is unheard of Group and fully integrated within RUAG Aviation, is in the any other industry," said Mr. Malkani. “For the first time, midst of a two-year project to investigate the use of an addi- MRO companies are shrinking their revenues because we are tive manufacturing process called Laser Metal Deposition getting contracts from airline customers saying can you (LMD) for quicker, more cost-effective aircraft repairs. The match it up. We say, how can we. If it was only labour we research and development of LMD involved collaboration might have absorbed 4-5% cost but 18% on spares is tough. with Innovative Manufacturing Cooperative Research Centre We don't manufacture spares and Boeing and Airbus are not (IMCRC) and the Royal Melbourne Institute of Technology going to give me 18% discount." (RMIT). RUAG is focused on using LMD to manufacture spare in countries like Sri Lanka, Singapore, Germany, Dubai and parts from steel and titanium. others, MRO service was zero-rated, hence Indian airlines send their aircraft abroad for maintenance checks. As a re- sult, less than 10% of the domestic MRO business is with In- dian MROs. Among the major players in India are Air Works, GMR Aero Technic and Max Aerospace and Aviation Pvt Ltd, which specialise in general aviation, transport and engines Neil Matthews, senior manager of advanced technology and and components, respectively. engineering solutions at RUAG Australia said, “Strategically Mr. Malkani estimates that if government charged an import speaking, a shift to LMD technology means less downtime duty of 20%, it could earn close to $200 million on 90% of for repairs and a dramatic increase in the availability and the $1.4 billion MRO revenues. Today, it was earning hardly readiness of aircraft. Instead of waiting for spare parts to $10 million on less than 10% of the total MRO revenues from arrive from a warehouse, an effective solution will now be domestic players. "We have estimated that more than 35% available locally. The ultimate goal of the project is to devel- of the players have shut down operations over the last one op indigenous capability that provides innovative and cost- year, mostly smaller ones. The bigger ones are also ready to effective sustainment solutions through the use of additive shut down. If you look at their balance sheet, it is sad. Once metal technologies which, in turn, reduce life-cycle costs and they shut down, there'll be no impact, apart from a loss of maintain reliable operational availability through repair and, job to 20,000 of us, which is insignificant in a population of when necessary, real-time manufacture,” 1.3 billion people. Imports will continue like it is now," said As per RMIT’s research team, LMD is essentially a very high- Mr. Malkani. tech welding process where metal parts are rebuilt layer by It is estimated that over the last one year more than 35% of layer, which is a process similar to 3D printing. Metal powder the domestic MRO firms have shut down operations, and if is fed into a laser beam and deposited across a surface in a corrective step was not taken urgently it would spell disaster precise, web-like formation. According to researchers LMD’s for the industry. It was also highlighted that despite the gov- bond is exceptionally strong, which makes it a viable process

Vol 3 Issue 1 20 February 2019 AERO MRO DIGEST for not only manufacturing spare parts but repairing existing mately I think the plans still remain that all general aviation parts where the repaired part is just as strong - or stronger - traffic will migrate from Dubai International Airport to Dubai than the original. South. Presently, the company has a stand-alone temporary FBO at Dubai South with a 5,000 sqft. (465 sqm) terminal." Mr. Matthews speculate that the LMD could be used to man- Mr. Berry also mentioned that the company is in the final ufacture or repair of high strength steel aircraft parts, like stages of designing and is expected to begin construction in those used in an aircraft’s landing gear. At the manufacturing the first quarter of 2019. The terminal is designed to be four stages, LMD would typically be ideal for small, complex, times the size of the terminal to be replaced. It will offer full highly loaded “low volume” parts, such as titanium compo- nents. The research team is testing the LMD's efficiency of cost saving in areas such as maintenance and spare parts purchasing, scrap metal management, warehousing and shipping. The project is currently focused on how LMD could be applied to existing military aircraft platforms and newer systems, such as the F-35 fleet, but the team believes the technology could potentially be transferable to civil aircraft or other industries.

customs and immigration on site, with several private loung- es, common lobby, crew rest areas with sleeping pods, and prayer rooms, among other amenities. ExecuJet, also plans to construct a 108,000 sqft. (10,000 sqm.) hangar for mainte- nance and aircraft storage. Hoping to keep their existing FBO active in Dubai active, if at a lesser capacity, Mr. Berry, stated “We are ever hopeful that we can keep some sort of presence in Dubai Interna- tional in the future, but time will tell whether that’s going to be achievable or not.” RUAG Australia has been developing LMD since 2014 and the company has already identified additional repair applications for the technology, as well as a titanium component which is likely to be manufactured as a demonstration of LMD. The Aircraft inspection robots get an upgrade research project began in March 2018 and is scheduled to Invert Robotics, a New Zealand based robotics company, has finish in March 2020. eased the task of aircraft maintenance after the introduction of mobile climbing robots, which can move across various aircraft surfaces to provide visual inspections, faster than it Execujet Dubai FBO & MRO relocation takes a technician to execute the same task. This robot is set to receive an upgrade. Besides being able to adhere to up- ExecuJet, the Luxaviation subsidiary, has initiated the con- side down or wet aircraft surfaces, the suction-based robots struction of its new Middle East headquarters facility at Du- can climb on rough, uneven surfaces. bai World Central’s Dubai South area. Contracts were signed recently with the airport authority for three plots, totaling The upgraded robots feature enhanced suction, which ena- approximately 5.5 acres (22,558 sq m), where they plan to bles the robots to climb on dirty or dusty surfaces. Addition- build a new, $30 million FBO and MRO complex. Since the ally, Invert has also made improvements to the speed at opening of the new airport, business aviation companies have been either relocating their facilities, or establishing additional facilities, like in the case of ExecuJet, which has long had a presence in Dubai. Michael Berry, ExecuJet’s President - Aviation Services and VP - Middle East operations said,“Dubai South is coming along very nicely as the new home of general aviation. Ulti-

Vol 3 Issue 1 21 February 2019 AERO MRO DIGEST Headquartered in Bengaluru, Star Air will be starting com- mercial flight operations under Ude Desh Ka Aam Nagrik (UDAN) scheme. Scheduled Commuter Airline Permit was received from Ministry of Civil Aviation on 1st January 2019.

Rolls-Royce signs contract with MEA On 12th December 2018, Rolls-Royce which the robots can climb over lapped joints and other sur- signed a contract with Middle Eastern face irregularities, like windows and damaged surfaces. The Airlines, for the support of Trent 7000 new functionality has been added in the past few months as engines, which powers its Airbus A330- part of an ongoing commitment to expand the range of are- 900 fleet. The contract covers long- as and environments for the robot operation. term engine maintenance services, In 2018, Invert Robotics partnered with SR Technics, using throughout the operation of the engine robots for aircraft maintenance inspections. Although the with MEA, the purchase of spare en- MRO provider has discontinued testing of robot technology gines and supply of parts. The contract in aircraft maintenance division for time being, it continues was signed by MEA Chairman - Director to work closely with company’s former CEO on identifying General Mohamad El-Hout and Rolls-Royce Chairman Ian further applications of robots, as stated by Invert Robotics Davis, during Lebanon-UK Business and Investment Forum in London. The signing was witnessed by witnessed by the The company intends to target those maintenance tasks Prime Minister of Lebanon, His Excellency Mr Saad Hariri and where technicians are required to work at-height or in dan- Rt. Hon. Alistair Burt, UK Minister of State for International gerous conditions, such as inspection and cleaning. Addition- Development and Minister of State for the Middle East. ally, the robots’ usage for non-destructive testing (NDT) technologies has been identified as a key efficiency improve- “We are committed to ensuring our airline is at the leading- ment. A spokesperson from Invert said, “The latest version edge in terms of using technology to provide excellent cus- of the platform provides a standardized means of attaching tomer service and performance. Our new aircraft, and their payloads, and as such we will see rapid releases of new func- latest-generation Trent 7000 engines, will deliver on that tionality. The first payloads in the development pipeline are goal. Rolls-Royce TotalCare is expected to offer optimisation NDT sensors for thickness, crack and coating testing.” to our maintenance costs through long term engine mainte- nance services. This deal symbolises the close bonds and re- Invert Robotics say that they have successfully demonstrated lationship between the UK and Lebanon and we are pleased the robot to leading airlines and received positive feedback. to be signing this historic deal here in London at the Lebanon They also mentioned that the feedback has identified even -UK Business Investment forum under the patronage of His more exciting potential applications for the robot. Invert Ro- Excellency Prime Minister Mr. Saad Hariri.” said Mr. El-Hout botics plans to deploy these new capabilities within the in- dustry in 2019. Pricing of the robots is on a case-by-case ba- “We are honoured to sign this contract with a valued, for- sis, depending on individual clients’ requirements. ward-thinking, customer that continues to develop the capa- bility of its fleet. It marks another milestone in a strong rela-

tionship we have built up together for more than 50 years, Star Air to commence flights soon and we look forward to supporting MEA operations to max- imise aircraft availability.” Said Mr. Davis Star Air is set to be the newest airline flying in the Indian skies. The airline plans to commence services on 25th January Rolls-Royce and MEA affiliation dates back more than 50 2019. At the launch of its operation, Star Air will be offering years, when the airline operated Dart-powered Viscount air- flights connecting Bengaluru & Hubbali. The flight from Ben- craft. MEA currently operates five Airbus A330 aircraft that galuru to Hubballi will depart at 7.35 am and arrive in Hub- are powered by Trent 700 engines, which will be progres- balli at 8.35 am. From Hubballi, the flight will depart at 11.45 sively replaced by latest aircraft. The 68-72,000lb thrust Trent 7000 delivers a step change in performance and eco- am and arrive in Bengaluru at 12.45 pm. The airline will also nomics compared to Trent 700. Benefitting from bypass ratio commence flight operations between Hubballi and Tirupati double that of its predecessor, Trent 7000 will improve spe- from 25th January 2018. From February 6 onwards, flights cific fuel consumption by 10% and will significantly reduce between Bengaluru and Belgaum will be started. noise. Vol 3 Issue 1 22 February 2019 AERO MRO DIGEST GI Aerospace develops Blockchain solu- digital certificate module that uses the widely accepted in- tion for tracking aircraft parts ternational X.509 public key infrastructure standards. GI Aer- ospace haven't reached out to any potential customers, as GI Aerospace, a San Francisco based aviation software and they are awaiting the release of their beta version. services company, is in the process of developing a block- chain solution for tracking aircraft parts, TARA. They plan to release an early-adopter version in the first quarter of 2019. Air India Express to phase out foreign pi- TARA will be a software platform for electronic record- lots keeping of full lifecycle data on aircraft and component as- sets, with a focus on continuing airworthiness and mainte- Air India Express, the low-cost arm of the national carrier, nance records. For data integrity, blockchain will be used will soon have a bench full of Indian Pilots. AI Express has along with digital signatures. begun phasing out the foreign crew and is expected to fly with an entire Indian crew. Air India has not hired any ex- pats/foreign pilots during the past three years. However, the AI Express has employed as many as 63 foreign captains/ pilots during the past three years, with 29 in 2016, 23 in 2017 and 11 in 2018. As per Civil Aviation Ministry data, AI Hadi Mohamed Shakir, CTO - GI Aerospace, said that they Express has a strength of 334 Indian pilots till 2018. Howev- are one of the first companies in the world to actively bring er, 16 Indian pilots were upgraded as pilots-in-command be- blockchain-based technology combined with standard proce- tween Jan-Sep'18. During this period, 11 foreign pilots were dural software that makes it real for the aviation industry. phased out. Acknowledging the hype around blockchain, Mr. Shakir men- A senior official, speaking to New Indian Express mentioned tioned TARA is a - real world implementation of an aircraft that AI Express plans to hold its flight services with a crew records platform and incremental innovation to bring further full of Indian pilots, from this year. “We have an in-house integration of blockchain for data integrity and security. mechanism to upgrade the Indian pilots to pilots-in- Tara will consist of digital signatures based on a public key command. At present, there are only less than 10 foreign infrastructure with cryptographic hardware tokens to associ- pilots who will be phased out this year itself. Recruiting and ate any action performed on a record with a specific person. managing foreign crew is a cumbersome process. Further, It will make use of an electronic workflow system to delegate the local crew are more economical and reliable in terms of documents and tasks to relevant business units. It will also emoluments. The rich pool of talent in the foreign crew will accept legacy records in digital format or digitized paper rec- always scout for big brand companies and relatively low- ords to ensure continuity of records. Additionally, TARA will profile foreign crew opt for low-cost airlines in the third- maintain records of structural repairs and damages in both world countries. While we have enough talent and more 3D and 2D models & it will also be able to perform analysis youths enrolling into the aviation field - backed by many fly- of both the data and of its own workflows, so processes can ing schools, there is no need to rely on foreign crew” he said be improved. Further, all Indian scheduled & non-scheduled airlines have been advised to regulate & develop their in-house strength, to lower the reliability on foreign pilots. The Ministry of Civil Aviation has requested all airlines to submit their phase out plan of foreign pilots periodically, although the government

Mr. Shakir expects Tara to be used by aircraft operators, MROs, Asset Managers, Lessors and regulators. He empha- sized the ease of integration, with multiple applications with an open web-based API. Digital signatures will be based on a Vol 3 Issue 1 23 February 2019 AERO MRO DIGEST has recently extended the use of foreign pilots by Indian car- within a 150km radius of Rajiv Gandhi International Airport riers up to 31st December 2020, in view of the shortage of (RGIA). Warangal is about 146kms from the RGIA. In the the type rated pilot-in-command/instructor/examiner in the meantime, work at other 2 airports, is expected to begin country. Although the phasing out of the foreign crew has soon. been an ongoing process for the past few years, the year 2018 saw a significant increase in the recruitment of foreign crew by the airlines in the country. New commercial aircraft delivery record for Airbus in 2018 SpiceJet & TruJet show interest in upcom- In year 2018, Airbus delivered 800 commercial aircraft to 93 ing airports of its customers. Airbus has met its full year delivery guid- ance and has set a new company record. Deliveries were 11 Presently under development, the Telangana state's plan to percent higher than the previous record of 718 units in 2017. develop 3 new greenfield airports, could soon see operation- Airbus has increased the number of annual aircraft deliver- al flights. The new airports are planned to be built at Waran- ies, for the 16th year in a row. gal, Nizamabad & Kothagudem. It is known that besides the talks with multiple stakeholders reaching at an advanced Variant 2017 2018 stage, the SpiceJet and Trujet have expressed interest in A220 - 20

launching operations at the state’s new facilities. A senior A320 377 240 official said, “Both SpiceJet and TruJet are on board. They A320 Neo 181 386 have conveyed their keenness to begin services to and from A330 67 49 these airports, once they become functional." A350 XWB 78 93 A380 15 12

In terms of sale, net orders received by Airbus in 2018 were 747, as compared to the 1109 net orders of 2017. By the end of 2018, the backlog of Airbus commercial aircraft reached a new industry record and stood at 7,577 aircraft, including The New airports will be developed and maintained by Air- 480 A220s, compared with 7,265 at the end of 2017. ports Authority of India, with an intention to provide connec- Guillaume Faury, President Airbus Commercial Aircraft said, tivity to and from Tier 2 and Tier 3 cities within Telangana. "Despite significant operational challenges, Airbus continued When asked to respond, Trujet said, “We are a Hyderabad its production ramp-up and delivered a record number of based airline operator. Whenever any new opportunity sur- aircraft in 2018. I salute our teams around the globe who faces in the two states, of Telangana & Andhra Pradesh, we worked until the end of the year to meet our commitments. I will be more than happy to be a part of it.” am equally pleased about the healthy order intake as it shows the underlying strength of the commercial aircraft market and the trust our customers are placing in us. My gratitude goes out to all of them for their ongoing support.” He added: “As we look to further increase our industrial effi- ciency, we will continue making the digitalisation of our busi- ness a key priority." The finer details of the project are presently under develop- ment. The state aviation officials estimate that the cost of each of this project would be approx. Rs. 150-200 crores. Hinting at the deliberations with GMR group, regarding the Warangal facility, a senior official mentioned, “There might be some variations after we start work.” A clause in the con- cessionaire agreement that GMR signed with the erstwhile Andhra Pradesh government – while developing the Sham- shabad facility – states that no new airport can come up

Vol 3 Issue 1 24 February 2019 AERO MRO DIGEST United Airlines lashes against Gulf carri- ers Headquartered in Chicago, Illinois, one of the major carriers of USA, expressed their displeasure at the 'heavily and ille- gally subsidised' Gulf carriers, due to the lack of direct con- nectivity between the India and America. It says that the In- dia-America traffic is being siphoned by the three major gulf carriers, Emirates, Etihad and Qatar Airways. US carriers have long complained that the state support to Gulf carriers, especially for the biggest cost item fuel supply, means deny- ing a level playing field to them. Express flight IX 715 (Boeing 737-800) flew to Abu Dhabi, which became the first commercial passenger aircraft to op- erate out of Kannur International Airport. Following this KIAL has piqued interest for potential air travel to GCC countries. Oman Air and Go Air have taken to planning, for connecting Kannur and Gulf countries by air, since the region of North , Mysore & Coorg witness a substantial number of ex- pats travelling to and from Gulf countries. Presently, United has a daily direct flight from its Newark, New York hub to Delhi and Mumbai each. They also plan to The international carriers are expected to get permission to start a seasonal nonstop from San Francisco, California to operate to Kannur in March of this year & Oman Air has Delhi in December 2019. Also, with 36 direct flights in a week offered to serve from KIAL, in near future too. A senior offi- connecting Delhi and Mumbai to New York JFK, EWR, Chica- cial from KIAL, talking to Financial Express, said, “From Feb- go, SFO and Washington, Air India is the only other carrier to ruary 1, Go Air will begin international services from Kannur. fly non-stop between India and America. Despite of the in- In fact, Go Air has brought four aircrafts to Kannur airport creasing demand for travel between India and US, AI and from Delhi, in prelude to commencing service to Doha and United together have only 50 direct flights a week as of now. Kuwait.”

Commenting on the United’s limited presence in India, Vice Current operations from Kannur include Air India Express President, Patrick Quayle said, "We are proud to be the only flying to Abu Dhabi, thrice a week. Indigo also to operate US carrier with service to India, a long history of continued domestic flights from KIAL, to Bengaluru Chennai Goa Hubli th service. There is a large demand for nonstop travel between & Hyderabad, from 25 January 2019. India and US. The challenge US and India carriers face is the KIAL, being the fourth international airport in Kerala, is Middle East carriers, three in particular (Emirates, Etihad and spread across 2300 acres, and is the second greenfield air- Qatar Airways) that are heavily subsidised and they get a ton port to be built on a public private partnership (PPP) of traffic for this route; hurting your airlines and hurting our platform in Kerala. The Kannur airport is expected to serve airlines. If there were stronger rules and regulations on more than one million passengers annually and authorities those middle east carriers, we would have service from estimate the number will increase five-fold by 2025. The many more hubs that just SFO and EWR to India. Due to the three international airports in Kerala reported the third larg- subsidised Middle East carriers, our services to India are re- est number of air passengers in India, in 2018. With the in- duced." crements in bookings from KIAL, by end of 2019, officials an- ticipate, the total air passengers from Kerala would cross 20

million. Go Air and Oman Air pitch for services between Gulf countries & Kannur Located in one of the Northern districts of Kerala state, the Kannur International Airport (KIAL) will soon begin its com- mercial operations. The first trial occurred on 20th Septem- ber 2018, with a Boeing 737-800 aircraft from Air India Ex- press. On 9th December 2018, the inaugural day, an Air India

Vol 3 Issue 1 25 February 2019 AERO MRO DIGEST New aircraft delivery record for Boeing the fastest-selling twin-aisle jet in history with 109 orders in 2018 or about 1,400 since the program launched. The Surpassing its record for 763 aircraft in 2017, Boeing deliv- Dreamliner program finished with 145 deliveries for the ered 69 737s in December 2018 & has set a new annual rec- year. ord of 806 aircraft deliveries. Even as Boeing delivered more jetliners, the company again grew its significant order book Boeing delivered various 777, 767 and 747-8 models, which with 893 net orders, with 203 airplane sales in December. accounted for a total of 806 aircraft, for the year. The 767 deliveries included transfer of 10 767-2C aircraft to Boeing Defense, Space & Security for the U.S. Air Force KC-46 tanker program. The 777 family continued its steady sales, receiving 51 net orders in 2018. These orders were driven by sales of the 777 Freighter to DHL Express, FedEx Express, ANA Cargo, Qatar Airways and other major freight operators. With De- cember sales, the 777-program exceeded 2,000 orders since its launch. Boeing achieved significant sales success by getting 893 net "Boeing raised the bar again in 2018 thanks to our team- orders, valued at 143.7 billion. Boeing showed particular mates' incredible focus on meeting customer commitments, strength in the twin-aisle category with 218 widebody orders and continuously improving quality and productivity. In a last year, despite of the growing order backlog for nearly dynamic year, our production discipline and our supplier every program. partners helped us build and deliver more airplanes than ever before to satisfy the strong demand for air travel across Ihssane Mounir, senior VP - Commercial Sales & Marketing the globe." said, Kevin McAllister, Boeing Commercial Air- said, "We are honored that customers around the world con- planes President & CEO. tinued to vote for the unmatched capabilities of Boeing's airplane and services portfolio. In addition to the ongoing In the mid of 2018, Boeing increased the production of the demand for the 737 MAX, we saw strong sales for every one popular 737, to 52 aircraft per month. From the 580 orders of our twin-aisle airplanes in a ringing endorsement of their of the 737, nearly half of the deliveries were from the more market-leading performance and efficiency. More broadly, fuel-efficient and longer-range Max family, including the first another year of healthy jet orders continue to support our Max 9 aircraft. The 737 Max family also achieved a major long-term forecast for robust global demand that will see the sales milestone in December, surpassing 5,000 net orders commercial airplane fleet double in 20 years." with 181 new sales during December. For the full year, the 737-program received 675 net orders, including sales to 13 A few highlights for Boeing include Hawaiian Airlines switch- new customers. ing from the Airbus A330 to the 787. Turkish Airlines became a new customer. American Airlines with 47 additional jets To support the high demand for the super-efficient jet, Boe- and United Airlines with 13 additional jets, were added to ing also continued to build the 787 Dreamliner at the highest the growing list of repeat Dreamliner purchases. production rate. The 787 Dreamliner extended its status as

Govt steps up to roll out in-flight mobile services On 4th January 2019, Indian govt has decided to establish an inter-ministerial panel to roll out in-flight and maritime mo- bile services within three months. It is understood that the inter-ministerial panel will meet every 15 days to examine & resolve issues, and expedite the process of approvals, till the configuration of - In flight and Maritime Connectivity (IFMC), gains momentum. According to information received from Livemint, the meeting was held with industry players - airlines, shipping

Vol 3 Issue 1 26 February 2019 AERO MRO DIGEST companies, telecom operators and government depart- Indian telecom licence holder. IFMC services can be provided ments. Representatives from the Directorate General of Civil using telecom networks on ground as well as through satel- Aviation, Directorate General of Shipping, Department of lites. Space as well as Department of Telecom were present at the

meeting. Companies like Air India, , Indigo, SpiceJet, Go Air, Jet Airways, AirAsia, BSNL, Reliance Jio, Bharti Airtel, Air India to be professionalized at all lev- els From Boardroom to Management, the government will pro- fessionalize Air India at all levels, with an aim to grow its op- erations and attract passenger traffic. The Civil Aviation Min- ister, Suresh Prabhu, announced the same, on 14th January 2018. “To make sure that Air India works properly, we have taken a number of measures like having a very good board of directors, with distinguished industry leaders as independent directors. For Air India to improve its market share, a num- ber of measures have been taken by the airline, which has resulted in growth in passengers during the last quarter” he said.

Hughes India, Tata Telenet, Inmarsat, Panasonic and Nokia also attended the meeting. "Based on the discussions, it was felt that the services will be rolled out within three months. SpiceJet said that they have made arrangement for the service in 10 aircraft. DGCA said it will expeditiously approve modifications in aircraft," as stat- ed by Livemint source. It is also learnt that the DGCA repre- sentative mentioned, that new aircraft are being received with in-built equipment to support in-flight mobile service; and approvals will be required for older aircraft as modifica- tions would be requisite. Also, Broadband technology firm Hughes India has warned that high satellite bandwidth charges may prove to be a hurdle. These implementations would make the facility costlier by 30-50 times, at Rs - 700 1,000 for a two-hour journey; and hence a strong challenge to will have to be faced in the implementation of the IFMC in As per a PTI report, the passenger revenue of Air India grew India. Mr. K Krishna, Chief Technology Officer at Hughes, also by 20%, owing to the improved aircraft utilization, during the mentioned that the broadband charges are 7-8 times higher, December quarter. Passenger revenue increased from ₹4615 as compared to other parts of the world, due to the condi- cr. in the third quarter of 2017-18 to ₹5538 cr. in the third tions under which bandwidth has to be procured from the quarter of 2018-19. Indian Space Research Organisation only. The Livemint source mentioned, “Government departments have taken Mr. Prabhu further said, “Air India has legacy issues as it had note of issues around bandwidth cost. Efforts are being accumulated debt due to policies of the past, which have made to lower bandwidth cost. Department of Space has affected its profitability. The airline’s interest costs run into assured industry players that it will allocate bandwidth in thousands of crores (of rupees). With the interest burden, frequencies that will be compatible with equipment and in- there is bound to be a problem with the airline. The aviation ternational standards.” ministry is working with finance ministry to sort out the debt issue.” Indian and foreign airlines as well as shipping companies which operate within the country can provide in-flight and maritime voice and data services in collaboration with a valid

Vol 3 Issue 1 27 February 2019 AERO MRO DIGEST Orvakal Airport inaugurated: Kurnool on airmap The Orvakal greenfield airport in Kurnool district of Andhra Pradesh was inaugurated on 8th January 2019, by AP Chief Minister N Chandrababu Naidu. Serving as a New Year gift to the people of Kurnool district, this airport was one of the 50 low-cost airports proposed to come up in 2013 during the UPA II regime. A small aircraft departed from Begumpet air- port in Hyderabad and landed at Orvakal airport successfully during a trial run on 31st December 2018. The airport, cate- gorised as 3C, shall be capable of handling turboprop aircraft craft, with 200 seats and above, valued at $100 billion. For such as ATR-72 and Bombardier Q 400, among others. the single-aisle aircraft, with 90 seats and above, the fore- cast speculates India may need 1940 aircraft, valued at $220 Post inauguration, while addressing the people gathered for billion. For the Regional Jets, with 90 seats and below, fore- the accassion, Mr. Naidu stated that world class aviation in- cast is for 10 aircraft, valued at less than $1 billion. frastructure will be createdin the state for reliable and seam- less air connectivity to regional, national and international "The Indian economy is projected to grow by nearly 350 per- destinations by 2022. "Rayalaseema region endowed with cent over the next two decades to become the third largest valuable minerals and other natural resources would be economy in the world. This will continue to drive the growth transformed as the most preferred destination for industries of India's middle class and its propensity to travel both do- and economic development with the new airport. I am confi- mestically and internationally, resulting in the need for more dent that the Orvakal greenfield airport will act as a lifeline new fuel-efficient short- and long-haul airplanes." said Mr. for Rayalaseema region by attracting global investors." Mr. Keskar. Naidu said. In 2018 alone, an average of more than 10 million passen- “Orvakal greenfield airport has been developed in a record gers traveled within India, each month. Boeing's Commercial span of just 18 months at a cost of Rs 88.5 crore in 1010 Market Outlook also mentions that India's commercial avia- acres. We have established the new airport at Orvakal with tion industry has achieved a double-digit growth for 51 con- our own funds to cherish the decade long dream of the peo- secutive months. ple of this district to have an airport here. Now, the people

of the district can travel to Amaravati and other parts of In- dia at ease,” Mr. Naidu added. Indian made Aircraft to decorate the

skies soon With an intention to boost the hon’ble Prime Minister’s vi- 2300 Boeing forecasts a demand for air- sion, Make-in-India, the government is preparing strategies

craft in India for manufacturing aircraft, domestically, and also for financ- Boeing has forecasted the long-term commercial aircraft de- ing and maintenance, within the country, as stated by Suresh mand, for the unprecedently growing domestic passenger Prabhu, Civil Aviation Minister. Mr. Prabhu was speaking at traffic and rapidly expanding low-cost carriers, in Indian avia- the Global Aviation Summit 2019, Mumbai, organized jointly tion. The forecast speculates that India will need 2,300 new by FICCI, Airports Authority of India and Civil Aviation Minis- jets – valued at $320 billion – over the next 20 years. Dinesh try. Keskar, Senior VP - Sales, Boeing Commercial Airplanes for Asia Pacific and India, said, "To meet this increased domestic air traffic growth, we see the vast majority of available air- plane seats coming from LCCs. The success of this market segment will mean more than 80% of all new airplane deliv- eries in India will be single-aisles. And the superior econom- ics and fuel efficiency of the new 737 MAX airplane will be the perfect choice for Indian carriers." The forecast says that India may require 350 widebody air- Vol 3 Issue 1 28 February 2019 AERO MRO DIGEST "We will soon roll out a road map for manufacturing of air- ways Pvt Ltd and Zexus Air Services Pvt Ltd. craft in India. We would like to join hands with top players Civil Aviation Ministry has approved 73 proposals of 11 oper- from across the globe" he said. Mr. Prabhu also emphasized ators. With an intention to connect unserved and under- on that the Maintenance, Repair and Overhaul (MRO) work served airports as well as make flying affordable, govern- to be done within the nation. Mr. Prabhu was of the opinion ment plans to connect a total of 89 airports, including 16 that if the MRO work is done outside the country, there will unserved and 17 underserved aerodromes, under the third be a loss of money as well as job opportunities. Government round of UDAN. Among all, 2 proposals for operating sea- urges the domestic entities to finance the aircraft manufac- planes have come from SpiceJet and Turbo Aviation, as stat- turing to meet the unparalleled double-digit growth seen by Indian aviation industry. Mr. Prabhu added stating, “We are ed by Civil Aviation Secretary, R N Choubey. losing out lot of resources to outsiders.” The inaugural ses- Six water aerodromes are planned to be connected under sion of the Global Aviation Summit primarily focused on the RCS, viz. Guwahati River Front and Umrangso Reservoir main theme of ‘Flying for all’, which envisions to make air (Assam), Nagarjuna Sagar (Telangana), Sabarmati River travel affordable for the citizen of every class in this country. Front, Shatrunjay Dam, and Statue of Unity (Gujarat). It is learnt from BusinessToday sources that seaplanes will be

operated on 18 routes. The Viability Gap Funding (VGF) re- UDAN Round 3: Seaplanes to fly on 18 quirements under the latest round are estimated to be routes around Rs 1,167 crore, as said by Mr. Choubey. The VGF is shared by the ministry and the states concerned. It is learnt The government of India, under its ambitious Regional Con- that there would be no exclusivity of operations and no air- nectivity Scheme, UDAN, has awarded 235 routes, which will port concessions granted for the tourism routes. The minis- connect 16 unserved airports and 6 water aerodromes. Civil try received 111 initial proposals and 17 counter proposals Aviation Minister, Suresh Prabhu, said that as many as 69.30 from 15 bidders covering more than 350 routes, for UDAN 3. lakh seats would be added on an annual basis across the 235 At present, flights are operating in around 155 UDAN routes. routes. More than 1 lakh seats would be through seaplanes. As per the ministry, 13 lakh seats were created in the first The 235 routes include 46 tourism routes or those that con- round of and and 29 lakh seats in the second round. nect tourist destinations. TOP MANAGEMENT APPOINTMENTS Civil Aviation Ministry also informed that SpiceJet, under

RCS, will fly international flights from Guwahati to Dhaka and Bangkok. Among the operators who bagged the routes are SpiceJet, IndiGo, Jet Airways, (an Air India subsid- iary), and Turbo Aviation. Besides, other operators who were awarded the routes are Andaman Airways Pvt Ltd, Aviation Connectivity and Infrastructure Developers Pvt Ltd, Ghoda- wat Enterprises Pvt Ltd, Heritage Aviation, Turbo Megha Air-

Name: Jean Kayanakis Designation: Senior Vice President, Worldwide Fal- con Customer Service & Service Center Network Organisation: Dassault Aviation Dassault Aviation announced, on 11th January 2019, the ap- pointment of Jean Kayanakis to a newly created position, Senior Vice President, Worldwide Falcon Customer Service & Service Center Network. The new role encompasses respon- sibility for customer service activities, Dassault’s service cen- ter network organizations, plus the Operational and Pilot Support Department.

Vol 3 Issue 1 29 February 2019 AERO MRO DIGEST Kayanakis graduated from the École Nationale Supérieure d'Ingénieurs de Constructions Aéronautiques (ENSICA) engi-

neering school in France. He started his career at the Das- sault design office more than 25 years ago working on the Rafale fighter prototype. Kayanakis led the development of a

heavy MRO facility at Bordeaux-Mérignac in Southwest France, to support the Dassault Falcon 7X and 8X business jet fleet. He also led the expansion of the DFS network with sat- ellite facilities in Nice, France; Rome, Italy; Moscow, Russia; and Lomé, Togo. He also recently directed a major renova- Name: Owen McClave tion of DFS’ FBO at Le Bourget Airport, rated in multiple sur- veys as the No. 1 FBO in the Paris region. He has held a varie- Designation: Senior Vice President Engine Services ty of positions within Dassault Aviation in customer service, Organisation: SR Technics logistics, purchasing, parts and maintenance services. Till recently, Mr. Kayanakis have been serving as General Man- SR Technics has appointed Owen McClave as Senior Vice st ager of Dassault Falcon Service. President Engine Services, effective as of 1 January 2019. He will succeed Roberto Furlan, who was appointed in July 2017 and has decided to step down. Mr. McClave will over- see engine solutions SR Technics, which covers a narrow-

body and widebody variants. Engines covered include over- haul services on the CFM56-5B, 5C and 7B models, along with services for Pratt & Whitney’s PW4000-94/100.

Mr. McClave is a senior level executive with over three dec- ades of experience from working with OEMs, independent MROs and leasing companies, etc. mainly on engine and

component business. He has worked for more than 12 years Name: Philippe Mhun with Pratt & Whitney, serving in various positions. He has also held the position of CEO with Lufthansa Technik Turbine Designation: Chief Programmes and Services Shannon. McClave was formerly managing director of Vector Officer for Airbus Commercial Aircraft Aerospace’s UK business for more than six years. Mr. Organisation: Airbus McClave has also worked as an independent consultant. He has also served as a member on numerous boards and as an Airbus SE has appointed Philippe Mhun, as Chief Pro- active member on several executive committees. Mr. grammes and Services Officer for Airbus Commercial Aircraft, McClave is a Fellow of the Chartered Institute of Manage- effective 01 January 2019. ment Accountants and holds a bachelor’s in science (Management) and master’s degrees from Trinity College, Mr. Mhun holds over 30+ years of aviation experience. In Dublin. 1986, he joined the now defunct French Airline, Union de Transports Aériens, in Engineering, where he was the head of Engineering, when he quit. Post UTA, Mr. Mhun joined Air France in 1993 and gained over 10 years of experience. Mr. Mhun joined Airbus in November 2004, as VP – Customer

Services (A380 Programme). He has fulfilled various posi- tions, like VP Programmes – Customer Service, SVP Procure- ment, SVP Customer Services, while with Airbus, before fi-

nally joining as the Chief Programmes and Services Officer. Throughout his entire career at Airbus, Philippe Mhun has Name: Anne Rigail focused on delivering the best services to customers, across CEO various programmes. He has also been supervising the Ser- Designation: vices by Airbus unit and affil-iated subsidiaries such as Satair Organisation: Air France and NAVBLUE. Air France-KLM, 12th December 2018, appointed Anne Rigail

Vol 3 Issue 1 30 February 2019 AERO MRO DIGEST as CEO of Air France. Ms. Rigail was previously the EVP - Cus- FORTHCOMING AVIATION EVENTS tomer Experience. She assumed her new role as CEO Air Event: MRO Middle East Summit & Expo France on 17th December 2018, replacing Benjamin Smith, who was appointed acting CEO of Air France through the end Date: February 10-12, 2019 of 2018. Location: Dubai, UAE Anne Rigail is a graduate of the Mines Paris Tech university,

where she completed her Engineering Diploma. She joined Air Inter in 1991. Ms. Rigail was appointed head of Air France Event: MRO Southeast Asia Customer Services at Paris-Orly in 1996. In 1996 She became Director of Passenger and Baggage Connections at the Paris- Date: March 6-7, 2019 Charles de Gaulle hub, and subsequently head of Customer Location: Kuala Lumpur, Malaysia and Baggage Products for Ground Operations. Ms. Rigail was appointed as head of the Paris-CDG Hub Operations Control Centre. She became VP Ground Operations at Paris-Charles Event: Nbaa Leadership Conference de Gaulle in 2009. In 2013 she became EVP In-flight Services, in charge of Cabin Crew and in 2017 was appointed EVP Cus- Date: February 12-14, 2019 tomer Experience, before being appointed as the CEO. I am Location: Austin, TX delighted that Anne Rigail is to become the new CEO of Air France. Anne is a strong professional in the airline industry. Throughout her career, she has always paid particular atten- Event: Saudi Airshow tion to employees while implementing the many projects and transformations she has led and placed the customer at Date: March 12-14, 2019 the heart of everything she does. With the support and com- mitment of every single employee, I am confident we can Location: Thumama Airport, Riyadh, Saudi Arabia rise to the challenges for Air France today, ensuring service excellence to all our customers. I have complete faith that Anne will succeed in transforming Air France. Together with Pieter Elbers, President and CEO of KLM, the Air France-KLM Group is taking an important step in its reorganisation to reconquer its market position."

References theweek.in airbus.com livemint.com dnaindia.com Reserve your ainonline.com mro-network.com advertisement businesstoday.in financialexpress.com space today newindianexpress.com arabianaerospace.aero thehindubusinessline.com boeing.mediaroom.com Email economictimes.indiatimes.com timesofindia.indiatimes.com [email protected]

Vol 3 Issue 1 31 February 2019