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‘India’s MRO not equipped to deal with growing fleet’

The findings of the survey acquire significance as Etihad Airways picks up equity in Jet Airways.

Written by ENS Economic Bureau | New Delhi | Published: September 9, 2013 3:31:15 am

The growth of Indian airports as air traffic hubs would largely depend on the terms of agreement arrived at between foreign airlines and Indian carriers,says a survey conducted by Ficci in association with Ernst & Young (E&Y).

As high as 90 per cent of those surveyed say the government has a critical role in ensuring Indian airlines have a level playing field in bilateral arrangements so that unduly large share of air traffic is not taken away by foreign carriers.

The findings of the survey acquire significance as Etihad Airways picks up equity in Jet Airways. The stake sale announcement came close on the heels of India trebling seat capacity between the two countries to 50,000 seats per annum,leading many to believe that huge enhancement in bilateral rights would allow Etihad Airways to wean away traffic from Indian airlines.

Also over 72 per cent of those surveyed said that though India is strategically located,the domestic MRO (maintenance,repair and overhaul) industry is not equipped to deal with growing diverse fleet of airlines and non-scheduled operators. There are added limitations arising from shortage of institutions which can produce skilled technical manpower required to handle MRO operations.

Further,though labour expenses are cheaper in India by almost a third,high customs duties,VAT and service tax make aircraft servicing 40-50 per cent more expensive in India as compared to Singapore,Dubai and Colombo.

While 59 per cent of the respondents feel that recent policy initiatives such as allowing direct import of ATF,abolition of the Aircraft Acquisition Committee,permitting flexi use of military and civil airspace and development of airports in tier-II and tier-III cities to boost regional connectivity are ‘positive measures’,implementation of these programmes would be key for growth of the sector.

However,57 per cent said that high taxation,lack of access to finance,shortage of trained manpower,rise in fuel costs,infrastructural bottlenecks,high operating costs are major deterrents in growth of the aviation industry.

The pace of development of low-cost airports is taking place at a slow pace due to delays in the land acquisition process and in securing environmental clearances. This adds to project costs and affects ‘financial viability’,says 49 per cent of respondents.

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