India Aviation MRO Market Porter’s Five Forces, India Aviation MRO Market Future Growth- Ken Research

The Potential of India Aviation MRO Market?

The Indian MRO Market is in its growth stage. Due to lack of proper MRO facilities and high taxes on MRO services in India, ~% of the Indian MRO work is outsourced to countries such as Singapore, Dubai, UAE, Sri Lanka and others. There are 8 major players in the Indian MRO Market including, AIESL, Air Works, Indamer Private Limited, Deccan Charter and Max MRO and others. Presently, the market is concentrated with more than ~% of market share captured by these 8 players. The major factors which drive the growth in the Indian MRO Market are increase in air passenger’s traffic, increase in fleet size, government investments, and new policy implementations, expansion of MRO facilities, investments and entry of low cost carriers.
Indian MRO Market has grown from USD ~ million in 2012 to USD ~ million in 2017. This growth was driven mainly by growth in the aviation industry in India which was valued at USD ~ billion in FY’2016. The air passenger traffic of scheduled airlines grew from ~ million in 2013 to ~ million in 2017. This increase along with growth in airline fleet sizes has increased demand for MRO services. There has been a recent development of airports and airstrips in India along with huge investments from the government to boost the Aviation Industry. Such investments are likely to have a positive impact on the demand for MRO services in India.
What is the need for MRo in India Aviation market?
Increase in fleet size: A rapid increase in the fleet size in India puts a lot of pressure on the MRO sector to be properly developed in order to cater to the growing demand.
Increase in Air Passenger: Increase in the air passengers puts pressure on the Air Line companies to further increase their fleet size and increase the number of air trips of each airplane. This increases the need for Air Operators to get their aircrafts serviced and maintained more frequently.
Entry of Low Cost Carriers: A large number of low cost carriers have entered the Indian Aviation market. Due to their entry, the existing airline companies are forced to compete with their prices. This has forced the existing airline companies to cut costs by getting MRO services domestically as abroad trips are expensive and the aircraft has to be out of operation for longer time. This increases the need for MRO facilities in India to cater to the increasing demand.
Outsourced MRO: ~% of the MRO work for Indian Airlines is done outside India. This is very costly for Air operators and involves high turnaround time. Airline companies get MRO services from abroad due to lack of MRO facilities in India. This increases the need to develop MRO in India because of the huge demand and low supply. Moreover, Air Operators are driven abroad due to the availability of globally certified standard of quality. Indian MROs have also started attaining global certifications for their services which is attracting many Air Operators and putting pressure on MROs to expand and make their services available all across India.
What is India’s Current Position in Global MRO Market?
The number of aircrafts in the global Aviation Industry has increased manifold over the review period. The 2 biggest aircraft manufacturers, ~ and ~ have reported that they expect ~ aircrafts to be manufactured per month in 2019 up from ~ aircrafts per month in 2015. Worldwide fleet size is expected to reach ~ in 2028 from ~ in 2018. Such a rapid surge in the number of aircrafts has raised the demand for MRO services globally. There has been an increase in the GDP of both developed and developing countries. In addition, there has been an increase in the disposable income and middle class families. Air travel rises in tandem with GDP and disposable income. As the disposable income increase, the number of air passengers is expected to rise simultaneously.
The revenue generated globally from MRO services has increased from USD ~ Billion to USD ~ Billion in 2017 registering a CAGR of ~%. The top 5 MROs in the world are ST Aerospace (Singapore), HAECO Group (Hong Kong), AAR (USA), AFI KLM E&M (China), Lufthansa Technik (Germany) and GAMECO (China).
What is the Competitive Landscape in the market?
India aviation MRO market is concentrated with major ~ players constituting more than ~% share in FY’18.
Market Entry: Indian Aviation MRO market has few players operating in the country. The services offered by the existing MROs are very limited as they lack world class infrastructure and technology. Due to the absence of MRO companies ~% of the MRO work is outsourced to Singapore, Sri Lanka, UAE, Europe and others. Only ~% of the MRO work is done in India. Due to this, MRO is an untapped market in India.
High Cost of Setup: Establishing an MRO facility involves huge initial cost. The whole infrastructure, machines and equipment used for MRO are very expensive. MRO facility also has very high operating cost as the facility needs to be upgraded constantly to increase the hangar size or improve the infrastructure to provide better and higher quality services. Due to such high initial and operating cost many players are not able to enter the market.
Competition Parameters: The major parameters on the basis of which Indian MROs compete are regional presence, types of maintenance service (Line or Base), and types of overhaul, facility size (number of hangars), turnaround time for aircrafts, approvals from global regulators and OEMs and others.
Latest Trends: MROs have started opening up of their facilities in SEZs because of the incentives provided by the government. Another new trend in the Indian MRO market is that the companies have started forming alliances with foreign MROs.
What is the value chain in the India Aviation MRO market?
OEMs: Original equipment manufacturer are of 3 types; Aircraft OEMs, Component OEMs and other Hardware OEMs. Major Aircraft OEMs are Airbus, Boeing and Embraer. The OEMs issue a TBO (Time between Overhaul) which specifics the time limit for each part and component separately. OEMs specify various checks to be performed on the aircraft namely, A, B, C, and D Checks. The interval of each check is determined by number of flying hours or the age of the aircraft. Keeping all factors in mind, OEMs issue TBO for all components and parts.
Air Line Companies: Air Line companies like Air India, Indigo, Spicejet, Air Asia, Vistara and others have to get their aircrafts serviced periodically as mentioned by the OEMs. A, B, C and D checks have to performed as mentioned by the OEMs. Moreover, Engine and Component Overhaul also have to be performed periodically as mentioned in the TBO.
MRO Companies: MRO companies are the final service provider of maintenance and repair work. MRO services include line maintenance, heavy maintenance, engine overhaul and component overhaul. MRO companies provide some services at the airports such as line maintenance services which include A & B Checks, AOG support and other regular services. MRO companies also have their own facilities where they provide Heavy maintenance, Engine Overhaul and Component Overhaul. The Air Operators have to fly their aircrafts to the MRO facility to avail full aircraft overhaul. For engine and component overhaul they send the specific part that needs to be serviced or repaired.
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