Air Works to soar as Modi tax breaks fire up plane care mar­ket

New Straits Times - - Business -

NEW DELHI: Prime Min­is­ter Naren­dra Modi’s tax re­forms will en­cour­age more lo­cal air­lines to ser­vice their air­craft within the coun­try, a 45 bil­lion ru­pees (RM3 bil­lion) yearly busi­ness that cur­rently goes to Sri Lanka and South­east Asia.

Sim­pler rules for do­ing busi­ness and scrap­ping of im­port du­ties on equip­ment and ma­chine parts were ben­e­fit­ing com­pa­nies that main­tain, repair and over­haul (MRO) planes, said Air Works In­dia En­gi­neer­ing Pvt man­ag­ing direc­tor Vivek Gour.

Air Works ser­vices Air­bus SE and Boe­ing Co sin­gle-aisle jets at an air­port near the south­ern city of Bengaluru.

Air Works, which is aim­ing for an ini­tial pub­lic of­fer­ing in three years, is among com­pa­nies that could ben­e­fit from a surge in air travel in In­dia, an avi­a­tion mar­ket poised to be­come the world’s third largest by 2025.

IndiGo, SpiceJet and other car­ri­ers have or­dered more than US$90 bil­lion (RM386 bil­lion) of air­craft from Air­bus and Boe­ing in the past decade, which raises the po­ten­tial of ser­vic­ing about 1,000 air­craft in the next 10 years.

In­dian car­ri­ers usu­ally carry out main­te­nance work at fa­cil­i­ties in Sri Lanka, Sin­ga­pore and Malaysia.

With the new pol­icy un­veiled by Modi last year, some of that busi­ness could be lured back to In­dia, ben­e­fit­ing firms like Air Works, said Gour.

The lat­est rules also al­low for­eign car­ri­ers to park their air­craft in In­dia for as long as six months for rou­tine up­keep and re­pairs with­out prior gov­ern­ment ap­provals.

That had opened up Air Works’ po­ten­tial mar­ket to air­lines from coun­tries such as Oman, Mal­dives and Myan­mar, said Gour.

“Over the last two years, the gov­ern­ment has made cer­tain im­prove­ments. MRO work in In­dia has be­come cheaper for an air­line.”

Air Works aimed to have rev­enue of 10 bil­lion ru­pees in three years, a 67 per cent jump from its sales in the year ended March, said Gour.

Two United States-based pri­vate eq­uity firms — New En­ter­prise As­so­ciates Inc and GTI Cap­i­tal Group — to­gether own about 55 per cent of Air Works. Gour holds about six per cent. Bloomberg

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