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