PUSHED BY DGCA, PRATT PLANS $250-MN MRO UNIT IN INDIA

Under pressure from DGCA and Indigo, US company to put its house in order

On February 1, a Qatar Airways freighter jet landed at the Delhi Airport from Atlanta, US. Nothing unusual there, except that the jumbo jet was ferrying 10 engines specially chartered by US engine maker Pratt and Whitney for its largest client, Indigo.

“Yes, we don’t normally hear engine makers chartering special aircraft to ferry engines. But this is an extraordinary situation and Indigo is probably the most valuable client for Pratt. The engine maker had promised a certain number of engines to Indigo by January. They had to keep the commitment,” said an airline executive. Indigo is the largest customer for Airbus’ popular A320neo jets for which Pratt supplies engines.

That’s not all. Indian aviation regulator Directorate General of Civil Aviation’s strict approach and IndiGo’s pressure have forced Pratt to set up a maintenance and repair unit in India at an initial investment of around $200 million, the first in the South Asian region.

The unit, which is being set up in

Mumbai in partnership with stateowned carrier Air India’s engineering unit, will in the first phase replace turbine blades of the faulty engines and in future evolve into a fullfledged maintenance, repair and overhaul (MRO) unit. An MRO in Mumbai will drastically reduce the time taken for replacing faulty turbines and ease the pain for Indigo and Goair, which has to fly out to Singapore for changing engines.

“We are in advanced talks with Pratt for the engine shop. Their team has visited our facility a number of times. We will soon finalise a contract and approach for regulatory approval,” an Air India executive confirmed.

India ranks way down the pecking order in global aviation. It’s the Federal Aviation Administration of US or the European Union Aviation Safety Agency that call the shots. Recently, internal emails released by aerospace major Boeing showed company executives used terms such as “fools” and “stupid” for the DGCA, reflecting its attitude towards the regulator.

However, developments over the past two months and conversations with industry executives over the past six months reflect a carrot-and-stick model very successfully deployed by DGCA officials to pressure Pratt. In addition, threats of aircraft order cancellation by Indigo, whose growth plans were held up by the regulator till engines were changed, forced Pratt to expedite the process of turbine change.

The geared turbofan engine, a step change in efficiency of turbines for commercial aircraft, which helps save fuel, faced several issues — design flaws grounding planes, delaying deliveries and leading to millions of dollars in compensation claims.

According to analysts’ estimates, Indigo received more than ~100 crore as compensation in a single quarter in financial year 2017-18.

The cause of the problem has since been detected. Pratt, in order to improve fuel efficiency, had used a titanium-based alloy to bring down the engine’s weight. But this proved fragile and led to fracture in the turbine blades, causing the shutdowns. Though the company has been using a sturdier nickel-based alloy for the new engines since August, a large number of engines fitted in Indigo and Goair aircraft had the old design.

Repeated cases of in-flight shutdown of aircraft kept happening forcing a public debate on whether DGCA was allowing Indigo and Goair to fly faulty aircraft, risking passenger lives.

Last October, there were four incidents on consecutive days where four aircraft had to return midway because of mid-air engine shutdown. “This was alarming. While executives from P&W, Indigo and Goair kept stressing that they were working on the faults, we thought enough was enough,” said a senior DGCA official.

DGCA Chief Arun Kumar served a show-cause notice to the top managements of P&W and Indigo. In a heated meeting on November 1, DGCA asked Pratt how long it would require to replace all the faulty engines. “Not before the end of 2020,” Chris Calio, then president of commercial engines at Pratt, said. There are around 130 engines to be replaced and it can’t be done in a hurry, Calio argued.

Kumar wasn’t satisfied, but not much could have been done as Airbus and Pratt were European and US companies and according to global aviation norms, any safety circular had to be passed by regulators there and adapted by DGCA. DGCA decided to push the engine maker by pressuring Indigo. What followed was a carrot-and-stick model.

A few days later, Kumar passed a directive asking Indigo to replace all faulty turbines in two months or the airline would not be allowed to add new aircraft. “The directive was unprecedented. While FAA & EASA, the gold standards of aviation safety had not passed any directive, DGCA was telling us to replace 130 engines in two months. That was simply not possible,” said an Indigo executive. This was the stick.

Indigo, one of the fastest growing airlines in the world, panicked. In a cut-throat market like India, restriction on capacity addition mean immediate loss of market share.

Sources aware of the development said Indigo promoter Rahul Bhatia and Kiran Rao, former Airbus India chief who leads aircraft acquisition negotiations for Indigo, held meetings with Airbus and Pratt bosses. “Indigo is in the process of choosing engine for their 300 aircraft order. It threatened P&W saying it will not even be considered for the deal if a quick mitigation wasn’t in place,” said a source.

That worked. Afraid of losing its largest customer, Pratt focused on India, ferrying engines meant for airlines in other parts of the world. “We have accelerated retrofitting the older design blade out of the fleet. It will happen mostly in India in the first half of the year, following that in rest of the world,” Gregory Hayes, CEO of Pratt, recently said, confirming the special India focus.

Following that, DGCA relaxed its earlier guideline and extended the deadline of replacement to May 31. This was the carrot.

Sources said Pratt has dedicated two assembly lines at its Georgia plant for Indian customers. “Indigo has replaced around 60 per cent of the engines involved to meet the directive,” CEO Rono Dutta told analysts recently.

FAA and EASA have followed up with directives similar to the one issued by DGCA. “Vietnam, which also has a large A320neo fleet, has reached out to us for guidance. For the first time, in aviation, global regulators are following India,” said a DGCA official.