The AAR Corp.-Indamer Aviation joint-venture (JV) airframe maintenance facility opening in India this year is in talks with two potential long-term customers and hopes to have an announcement "soon," AAR President John Holmes said.
Speaking to analysts during AAR's fiscal year 2018 first-quarter earnings call March 20, Holmes said both customers are Indian operators that currently send their airframe work abroad. "They're interested in bringing that work back in the country to bring jobs to India," he said.
Holmes said that, if all goes as planned, the facility will begin work on its first aircraft later this year.
The JV, announced last month, lays the groundwork for a large narrowbody MRO operation in Nagpur. Phase one will see a facility capable of handling up to six narrowbody maintenance lines. The second phase, which would be developed based on demand, would roughly double capacity. The operation also will have aircraft-painting facilities and component repair shops. Land for both phases has been "secured," Holmes said.
AAR's move to establish a major presence in India has significant long-term upside. The country's transport-category MRO demand is expected to grow at 7.7% annually over the next decade, Aviation Week's Fleet and MRO forecast projects—more than three times the global rate. The demand is being driven by a fleet growing at 9.9% annually, from fewer than 900 this year to more than 2,000 in 2027.
A dearth of established in-country MRO facilities means there is plenty of market-share to grab. In addition, recent moves by the government to help level the playing field for Indian MRO providers—such as reducing import duties on spare parts and tooling that must be brought in—is creating a more business-friendly environment.
Access to a new airframe MRO facility—and, more importantly, its customers—also provides AAR with opportunities to grow its supply chain and logistics services.
The Nagpur shop will open with India Directorate General of Civil Aviation approval, and executives are pursuing FAA and EASA repair station approvals with an eye on importing MRO work to India. The first technicians are being trained by AAR in the U.S. Some of the initial staff will come from Indamer, an India-based MRO provider that specializes in general and business aviation.