By Jitender Bhargava
Most legacy carriers established over five decades ago, besides owning and operating aircraft, have created large facilities for aircraft maintenance since standalone aircraft maintenance companies were virtually non-existent in the days when Air India was established nearly 75 years ago.
Almost everything associated with flying operations had to be done in-house. It was in this context that J R D Tata, who pioneered Air India, had laid emphasis on setting up the engineering base of the airline at Santa Cruz, Mumbai. These facilities have expanded geographically over the years as Air India expanded its fleet, began operating direct international flights from cities other than Mumbai so that aircraft after operating flights did not have to come to Mumbai for maintenance or periodic checks. The merger of Air India and Indian Airlines in 2007 led to the combining of engineering set ups of the two airlines into a monolith engineering organisation.
These engineering bases at major airports viz Mumbai, Delhi, Hyderabad, Kolkata, Thiruvananthapuram and Nagpur are equipped to provide all kinds of engineering services. With about 9000 skilled aircraft maintenance engineers and technicians on the roll, AI Engineering Services Limited, as it is now called, after it was made a subsidiary of erstwhile government owned Air India, has the distinction of being India’s biggest DGCA approved MRO set up in India.
The website of AI Engineering Services Limited (AIESL) proudly proclaims: “With a great skill set, huge professional experience and competency, AIESL manages and maintains Airbus, Boeing and ATR fleet with the Technical Dispatch Reliability of more than 99%. With major hangars and bases located at all the major metros, AIESL is maintaining a fleet comprising Airbus A320 family aircrafts, Boeing aircrafts – B737, B747, B777, B787, and ATR-72.”
The aircraft mentioned are those in Air India’s fleet because AIESL has largely confined its services to its parent company, Air India. Instances of it providing services to other airlines on a sustained basis have been few and the revenue earned from such services has been minuscule. But now that Air India has been disinvested, is under a new owner, and the business of maintaining aircraft owned by Tata-owned Air India may not necessarily come to AIESL as a matter of right, it has to look at Air India afresh and beyond for its future. It is also pertinent to mention that domestic airlines have generally preferred to send their aircraft abroad for major maintenance rather than look at AIESL in their own backyard.
Aiming To Be World Class
How will AIESL infrastructure be put to effective use now is quite literally a million dollar question?
The facilities of AIESL include hangers, line and base maintenance, engine overhaul, avionics accessories shops and components shops, structural repairs, cabin and seat repair facility, landing gear, engineering support service and various specialised services. AIESL has all that is needed to have a world class engineering services establishment. However, like its earlier parent airline, Air India, it has also been a victim of government ownership – low productivity work culture and poor efficiency standards when benchmarked against its peers besides uninspiring leadership.
With no committed business likely to come its way because Air India under Tata’s will not only insist on best commercial terms and quicker turnaround of aircraft while giving maintenance contracts, AIESL, will sooner or later, have to be disinvested by the government – and rightly so. Having successfully gone through the Air India disinvestment, the government will perhaps not need any prodding or convincing that the future of AIESL lies in disinvestment. However, it must take a different course. Unlike Air India which was disinvested virtually on an ‘as is where is basis’, the government, instead of making the disinvestment exercise of AIESL appear as a desperate one, must undertake a value enhancement plan to harness its full potential.
Considering the array of services AIESL is capable of providing in a country which is set to become the third largest aviation market after US and China and all private airlines set to expand fleet in the coming years, AIESL must look at entering into joint ventures with established global aircraft and engine manufacturers besides ensuring that it also gets to maintain aircraft of international and domestic airlines. Currently it is servicing CFM engines of other airlines but not on the scale that it can.
New Thinking, New Thrust
The business potential is indeed huge; just waiting to be exploited. It is imperative that the government initiates the restructuring exercise to give it a futuristic outlook in right earnest without further delay. Time is of the essence in today’s competitive environment. In the first phase, it should follow the Satyam pattern for restructuring. For those unfamiliar with the Satyam model, what the government did after Satyam – one of the top software companies – was embroiled in a huge financial scandal was to place at the helm a management team comprising of eminent people from varying backgrounds, but with impeccable management expertise, to bring the company back on track, add value and then disinvest. The old Satyam is what we now know as Tech Mahindra.
Likewise, AIESL should be handed over to professionals; people, who have managed engineering giants like L&T to run it for a while to reorient and reengineer work practices, enhance productivity, create a brand and through aggressive marketing get global business.
Once AIESL is reckoned as an internationally renowned Maintenance, Repair and Overhaul (MRO) company, known for excellence after this innovative effort, it will not only generate interest in established global players to seek a stake in the company but also help government monetise its engineering asset in a financially rewarding way.
AIESL is currently a sleeping giant, to be woken up through an entirely new vision for it! It is not just AIESL seeking a change in government policies on taxation to reduce maintenance costs but the entire MRO industry.
About The Author
Jitender Bhargava, former executive director, Air India & author of The Descent of Air India.