Belagavi Airport Positioned as Regional Maintenance Hub for North Karnataka & South Maharashtra
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In a move aimed at boosting investments in the aviation sector, the Indian government announced a groundbreaking policy for Maintenance, Repair, and Overhaul (MRO) services in 2021. This policy, which has garnered significant attention in the media, introduced several crucial changes to facilitate the growth of MRO operations across the country.
One of the key highlights of the updated policy is the provision for the allotment of land at Airports Authority of India (AAI) airports through open tenders, rather than predetermined rates. Moreover, the policy eliminated the imposition of any royalty or cess on MRO operators, providing them with a conducive business environment. In a significant move, the allotment of land to MRO service providers has been extended from the earlier three-to-five-year period to a more substantial duration of 30 years.
The positive developments did not end there. In March 2022, the government further reduced the Goods and Services Tax (GST) on MRO services from 18 percent to 5 percent. These measures collectively aim to attract investments and foster the growth of the MRO sector in India.
The latest report released by CRISIL Ratings sheds light on the potential impact of these policy changes. The report predicts a remarkable tripling of revenues for domestic MRO service providers in the aviation sector, projecting a rise from the current Rs 1,800 crore to an estimated Rs 5,500-6,000 crore by fiscal 2028. The anticipated growth can be attributed to multiple factors, including the expansion of airplane fleets, the implementation of favorable policies, and ongoing investments in airport infrastructure.
Among the numerous airports poised to benefit from these developments, Belagavi Airport in Karnataka has emerged as a prominent player in the MRO landscape. Belagavi Airport, strategically located in the heart of North Karnataka and South Maharashtra, is now being positioned as a regional maintenance hub catering to the needs of this geographically significant area.
The airport’s inclusion as an MRO facility is a testament to the region’s increasing prominence in the aviation sector. With plans to establish MRO facilities at Belagavi Airport, the local economy is expected to witness substantial growth, generating employment opportunities and boosting overall development.
Belagavi Airport will join the ranks of prestigious airports such as Delhi and Bengaluru, which have already set up dedicated MRO facilities to cater to select private airlines. The region’s growth potential is further underscored by the planned establishment of two MRO facilities near the upcoming Jewar airport in Uttar Pradesh. Additionally, ambitious plans are underway to develop MRO facilities at Bhopal in Madhya Pradesh and Tirupati in Andhra Pradesh.
CRISIL Ratings emphasizes that the demand for MRO services is strongly linked to the size of the aircraft fleet. Given the substantial orders placed by airline operators for the procurement of aircraft, the demand for MRO services is expected to receive a significant boost. The domestic fleet, currently consisting of approximately 700 units as of March 2023, is projected to exceed 1,000 units by 2027.
Belagavi Airport’s emergence as a regional maintenance hub serves as a beacon of progress for North Karnataka and South Maharashtra. As the MRO sector flourishes, the airport’s strategic location and state-of-the-art facilities position it to become a vital contributor to the region’s economic growth. The expansion of aircraft fleets, coupled with favorable policies and ongoing investments in airports, sets the stage for a prosperous future for Belagavi Airport as it takes on its new role as a regional maintenance hub.
What is MRO?
MRO stands for Maintenance, Repair, and Overhaul. It refers to the comprehensive services and activities carried out to ensure the safe operation and maintenance of aircraft and aviation equipment. MRO services encompass various tasks such as inspections, repairs, component replacements, and system upgrades to ensure that aircraft are in optimal working condition.
Advantages of MRO at IXG Belagavi Airport
The establishment of MRO services at Belagavi Airport brings several benefits to the airport and the region it serves:
- Economic Growth: The presence of MRO facilities at Belagavi Airport will stimulate economic growth in the region. It will attract investments, create job opportunities, and foster the development of ancillary industries and services, such as logistics, catering, and hospitality. The MRO sector generates a substantial amount of revenue, contributing to the local economy and improving the standard of living in the area.
- Employment Opportunities: The establishment of MRO facilities will lead to the creation of a significant number of job opportunities. Skilled technicians, engineers, support staff, and other professionals will be required to operate and maintain the MRO operations. This influx of employment opportunities will provide a boost to the local workforce and contribute to skill development.
- Enhanced Connectivity: With MRO services available at Belagavi Airport, airlines operating in the region will have easier access to maintenance and repair facilities. This convenience ensures faster turnaround times for aircraft, reducing downtime and optimizing operational efficiency. Improved connectivity and reliable MRO support will attract more airlines to operate from Belagavi Airport, leading to increased air traffic and passenger services.
- Cost Efficiency: Opting for domestic MRO services, as opposed to relying on international providers, is generally considered more cost-effective for airlines. Domestic MRO services can offer advantages in terms of reduced logistics costs, lower fuel expenses, and shorter turnaround times. By having MRO capabilities at Belagavi Airport, airlines operating in the region can benefit from these cost efficiencies, positively impacting their operational budgets.
- Technological Advancements: The establishment of MRO facilities at Belagavi Airport will contribute to the technological advancement of the aviation sector in the region. The presence of MRO services attracts investments from global technical companies, promoting the development of local capabilities in engine and component maintenance. This transfer of knowledge and expertise will enhance the technical competence and competitiveness of the region’s aviation industry.
According to the report, the total expenditure of Indian airlines on MRO services, both domestic and global, is projected to exceed Rs 25,000 crore by 2028, witnessing a significant increase from the levels of around Rs 14,000 crore in the previous fiscal year. The report highlights that choosing domestic MRO services is generally considered a cost-effective option in terms of fuel and logistics, resulting in time savings as well. It further notes that the penetration rate of the domestic MRO industry is expected to rise to 22-24 percent by fiscal 2028, compared to the current 12 percent.
This growth will be driven by the demand for less complex line maintenance services. Ankit Hakhu, Director at CRISIL Ratings, emphasized in a press statement that the engine and component maintenance segment, which is attracting investments from global technology companies to build local capabilities, is also expected to witness improved penetration.
With the government’s progressive policies and the steady growth of the aviation sector, the transformation of Belagavi Airport into a regional maintenance, hub is poised to make a significant impact on the economic landscape of North Karnataka and South Maharashtra.
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This article is written by a Team Member of Belagavi News and Inputs from CRISIL Report and a PTI Release. If using our article, please ensure due credit is given to the Author.