Podcast: Is India Geared Up To Meet Future Fleet And MRO Growth?

Listen in as James Pozzi, Swaati Ketkar and Dan Williams discuss the latest developments in India’s fleet and aftermarket as the country continues to develop as an aviation power.

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Transcript

James Pozzi:                 Welcome to Aviation Week's MRO Podcast. I'm James Pozzi, MRO Editor for the EMEA Regions, and today we are going to be doing an update on India's MRO sector. We previously covered this on the MRO Podcast in January of last year, but given the size of the country and the potential growth in its aftermarket and its projected fleet growth over the next decade, we thought now was a good time to look again at the country and developments there over the past year or so, because there's plenty to discuss from that time period. So joining me today are Swaati Ketkar, who is Aviation Week's India correspondent for all things MRO. Swaati, welcome back to the podcast.

Swaati Ketkar:               Hello, James. Thank you.

James Pozzi:                 And Dan Williams, who is Director of Fleet Data Services for Aviation Week Network. Dan, welcome back.

Daniel Williams:            Oh, thanks for having me again.

James Pozzi:                 Excellent. Okay, so let's get started then. I think Dan perhaps could maybe set the scene for us, of course. The India fleet, those of us in aviation are all very aware of the projections and how it's going to grow. Of course, there was some huge orders a couple of years ago with Boeing and Airbus aircraft, and there's been more since. Domestic airlines, I read a stat the other day that will continue to add a new aircraft every month for the next decade. So that kind of gives an illustration, I guess, of where that's heading, but what's some of the numbers related to India's fleet growth that you can pick out from the latest Aviation Week forecast and some of the numbers there?

Daniel Williams:            Brilliant. Yeah, and thanks for the opportunity, and yeah, India, it's really interesting because India's long been classed as like a sleeping giant, so much so that about a half dozen years ago, maybe even a little further back in terms of our forecast, we broke India out into its own region just like we do China because there's been so much pent-up potential for India for so long that we broke it out. The problem is it's been exactly that. It's been pent-up potential. It hasn't yet materialized, until it started to. So we are now seeing these green shoots, and James, you mentioned the big orders. If you look back recently, there was over a thousand orders in 2023. 2024 foot came off the gas a little bit; there's nearly 150 orders. However, when you look at a fleet today, which is a smidge under 800 aircraft when you're ordering nearly 13, 1400 aircraft over a two-year period, that's huge growth. And we see that growth continuing.

                                   Our latest forecast showcases that by the end of the coming decade, by the end of 2034, they'll have over two and a half thousand aircraft in service. Bearing in mind, as I just mentioned today, the fleet's a little under 800 aircraft, so we're going to see nearly 1900 deliveries and actually not a huge number of retirements because we're getting such vast swathes of deliveries that's keeping the fleet, the average age of the fleet, quite young. So on an MRO podcast, there's a double-edged sword to this. It's great that the fleet's growing. It's great that there's an opportunity to invest time, efforts, facilities, workforce in India. However, they're not necessarily going to need that to be up and running right now. Obviously, MRO has a slight delay. So we see this market as a growing region. Again, vast swathes of certainly narrow-body orders, and also, as it stands today, it'd be remiss of me not to talk about the issues that are also going on.

                                   For example, with the Pratt & Whitney GTF issues, there's about 80 aircraft as it stands today that are on the ground courtesy of the GTF issues. So when that's about 10% of the overall fleet, when it's just a little under 800 aircraft, that's having an impact. Even the fleet that India has today is still held back a little bit, courtesy of those well-documented reliability issues. Durability issues, I should correct myself; it's not reliability; it's durability issues on the GTF. So there's still those to come back into fleet. And we've talked about it on these podcasts many times, how long that's going to be; turnaround times on those engines is around 300 days, give or take. However, again, we think we have peaked; now we're just in this plateau period before we start making strides forward. So again, there's so much potential coming in the market.

                                   We show big growth, nearly 12% CAGR over the coming decade just in the fleet alone. Now, when it comes to the MRO jumping around a little bit here, the MRO doesn't grow at quite the same rate. It grows at about just under 11% CAGR, but again, that goes back to the fact that it's quite a young fleet, and young fleets don't initially need quite as much MRO, so there's still plenty of money in there. Our 2025 forecasts suggest there's going to be about $57 billion worth of MRO that relates to Indian operators within the coming decade and over 11,000 MRO events. So again, there's so much potential once the Indian operators get those aircraft delivered and get them in country and start using them.

James Pozzi:                 Sure, yeah, very interesting, Dan, looking at the fleet and the MRO and the growth there, but also some of the factors that will impact that for better or worse over the next decade. Bringing in Swaati. So you recently wrote a story for us looking at how India's MRO revenues are set to double, of course, in the next year, but the article stated that 90% of the MRO sector revenue is driven by just three providers. And that's Air India Engineering Services, GMR Aero Technic, and AirWorks. Let's start with Air India, actually, Swaati; some very interesting times going on there, of course. I know the airline was privatized, I think, in 2021, and it outlined plans for its own in-house MRO to compete against AI engineering, which, of course, was its former maintenance and engineering arm. Could you give us an update on how this is progressing and how having two separate MRO entities forming out of Air India, I guess, impacts the aftermarket landscape in India?

Swaati Ketkar:               See, Air India has indeed started developing its own in-house maintenance capabilities, and recently it also got credited as the first airline in India to get its DGC approval for line maintenance on wide-body A350s. Then Air India is again coming up with its own MRO facility at Bengaluru, which is again expected to start... Towards the start of the next commercial, I think by 2026, the first quarter of 2026, if I'm not wrong. But then I don't feel that this strategy of Air India to build its own in-house maintenance capabilities is to compete against AISM because even today, if you see, a huge chunk of Air India's fleet is maintained across various AISM facilities in India. As we progress further from here, like we just heard Dan speak about the rate of deliveries, Air India will take deliveries of newer and more advanced aircraft as time comes, and this demand for MRO will automatically keep rising further.

                                   Competition in any sector, wherever you go, is always when the demand is less and suppliers are more; here the situation is completely reversed. Here is a huge incoming demand, and comparatively, there are too few MROs in India to handle this incoming MRO demand. Hence, what I feel is Air India's strategy of developing its own in-house MRO capabilities is to build its own strong MRO foundation and keep itself prepared for the incoming MRO demand. On the other hand, if you see AISL too in its own way, it's developing its own maintenance capabilities. AISL Trivandrum recently got a visit from YASA officials, and I guess it'll soon get YASA approval. It's expected to come in the next couple of months, so even if there are two different MRO entities in India, I feel it is not good enough for the MRO demand that is going to come in the country.

                                   India will still need many more private MRO players, and it needs to be complemented with the airline's in-house maintenance capabilities. So that you know what Indians... The Indian MRO sector calls itself that we are on the path of becoming a truly self-reliant MRO sector, but I feel we are still very far away from there because looking at the demand, looking at the fleet that is going to come in, and looking at... See, even if the new aircraft will not require maintenance to that extent, line and airframe, the base maintenance are still going to be needed, and for that we will still need a lot more MRO players in the country is what I see feel.

James Pozzi:                 Very interesting. Still a lack of MRO players there and a lack of capability, as you said. I think on my travels over the last few years, engine MRO is something that comes up a lot, and the volume of that that's being outsourced overseas still to places like the Middle East and other parts of Asia. How have we seen progress? There's been so much talk about the expected wave of non-Indian partners entering the Indian market, perhaps going to partnerships or joint ventures to establish an MRO presence in India. To me that seems like it's been quite sluggish, hasn't really got moving, barring maybe one or two exceptions. I'm thinking like AAR and, of course, the Safran LEAP facility that's coming online. But how would you say from the ground in India? How is that progressing in terms of non-Indian partners entering the market?

Swaati Ketkar:               I won't call it sluggish, to be very honest, because see, every day I keep hearing of some new overseas MRO partnering with one of the Indian entities. Just a half an hour back, I got an update saying Aequs is partnering with Magellan on another aerospace component facility in India, so every time there's something new coming up, approximately a year back I heard that Israel Aerospace Industries is again in talks with a couple of Indian companies, including Hindustan Aeronautics, to establish P2F, passenger to freighter conversion facility. Then apart from that, they're also looking at the huge gap in the engine MRO segment, and they are also considering and planning an engine MRO in India. But so far I have not heard or I've not got any more information on this. I'll keep you posted as soon as I get any updates from Israel Aerospace.

                                   Apart from that, we have Lufthansa. Lufthansa Technik has partnered with GMR very recently for their engine wash solutions in the entire Asia Pacific region, so now GMR Aero Technic will be taking care of Lufthansa plants to perform their engine core wash services on commercial aircraft. Then again, we have this Dassault Aviation. It has come up with, in fact, its own subsidiary called Dassault Aviation MRO India, DAMROI. And it has its office in New Delhi, and it's more likely inclined towards defense MRO, but it will balance itself out in civil and defense both, is what I feel. Then Thales, we should not forget, is establishing its own dedicated avionics MRO this year. In India's large-scale aviation sector growth and the transformation that's going on, it was expected to come out in the first quarter of 2025. I guess it got a slight delay, and maybe in the next month or a couple of months down the line, we'll see the Thales MRO coming up.

                                   Then we have also seen Air India how it's roped in SI Engineering Company to build a Bengaluru MRO. If we tilt slightly towards the defense side, Lockheed Martin has partnered with Tata Advanced Systems, and they have agreed to set up an MRO to support the Indian Air Force C-130J Super Hercules fleet. Then again, like I mentioned, Aequs has partnered with Magellan Aerospace to establish engine MRO in Karnataka, and we have the Safran LEAP MRO coming up. So we see a lot of foreign names, overseas names, which are partnering with the local Indian MROs to establish their own facilities in India. And I feel yes, there is a huge inflow of overseas companies, which is investing in the Indian MRO sector, and personally, my opinion is going ahead, this number is going to rise manyfold, be it a joint venture, be it an independent MRO establishing their own office, or be it in partnership with the airlines. I think there is a huge scope for overseas MROs to partner in India and invest in India.

James Pozzi:                 Yeah, and certainly there's a lot of ambition to do so, and it seems like a lot of companies have it on their radar, as they've mentioned, and there was a bit of a, I used the word sluggish before, perhaps that wasn't the right term, but people were definitely talking about maybe waiting and seeing about how things will develop. But yeah, it's certainly on everyone's radar, seemingly. Very interesting how it's going to develop. Just about the capability side, and I'll throw this out to both of you: where do you see the need for, I guess, capability growth on the MRO side? Is it in engines or components, where it kind of needs to really develop to, I guess, service this demand that you've both spoken of during this podcast?

Daniel Williams:            Maybe I'll have a first stab at that one. Look, the narrow-body sector, so airframe, heavy maintenance, narrow-body aircraft, and everything that is associated with it. James, you mentioned before, engine shops. Engine shops today are full. Without the boom or potential boom of almost tripling, more than tripling the Indian-operated fleet. So we have long-standing issues with engine shock capacity right now, and you can't... It's all very well and good, building facilities to do that. That's one problem. Then you need to bring on the workforce and train them up. That's problem number two. And then you need to get established supply chains and flows there as well. Now, India has a long heritage of wanting to build their own aircraft. We see also on the military side they're going to take over the CASA 295s. I know I shouldn't stray into military territory too much. However, I'm an AV geek.

                                   I like this kind of thing. So they have a long-standing heritage of it, so they would like to continue to retain some of that. So any form of MRO definitely pertains to the narrow-body sector particularly, and Swaati is exactly right. Even with all the plans that are coming, there probably isn't enough MRO capability and capacity to deal with what the fleet is, we expect to look like in a decade. Yes, it's great bringing on all these extra MROs, but the Indian operators will still have to seek outside help either through partnerships or through sending their aircraft or engines away for MRO.

                                   There's a long journey, but at least things are starting soon. But James, you said it rightly; I think you did use the word sluggish, but it's not necessarily sluggish. It's a reluctance. Let's face it, India has had its ups and downs. We saw GoAir come and go. We've got IndiGo that are struggling with their NEOs courtesy of the GTF engine issue, so it is not plain sailing. So I think there's a little bit of hesitancy; however, we can't delay it too long because the MRO is going to creep up very quickly, especially when you need to get all the facilities and the people in place.

James Pozzi:                 Yeah. And you mentioned workforce, obviously, Dan, that's just an interesting one. Maybe a separate topic for another podcast, because, of course, India has a huge population of over a billion people, says that...

Swaati Ketkar:               James, what I feel is-

James Pozzi:                 Sorry.

Swaati Ketkar:               -In spite of having this huge population and in spite of people telling that there is a huge scope in India. I see a lot of aviation maintenance institutes coming up in India these days, but the basic ground-level question that MROs ask is, "The students coming out of these institutes? Are they trained enough to do the job on ground, on field? Or do they have to be very vigorously trained with these MROs?"

                                   They have to invest in them for maybe another two or three years for them to completely take over the job at hand. But there is a change happening in this field also because GMR has come up with its own institute now, and India has come up with its own institute to train engineers now. So things are slowly changing. MROs are coming up with their own educational institutes. Now, what they will do is, the batches that will come out of these institutes, the new batches, the fresh batches, GMR is planning to absorb them in their own MROs because there's a huge demand and they're already facing a workforce crunch. Again, Air India, it's the same story. Whatever engineers and technicians will come out of their educational institutes. Air India is planning to absorb them all. So even though we see a workforce crunch, the picture is changing, not at the pace which we expected, but yeah, very slowly it is changing.

Daniel Williams:            Just to add on to what Swaati said, that is exactly right. The issue that these companies will have longer term is those engineers being poached by other MRO providers in other parts of the world. We see it quite often where they get well-trained, and all of a sudden, somebody, a big European MRO, comes along and says, "Hey, we'll offer you $10 an hour more," or something like that. And that makes it difficult to retain people for long. It's great training people; that's exactly what we need to do. It's then when we get those people, that workforce, on site within the MROs; it's keeping them there. That's the next tricky bit, but that's a problem for a few years after, but there's always workforce issues, but other parts of the world fix their workforce issues by trying to poach people from elsewhere on the globe. This is the cyclical nature of our global industry.

James Pozzi:                 And certainly you've seen that in places related to Indian tensions in places like the Middle East, UAE, Singapore obviously, and Asia Pacific.

Swaati Ketkar:               It's already happening.

James Pozzi:                 Yeah.

Swaati Ketkar:               It's already happening. A lot of technicians, engineers here, they work in one company for a few years, and then they move abroad, obviously because of more lucrative and better deals. But I think this problem is not just India. It is everywhere, like Dan mentioned; everyone is going to face this challenge, and I don't see any solution to this insight, to be honest.

James Pozzi:                 Well, we'll see how it plays out in India in years to come. There's certainly a lot we discussed today, and I'm sure we could do another update in around a year's time, and there'll be loads of developing issues there that relate to the fleets, MRO. I'm sure there'll be more people setting up in India, and of course, there may be a new spin on the workforce topic, but we do know regardless of the year or the time, it will remain a challenge, no doubt. But yeah, there's obviously new elements to that every year that we seem to see.

                                   So like I said, we'll be back in 2026, no doubt, and be doing this again, but we've come to the end today, unfortunately. So Swaati and Dan, thank you very much for joining us today and giving us some really interesting insights to the MRO Podcast. Well, don't miss the next episode by subscribing to the MRO Podcast wherever you listen to your podcasts. And one last request: if you're listening in Apple Podcasts and want to support this podcast, please leave us a star rating or write a review. Thank you.