Helicopter Summit – “Enhancing Connectivity through Helicopters”
Development of MRO in India
Constraints and Issues
7th September , 2019
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
1. Introduction.
2. Global Aviation Scenario - Passenger Air Travel & Cargo Services.
3. Raising Cost.
4. Global MRO Scenario.
5. Status of Indian Aviation.
6. Issues that Create Headwind for Indian Aviation & MRO - Needs
Immediate Attention.
7. Conclusion.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Aviation Industry experiencing unparalleled growth.
Expansion in the global population able to afford air travel.
Rising incomes and consumer spending .
Passenger travel grows to record levels and fuelling the highest fleet growth since
2008.
Next decade, air travel demand is anticipated to be robust.
Growth in Revenue Passenger Kilometres (RPK) exceeds the annual expansion
of Gross Domestic Product (GDP) in most economies – high growth areas like
China and India.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
YEAR RPK AND GDP ANNUAL GROWTH RATE PROJECTIONS
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
One out of every 20 Civil Aircraft that are delivered globally are
for India.
India is the fastest growing aviation market for close to three
years now.
Third largest domestic market and inching towards taking over
Japan in the overall size of the market.
US and China, are still ahead of India, and it is expected that
India would catch up by 2030.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Global MRO Indian MRO Domestic MRO Helicopter Helicopters MRO /
Done MRO/Indian MRO Domestic MRO Done
2019 $82 billion $ 2 billion/ 2.4% $ 0.7 billion/30% $ 75 million/(3.75%) $ 75 million/10.7%
$ 1.2 billion (30%) $ 150 million (3.75%) $ 150 million/12.50%
2029 $116 billion $ 4 billion/3.4%
$ 2 billion (50%) $ 600 million (15%) $ 600 million (30%)
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
2019–2029 :: GLOBAL FLEET CHARACTERISTICS
2019 2024 2029
33,295
FLEET SIZE 27,492 39,175
5-YEAR
N/A 3.9% 3.3%
CAGR
AVERAGE
11.3 10.9 10.7
AGE
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
GLOBAL FLEET FORECAST BY AIRCRAFT CLASS, 2019–2029
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Boeing and Airbus historically maintaining high monthly production.
Committed to producing 50-60 per month in 2019.
Committed to producing 60-75 per month in 2020.
Late deliveries of fuselage components and engines have caused OEM
production delays.
Delays prompted carriers to defer formal retirements.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Cargo
Cargo volume growing, due to double-digit expansion of e-
commerce.
Air cargo demand as measured by freight tonne kilometres (FTK)
saw an estimated 3.8% increase in 2018.
Cargo capacity saw an estimated 4.4%.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
GLOBAL AIRLINE INDUSTRY FINANCIAL PERFORMANCE SPOT PRICES OF CRUDE OIL AND JET FUEL PER GALLON
GLOBAL PASSENGER LOAD FACTOR VERSUS RETURN ON INVESTED CAPITAL
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Labour costs also have been on the rise.
Upward pressure on wages is expected with the need for more
pilots and trained aviation maintenance technicians.
Labour and fuel are the industry’s two largest operating expenses.
Aviation industry will need 635,000 new commercial pilots by 2037.
Presently, there are 550,000 full-time commercial pilots of which
large numbers Old Guards (born between 1946 and 1964) and
majority are expected to retire within the next 10 years.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Aviation maintenance Engineers (AMEs) are older than workers in
other industries, such as technology, retail, and healthcare.
Challenge of being an AME is to service older aircraft built before
2000 as well as newer planes with more sophisticated technology.
Operating expenses are putting pressure on airline profitability.
World GDP growth rate is expected to remain at 3.7 % for 2019.
China and India, while still growing at more than 6%, may also see
slow economic growth over the next two years.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
TOTAL MRO SPEND BY AIRCRAFT VINTAGE, 2019–2029 TOTAL MRO SPEND BY REGION, 2019 VERSUS 2029
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
MRO MARKET FORECAST BY AIRCRAFT CLASS, 2019–2029
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Global MRO Indian MRO Domestic MRO Helicopter Helicopters MRO /
Done MRO/Indian MRO Domestic MRO Done
2019 $82 billion $ 2 billion/ 2.4% $ 0.7 billion/30% $ 75 million/(3.75%) $ 75 million/10.7%
$ 1.2 billion (30%) $ 150 million (3.75%) $ 150 million/12.50%
2029 $116 billion $ 4 billion/3.4%
$ 2 billion (50%) $ 600 million (15%) $ 600 million (30%)
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Opportunities for the growth of MRO Industry - India
• New Civil Aviation Policy - 2016 has enumerated several progressive steps for
MROs viz:
• VAT reduction in persuasion with State Govts.
• No airport royalties and charges for five years and further rationalization.
• Declaring MRO as a Separate Category.
• Duty free storage of imported spare parts.
• Exemption of customs duty on aircraft tools, tool-kits and testing equipment etc.
• Allowed import of unserviceable parts for maintenance.
• Relaxed rules for foreign aircraft maintenance in India.
• Easing out several irritant customs and regulatory provisions.
• NCAP Policy would give strong positive push to performance and expansion of
MRO establishments.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
1. Higher duties of approximately 12-15% on spare parts.
2. Rents charged by Airports to MRO providers are 50-100% higher than the facilities in Europe
and Turkey.
3. High GST of 18%.
Policy interventions to propel MRO as per 2019-2020 Union Budget
1. Providing a level playing field through suitable tax related interventions
2. Rationalising royalty payments for MROs at Airports
3. Strategic push for setting up engine shops in India
4. Creating a bonded warehouse or depository of spare parts for timely availability
to suit best turnaround times.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Issues that Create Headwinds for Indian Aviation
Tax on Aviation Turbine Fuel.
Limited runway capacity.
Costs of new airport capacity are unrestrained.
Restructuring of regulatory bodies.
Legal procedures where contract enforcement is challenging.
Sustainability and Success of UDAN Scheme.
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
FACTORS AFFECTING AVIATION INDUSTRY & MRO
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Pawanhans.co.in
Let the Transformation
Begin
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
N o . o f A irc ra fts
1800
Aircrafts and Helicopters 1619
1600
1400
1200
989
Human
1000
850 resource
800
functional
560
600
430
496 break-up of
350 370 390
400
243
305
220 240 258 280 272 240
MRO: 12
198
200 employees
0
2005 2007 2009 2011 2013 2015 2018 2025 2035
per aircraft
MRO Market Size Annual India Abroad Helicopters
Current (2018-19) Rs.5000 Cr Rs. 500 Cr (10%) Rs 4,500 Cr (90%) Rs. 525 Cr.
Year 2025 Rs. 13,950 Cr Rs. 8,370 Cr (60%) Rs. 5,580 Cr (40%) Rs. 1100 Cr.
Year 2035 Rs 20,900 Cr Rs. 15,693 Cr (75%) Rs. 5,225 Cr (25%) Rs. 2000 Cr.
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INTERNATIONALLY WELL LOCATED & DOMESTICALLY WELL CONNECTED LOCATION
Within 5 Hours flying time
Within 2 Hours flying time
Abu Dhabi Muscat Penang
Dammam Riyadh Phuket
Kathmandu Male
Doha Sharjah Singapore
Dubai Bangkok Mauritius
Colombo Dhaka
Kuwait Kuala Lumpur
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
FLEET AND MRO FORECAST SUMMARY
MIDDLE ASIA LATIN NORTH EASTERN WESTERN
EAST PACIFIC AMERICA AMERICA EUROPE EUROPE
REGION AFRICA CHINA INDIA WORLD
2019 FLEET
NARROWBODY 460 564 2,152 2,819 460 1,085 4,208 896 3,294 15,938
WIDEBODY 179 781 1,383 414 67 177 1,277 153 1,057 5,488
REGIONAL JET 159 66 220 143 4 273 1,905 241 466 3,477
TURBOPROP 327 29 655 - 73 236 643 124 502 2,589
TOTAL 1,125 1,440 4,410 3,376 604 1,771 8,033 1,414 5,319 27,492
2029 FLEET
NARROWBODY 749 906 3,803 6,146 1,177 1,582 5,493 1,169 4,752 25,777
WIDEBODY 340 1,278 1,817 780 149 364 1,694 240 1,383 8,045
REGIONAL JET 73 47 415 261 13 277 1,624 252 365 3,327
TURBOPROP 163 46 594 22 208 164 436 82 311 2,026
TOTAL 1,325 2,277 6,629 7,209 1,547 2,387 9,247 1,743 6,811 39,175
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
FLEET AND MRO FORECAST SUMMARY
MIDDLE ASIA LATIN NORTH EASTERN WESTERN
EAST PACIFIC AMERICA AMERICA EUROPE EUROPE
REGION AFRICA CHINA INDIA WORLD
2019–2024 1.5% 5.0% 4.9% 9.6% 12.1% 2.7% 1.3% 2.6% 2.7% 3.9%
2024–2029 1.8% 4.4% 3.4% 6.2% 7.7% 3.4% 1.6% 1.7% 2.3% 3.3%
2019–2029 1.6% 4.7% 4.2% 7.9% 9.9% 3.0% 1.4% 2.1% 2.5% 3.6%
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
FLEET AND MRO FORECAST SUMMARY
MIDDLE ASIA LATIN NORTH EASTERN WESTERN
EAST PACIFIC AMERICA AMERICA EUROPE EUROPE
REGION AFRICA CHINA INDIA WORLD
2019 MRO (US$ BILLIONS)
AIRFRAME $0.9 $1.5 $3.7 $2.2 $0.7 $1.1 $5.2 $1.3 $4.6 $21.1
ENGINE $0.9 $5.6 $7.1 $2.2 $0.7 $1.5 $7.8 $1.6 $6.0 $33.4
COMPONENT $0.4 $0.9 $2.2 $1.3 $0.3 $0.8 $4.1 $0.7 $2.9 $13.8
LINE $0.3 $1.0 $2.3 $1.5 $0.3 $0.7 $3.4 $0.7 $3.4 $13.7
TOTAL $2.6 $9.0 $15.3 $7.2 $2.0 $4.1 $20.5 $4.3 $16.9 $81.9
2029 MRO (US$ BILLIONS)
AIRFRAME $0.8 $2.1 $4.7 $4.2 $0.9 $1.2 $5.2 $1.2 $4.7 $25.0
ENGINE $1.3 $8.0 $8.5 $7.3 $1.6 $2.3 $10.3 $2.0 $8.7 $50.0
COMPONENT $0.7 $1.5 $3.6 $3.6 $0.9 $1.2 $4.7 $1.1 $3.7 $21.0
LINE $0.5 $1.5 $3.4 $3.3 $0.7 $1.0 $4.2 $0.9 $4.4 $20.0
TOTAL $3.4 $13.1 $20.3 $18.3 $4.0 $5.6 $24.5 $5.2 $21.5 $116.0
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
FLEET AND MRO FORECAST SUMMARY
MIDDLE ASIA LATIN NORTH EASTERN WESTERN
EAST PACIFIC AMERICA AMERICA EUROPE EUROPE
REGION AFRICA CHINA INDIA WORLD
MRO GROWTH RATES
2019–2024 1.4% 3.8% 3.6% 11.0% 6.0% 3.1% 1.1% 2.1% 2.4% 3.4%
2024–2029 4.1% 3.9% 2.1% 8.5% 8.2% 3.3% 2.5% 1.9% 2.5% 3.7%
2019–2029 2.7% 3.9% 2.9% 9.7% 7.1% 3.2% 1.8% 2.0% 2.5% 3.5%
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
Modification South Africa
Africa
Airframe 6% Middle East 5% 4%
15% 7%
North America
31%
Line MRO
17% Segment Engines
Europe
26%
Region
40%
Components
Asia Pacific
22% 27%
Modification Engines Components Africa North America Asia Pacific Europe Middle East South Africa
Line Airframe
MRO Market Forecast – Rotary Wing
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
GLOBAL FLEET FORECAST BY AIRCRAFT USAGE, 2019–2029
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Helicopter Summit – “Enhancing Connectivity through Helicopters”
GROWTH OF MRO SPEND, 2019–2029
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Aviation Industry One of the fastest
CAGR
growing industry in
FY14 FY18
Scheduled aircrafts
India
395 496 8%
in operation
Favourable Dynamics
Total Passenger traffic –
Domestic and International (Cr.)
10.4 15.9 15% 1) India’s strong GDP growth 7.1% in 2017
2) Rising per capita income in India: Rs. 1.0
Non-scheduled aircrafts in lakh (FY17) vs. Rs.0.6 lakh (FY10)
361 406 4%
operation
3) Travel & Tourism is a Rs. 9.4 lakh
No. of aircraft hours flown
14.2 19.4 11%
crore strong industry
(lakh hrs.)
4) Strong policy support: NCAP
No of helicopters in operation 280 240 -14% 5) Rs. 77k Crore worth
investments made in the airport sector
from FY2012-17;
No of helicopter hours flown
0.89 0.72 -18%
(in lakhs hours) 6) Developed 1st Integrated Heliport at Delhi
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