Air India has finally found better use for its ₹600-crore maintenance, repair and overhaul (MRO) facility at the Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN).

The national air carrier has entered into an agreement with SpiceJet for maintaining the latter's’ aircraft. Both the companies have signed an MoU under which Air India will provide support to SpiceJet for the maintenance of the latter’s B737 aircraft and landing gear replacement at the Nagpur facility.

The MoU was signed by Air India Engineering Services CEO HR Jagannath and SpiceJet Vice-President (Engineering and Maintenance) Arun Kashyap.

Revenue source

A senior engineer at Air India said on condition of anonymity that the MRO is currently under-utilised, and that the tie-up with SpiceJet will provide some revenue to Air India.

In the mid-2000s, when Air India had placed an order for 68 aircraft with Boeing, it had committed to setting up an MRO in India for servicing the aircraft.

Boeing had built the facility for Air India and it was operational by 2015.

Kashyap told BusinessLine that the MRO has been newly built with the latest infrastructure and is therefore better equipped to handle SpiceJet’s aircraft — carrying out the airframe checks that every aircraft needs to undergo every 24 to 36 months.

Engine overhaul will not be carried out at MIHAN, he added.

Both the companies will work on each other’s strengths, Kashyap added. Since Air India has better experience in terms of maintenance, major checks will happen at Nagpur. SpiceJet does not require full facility, so about two bays will be used for aircraft maintenance.

Supply of spares

SpiceJet’s aircraft are currently maintained in Hyderabad and Hosur, but Air India will be able to supply the spares at Nagpur in a better manner, he said.

On the issue of viability of taking aircraft to Nagpur, Kashyap said that since the city has a functional airport, it can be worked out such that the aircraft fly with a passenger load.

Cost factor

SpiceJet is working on the costs required for using the facility. Under the new aviation policy, MRO services do not have to pay VAT and service tax, which would be advantageous to SpiceJet, he said.

MIHAN is being developed for the past 11 years by the State government through Maharashtra Airport Development Company Ltd (MADC), a special purpose vehicle.

The main MIHAN site, spread over 4,000 hectares, is located about 15 km away from downtown Nagpur.

The airport, MRO, SEZ and other manufacturing areas are closely located. It was originally envisaged as a Multi-modal International Cargo Hub for servicing global cargo companies and their aircraft.

Union Shipping Minister Nitin Gadkari had provided a major push to the project.

Under the new aviation policy, MRO services do not have to pay VAT and service tax, which would be advantageous to SpiceJet, said SpiceJet Vice-President (Engineering and Maintenance) Arun Kashyap.

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