Air India’s Maintenance, Repair and Overhaul (MRO) arm, Air India Engineering Services Limited (AIESL), has signed a pan-India contract for maintenance of SpiceJet’s aircraft.
AIESL will also approach Vistara to maintain its latest aircraft additions, said Air India officials.
However, AIESL will be “cautious” before taking on long-term contracts as parent Air India is headed for disinvestment for which the Centre is planning to invite bids. Air India's net loss in 2018-19 was around ₹8,556 crore.
An AIESL official said the company is profitable and has been winning contracts from various airlines. It already has contracts for servicing planes of GoAir and and a few foreign airlines.
“90 per cent of our revenues comes from Air India and the rest from other airlines. We have also been winning contracts from airlines of the Middle-East.
“We had the contract for SpiceJet in Thiruvananthapuram, but now we have got the contract to service their aircraft pan-India for the majority of Boeing 737s. Vistara is also getting 737s. We are approaching Vistara for the contract,” the official said. The MRO-service provider has stations in Mumbai, Delhi, Nagpur, Kolkata, Hyderabad and Thiruvananthapuram.
The official said that thanks to its cutting edge technology and infrastructure, AIESL also has contracts to service defence aircraft and helicopters.
High tax woes
The official said because of higher GST and taxation, airlines do not prefer signing contracts with MROs in India and this is making it difficult for even AIESL to compete globally.
He explained, “Our profit margins are skewed because the companies would not pay that much, creating an issue for us to compete with other countries.”