Fast 5: Air Works Buoyant About India's Recovering Aftermarket
COVID-19 threatened to slow down India's aftermarket ambitions but domestic MROs are seeing a long-term route to recovery. Anand Baskar, CEO of Air Works, talks about where it is seeing repair opportunities and how the industry can benefit from Indian government support strategies.
The last year has been a very difficult one for the aviation industry. How has Air Works had to adjust its operation?
Much like our global counterparts, Air Works and in fact, the entire aviation sector in India, faced severe pressures due to COVID. The early months were especially difficult given the unpredictability of the pandemic. Business ground to a halt, almost overnight. The pickup began after nearly six months post the lifting of the lockdown. At Air Works, we responded by creating a COVID action team comprising key management stakeholders, who set about guiding the company’s response to the pandemic, while ensuring business continuity. Two key decisions were undertaken. First, to ensure the safety and wellbeing of our employees countrywide at all our 27 locations and two, taking steps to immediately digitize aspects of our business that were oriented towards ensuring operational and customer support. For employees, we activated several measures such as work from home, rostering, providing safety and PPE kits, as well as regularly sanitizing facilities and equipment. We also asked people to work on need basis, until the situation became better. In fact, some of the above measures continue to be enforced to ensure zero compromise for staff health. Our IT team also created mandatory, remote survey applications to track the health and safety of our employees and of their families, on a daily basis. All of these measures found a strong internal resonance with our people.
How do you see your commercial MRO work recovering, given the perilous situation experienced by airlines in India and throughout the surrounding region?
In India, the recovery has been relatively fast-tracked in comparison to our regional counterparts, given a robust domestic market and demand, especially because international flights to and from the country continue. The phased increase in fleet capacity has enabled airlines to rotate their assets and continue flying them as well as undertake periodic maintenance. We’ve also benefited from this gradual improvement, helping us recover our overall business to almost three-quarters of the pre-COVID levels on the back of a strong and diversified business mix that includes business aircraft, avionics as well as defense MRO projects. However, liquidity across the entire aviation business continues to remain tight, impacting cash flows and related investments.
Are there specific areas of repair you are exploring or looking to grow in?
India is a growing aviation and MRO market. Prior to COVID, it was the world’s third largest domestic aviation market and we are confident that we will soon see a resurgence. Most of the MRO capabilities in the country have historically been airframe driven. However, a growing market presents several possibilities in multiple areas such as components, landing gear, as well as engines for future growth. We are keen to tap these opportunities, especially the ones presented by end of lease, cabin appearance and interiors, as well as continuing to offer engineering solutions for entire aircraft needs.
Air Works services cargo operators in addition to passenger airlines. How has demand spiked from cargo customers and will this lead to new capabilities and certifications for that segment?
Cargo has received a fresh focus from all key aviation players given that it was the only sustainable flying operation despite the pandemic ban. While passenger demand plummeted, demand for cargo went through the roof, strengthening rates as well as the perception of it being a much safer business proposition. From Air Works’ perspective, the move towards cargo-related modifications appears more as a limited, incremental shift to balance its newfound potential, rather than a tectonic shift in the market strategy of operators. We therefore intend to continue our focus on pre-defined growth strategy, until we sense it otherwise. In terms of maintenance services, we continue to offer line maintenance and base maintenance services to airlines as well as cargo operators as part of our scheduled business offerings.
Looking forward, India’s government is very proactively trying to grow the country as an MRO destination. How do you see India growing as an MRO hub?
The steps being taken by the government have indeed been long overdue from the MRO ecosystem perspective. With a scheduled commercial airline order book close to $50 billion, even today, almost 85% of the MRO spend by Indian aviation goes abroad, when there is little reason for it since significant capabilities to address the same exist locally and only need harnessing. Given a global situation of rising trade barriers, instability, currency volatility and governance, it is important not just for India but perhaps for every nation to evaluate and arrive at a balance between internal capabilities and external ones. Moreover, India’s strategic geographic location, technically oriented knowledge base, and young population position it at the right point and as an ideal bridge between the Middle East and Fast East, reinforcing the country’s ambition of becoming a global MRO hub. The changes undertaken by the government are correcting the inverted tax structure and certain other policies. They are the first set of measures in a series of steps that have improved the business case for Indian airlines, operators and MROs to promote aviation maintenance within India. The seriousness of this intent can be gauged by the fact that most of the measures which the aviation sector has undertaken happened while the pandemic was at its worst. We’ve seen officials devoting hours, even sometimes during weekends, to engage with the industry. There is an increasing focus to leverage offsets, undertake technology transfers and invest in the country via partnerships while opening access to the market for OEMs. Ultimately, this will support the development and growth of the Indian economy in a fair and positive atmosphere of collaboration and cooperation.