MRO Market - India July 2009

Executive Summary SAMPLE Market Drivers & Challenges Government policies & initiatives Competition Airlines maintenance, repair and overhaul (MRO) market valued at USD X mn in 2008; Expected to reach USD Y bn by 2010 India is emerging as the global MRO hub due to its low-cost and favorable geographical location Domestic carriers source MRO services from service providers in Singapore and Europe Only line maintenance and some other basic checks are done in India Drivers: Growth in air traffic Manpower cost arbitrage Increasing fleet size Government Initiatives Challenges: High tax regime and regulatory limitations Shortage of land and skilled manpower Defense Procurement Procedure 2008 provides opportunities for public-private partnerships 100% FDI is allowed for greenfield MRO projects through automatic route Imported spare parts attract high customs duty State-level initiatives by various state governments to encourage investors to set up MRO centers MRO market is in a nascent stage at present, but it is fast emerging as a competitive segment Major domestic players include ABC, XYZ and UV Ltd Foreign players like AA, BB and CC are some companies which have shown interested in setting up MRO centres in India

Airlines maintenance, repair and overhaul (MRO) market valued at USD X mn in 2008; Expected to reach USD Y bn by 2010

India is emerging as the global MRO hub due to its low-cost and favorable geographical location

Domestic carriers source MRO services from service providers in Singapore and Europe

Only line maintenance and some other basic checks are done in India

Drivers:

Growth in air traffic

Manpower cost arbitrage

Increasing fleet size

Government Initiatives

Challenges:

High tax regime and regulatory limitations

Shortage of land and skilled manpower

Defense Procurement Procedure 2008 provides opportunities for public-private partnerships

100% FDI is allowed for greenfield MRO projects through automatic route

Imported spare parts attract high customs duty

State-level initiatives by various state governments to encourage investors to set up MRO centers

MRO market is in a nascent stage at present, but it is fast emerging as a competitive segment

Major domestic players include ABC, XYZ and UV Ltd

Foreign players like AA, BB and CC are some companies which have shown interested in setting up MRO centres in India

Market Overview Drivers & Challenges Government Policies & Initiatives Competition Joint Ventures Key Developments

Market Overview

Drivers & Challenges

Government Policies & Initiatives

Competition

Joint Ventures

Key Developments

MRO market in India is at nascent stage with the potential to become MRO hub MRO market estimated to reach USD X bn 2010 Many new players, both domestic and international, are entering this fast emerging market in India By 20--, India will be having the potential to service a fleet of 1,000 commercial planes and 500 general aviation aircraft Apart from commercial airlines, MRO service providers also provide services to the operators of chartered aircraft and corporate-owned aircraft SAMPLE Market share by activities Market overview Market size & growth Source: 2008 Y 2009 Z 2010 x% X USD mn Modifications of interiors, cabin electronics, avionics and paint are done when required z% Modifications Heavy Maintenance (D– Check) Engine Maintenance (C – Check) Components (B-Check) Line Maintenance (A-Check) Segment Performed once in every x months and done overnight at an airport gate w% Performed once in every x days and done overnight at an airport gate v% Performed once in every x-y months at a maintenance base in a hangar x% Market Share Description y% Performed once in every x-y years at a specialized facility

MRO market estimated to reach USD X bn 2010

Many new players, both domestic and international, are entering this fast emerging market in India

By 20--, India will be having the potential to service a fleet of 1,000 commercial planes and 500 general aviation aircraft

Apart from commercial airlines, MRO service providers also provide services to the operators of chartered aircraft and corporate-owned aircraft

Modifications of interiors, cabin electronics, avionics and paint are done when required

Performed once in every x months and done overnight at an airport gate

Performed once in every x days and done overnight at an airport gate

Performed once in every x-y months at a maintenance base in a hangar

Performed once in every x-y years at a specialized facility

Drivers & Challenges 35 Growth in Air Traffic Drivers Manpower Cost Arbitrage Increasing Fleet Size Government Initiatives Challenges High Tax Regime and Regulatory Limitations Shortage of Land and Skilled Manpower

Indian MRO space is emerging as a competitive space with large investments from many foreign players MRO space in India is at a nascent stage with few domestic players Many foreign players are planning to enter the market Many projects in the pipeline are about to complete and operations will start by 20-- A, B and few others have their own facilities for line maintenance and basic repairs and also offer service to other airlines Domestic airlines source MRO services from service providers in Singapore and Europe Most of the line maintenance activities are carried in-house in India but majority of C and D checks are done outside India SAMPLE Competition Aircraft Maintenance Relationships Source: Air India & Indian Airlines got merged and formed NACIL; Sahara merged with Jet Airways Outsourced/Offshored In-house XY got permission to carry C-check for Boeing 777 in India recently -- -- Paramount -- -- Go Air -- -- Indigo Air -- -- Spicejet -- -- Kingfisher -- -- Jet Airways -- -- Air India Component repair (B-check) Line Maintenance (A-check) Airline -- -- -- -- -- -- -- -- -- Expected Entrants in Indian MRO

MRO space in India is at a nascent stage with few domestic players

Many foreign players are planning to enter the market

Many projects in the pipeline are about to complete and operations will start by 20--

A, B and few others have their own facilities for line maintenance and basic repairs and also offer service to other airlines

Domestic airlines source MRO services from service providers in Singapore and Europe

Most of the line maintenance activities are carried in-house in India but majority of C and D checks are done outside India

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Joint-Ventures (1/3) SAMPLE Source: Date of JV: Feb 2009 GMR Hyderabad International Airport Ltd (GHAIL) has formed a joint venture with MAS Aerospace Engineering for setting up a state-of-the-art aircraft MRO facility in the airport premises --- --- --- -- Date of JV: Yet to be announced Pratt &Whitney Canada (P&WC) is interested in starting an MRO shop for aircraft engines along with HAL in Bangalore ---- --- --- ----

Date of JV: Feb 2009

GMR Hyderabad International Airport Ltd (GHAIL) has formed a joint venture with MAS Aerospace Engineering for setting up a state-of-the-art aircraft MRO facility in the airport premises

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Date of JV: Yet to be announced

Pratt &Whitney Canada (P&WC) is interested in starting an MRO shop for aircraft engines along with HAL in Bangalore

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