With the Government of India having fast-tracked the disinvestment process in the aviation sector, this New Year will bring in much cheer for the aviation sector. With a great skill set, huge professional experience and competency, AIESL manages and maintains Airbus, Boeing & ATR’s fleet with the Technical Dispatch Reliability of more than 99%. AIESL was honored with the award for the BEST AIRFRAME AND ENGINE MRO in India for 2011 by MRO Association of India and also adjusted as the ONE STOP SHOP INDIAN MRO in India for 2013 by MRO Association of India.
With major hangars and bases located at all the major metros, AIESL is maintaining fleet comprising 76 Airbus 320 family aircrafts, 72 Boeing aircrafts, and 18 ATR. AIESL’s facilities includes Hanger Facility, Line and Base Maintenance, Engine Overhaul, Avionics Accessories shops and components shops, Structural Repairs, Cabin and seat Repair Facility, Landing Gear, Engineering Support Service and many specialized service.
A dedicated support team for AOG requests provides highly coordinated troubleshooting and engineering support round the clock. MRO Business Today while tracking these developments speaks with Mr. Sharad Agarwal, the CEO of AIESL for his views and expectations of these exciting times. Read on…….
Q – With AI’s privatization complete and out of the way, a new beginning awaits AIESL. Would you consider this adding a fresh lease of life for your organization? In a way, this would mean stepping out of AI’s shadows would it not?
Ans – Air India was privatized on 27 January 2022. Up until the privatization, AIESL was the sole service provider for Air India, and all policy decisions by the company were directed toward serving Air India. Now post the change of ownership AIESL’s relationship with Air India is of a customer and a service provider. This adds additional challenges for us as Air India will make more demands towards AIESL and the old ways of doing things may not work anymore. This change led to some difficult adjustments between AIESL and Air India, however, I would like to add that overall we were able to put our act together with the airline. For example, the service of one-base maintenance during the pre-disinvestment days took 40 days to complete; we have now been able to reduce the time taken for a task by over 40%. Jobs that normally would take 40 days to accomplish earlier, but were delivered in 38 days were seen as a huge deal by Air India. But now that is not acceptable, by Air India.
One aircraft was sent by Air India to the Singapore Airlines Engineering Company (SIAEC) to show the benchmarking of efficiency. Now that has become the benchmark for Air India aircraft maintenance standards. The Singapore Company completed the task in the time which is nearly 60 percent of what we at AIESL used to take and I can proudly inform you that AIESL has also managed to achieve that now.
Secondly, our business requirements mandated in the earlier days that all the files once approved by the CEO of AIESL needed to be sent to Air India for further scrutiny and justifications like “what benefits does Air India have in this proposal”. Post disinvestment that requirement has been done away with and the CEO approves the file based on a business proposal! That gives us a sense of freedom with the feeling that we can make a business proposal and make a deal happen. But yes, this has also increased our accountability as I cannot just keep on running up expenses without accountability. So yes, a new sense of accountability has been introduced. In this manner, we are stepping out of Air India’s shadows. You can call us “a child who has just started to walk.” And I am very sure that we shall be running very, very soon.
Q – What is the roadmap drawn up for the take off stage, toward becoming truly global? Apart from being the largest MRO in India offering an array of services, will you look at overseas clients and set up hubs at overseas locations? You already have a 3- year lock-in period with Air India and will this tie you down a bit?
Ans – Okay, let me first start with the three-year lock-in period, the lock-in period is also working to our advantage as at least we are reasonably sure that we will get cash inflow for at least the next three years and that portion of our business is secure. So in a way, it is a good clause, because locking in with Air India means guaranteed business for that period. At least I can say we will have a minimum inflow every month, so that is good news for us. About venturing overseas; well right now that is not on our radar, i.e. venturing overseas and opening a big MRO out of the country. We had already started line maintenance branches in Dubai and Sharjah, and have recently opened a new branch in Kathmandu, but all of this is mainly restricted to line maintenance. Now about getting international clients, what does the international client need? They need FAA and EASA approvals. So far we do not have EASA approval for aircraft maintenance anywhere in India. Now coming to FAA, at least with FAA I have been personally following up and I have managed to add the FAA approval for our facility at Thiruvananthapuram for base checks of Airbus A320 aircraft and look forward to getting a good volume of business here. So far, our business involved providing services to Indian aircraft or aircraft of Indian operators leased from an international company. Now getting an international aircraft to enter, we have had a lot of discussions with aircraft operators, especially Gulf-based carriers, and I am very optimistic about being able to crack at least one deal.
Q – With AIESL’S inherent talent and assets and infra for MRO capabilities across segments, plus being certified by major ORMs … you must be upbeat about the next phase of growth. How are you planning to achieve this …is it through partnerships and/or service hubs across the world?
Ans – Of course, we are. We are chasing clients actively, but forming a partnership with a foreign company will take a while. This is because we are heading for a disinvestment process as well, let me say very clearly right now that we are not looking at any cost sharing, revenue sharing, or joint venture with any OEM or anyone for that matter at the moment. So basically with the freeze on disinvestment, it will take a while till a decision is made and the process is complete, perhaps post-disinvestment. We want our MRO capabilities to go big. We have hangers at seven different locations across India. We plan to add a couple of more business lines, so far, our clientele has been commercial airlines basically, Air India. We are actively trying to capture some defence sector business as well. One agreement has been signed in this year, and another agreement is in its final stages of completion. However, I am unable to reveal any details about it.
Q – DIPAM has conducted roadshows mainly to gauge investor sentiment and interest…how encouraging has that been? Judging by investor interest, do you feel the valuation will go northwards or as per expectations?
Ans – Well, one thing I can say is that multiple people have shown interest in buying and we have been optimistic about the feedback from the roadshows. Multiple investors have participated in the show and yes, I can see each of those parties is more than keen to buy. The only thing I can say is that the highest bidder will be successful. The investor, therefore, will need to be very very cautious about what they are bidding for, because no one should lose a gold mine by underbidding.
Q – What kind of inputs did you receive from potential bidders both Indian and International? Would incorporating their inputs call for key changes without disrupting services?
Ans – First of all, anyone who wants to buy the company will be looking for efficiencies and will be looking for ways to improve it. I feel that whatever revenue we are earning today, we are capable of earning 4-5 times that, but that calls for bettering processes and streamlining them. Our hangers have to work on a 24/7 basis as compared to the current 8 hours 6 days a week system. There are processes involved, of course, there will be some additional manpower requirements, and there will also be a requirement to capture the market through aggressive marketing, all of which is definitely on the agenda. All I can say right now is that key changes will be made but the basic services offered by AISEL would continue. What happens is improvement in the processes. This will manifest only when the processes keep running, because how else can you improve the process? Not by stopping the process. So the process will keep running of course there will be observers to look after it, do analyses and find ways to improve it.
Q – In the event of a new owner taking over, and the apprehensions that trickle in with regard to staff sentiment, what kind of assurances are you giving your employees so that work goes on smoothly and a sense of confidence prevails?
Ans – First of all, all my staff is very clear and is looking forward to the disinvestment, in fact, no one is resisting it because everyone feels that with the correct improved process in place their value as executors will only go up. Our staff is highly experienced and it is not easy to get people with similar experience and caliber. There are several MRO trying to even poach our people, in fact, I have to come up with some notices which will stop or delay or discourage employees from leaving.
It’s a fact that post-disinvestment we will only grow and not reduce. So, this is something that everyone is looking forward to it. Having said that, some groups might try to take advantage of the disinvestment process, – like trying to derail the process until and unless some of their demands are met. The only thing I can say is that we will address genuine issues only.
Q – What according to you is the biggest USP of AIESL?
Ans – Talking about AIESL’S USP, I will say that we are not just an MRO, we are a complete engineering solutions provider. Regarding our MRO services concerned, we are present in all segments i.e. line maintenance, base maintenance, engine overhauls, component overhaul and other services like structure repairs, non-destructive testing and much more. Our second USP is that we have a presence at over seven different locations; in fact, there is no other MRO that has such a pan-India presence. And thirdly, is of course our level of experience.
