AAI in plans to give concessions for attract aircraft repair firms in its airports

In its zest to encourage maintenance, repair and overhaul (MRO) units to set up facilities at its airports, the Airports Authority of India (AAI) is in plans to abolish royalty and offer steep discounts in lease rent. The civil aviation ministry has in-principle approved the MRO policy and is awaiting AAI board’s nod.

Around 85 per cent of the $1.4 billion maintenance work of all the airlines of India is carried out overseas and the government hopes that policy sweeteners will attract investment in the sector, generate employment and reduce import dependence.

Last year, the government cut goods and services tax (GST) rate on aircraft repair and maintenance work from 18 to 5 per cent. To further incentivise the industry, it will lease out land at airports at discounted rates to repair units.

Airports such as Bhopal, Chandigarh, Chennai, Hyderabad (Begumpet), Juhu, Kolkata and Tirupati among others have been identified for the purpose. Also, AAI has land parcels in Delhi that are also being considered for lease.

Airports in India charge a minimum 13 per cent royalty on MRO firms’ annual revenue, thus reducing their profit margin.