Safran Engineering, whose engines will power the largest number of Indian airliners in the next few years, is setting up its biggest maintenance, repair and overhaul facility in Hyderabad, its CEO said on Thursday.
The facility, which will be able to handle up to 300 engine shop visits annually, will also be the biggest in India to be set up by a major global engine manufacturer. The French engine-maker will invest up to $200 million in the MRO facility, Olivier Andriès told reporters on the sidelines of an event. Construction will start in 2023 and the company hopes to receive its first customer in 2025. Currently, Safran’s largest MRO facilities are in its headquarters in France and in Mexico.
CFM International, a joint venture between Safran and American engineering giant GE, makes the CFM56, Leap-1A and Leap-1B that power most of the Airbus A320s and the Boeing 737s in India. There are 600 CFM engines powering 330 passenger aircraft flown by six airlines in India, said Jean-Paul Alary, chief executive of Safran Aircraft Engines. That number will go up to 1,500 in the next few decades, making it the biggest engine orderbook from Indian carriers, including the soon-to-fly Akasa.
The MRO facility will service the Leap-1A and Leap-1B engines, that comprise the largest chunk of Indian airlines’ orderbook. Global aircraft and engine makers have been reluctant to set up repair shops in India because of high taxes which would make the services unattractive for customers. India’s airlines have typically had aircraft and engines serviced in markets such as Singapore, Hong Kong and even Colombo.
“We have clearly explained to the central government in New Delhi that the tax regime was a problem. We couldn’t establish any MRO activity in India because in the previous tax regime we were taxed twice. We told the government, if you change this tax regime, then we will come.And that’s what happened,” said Andriès. In March, the government reduced GST on domestic MRO services to 5% from 18%.
Also on Thursday, Safran inaugurated two subsidiaries — Safran Aircraft Engines and Safran Electrical & Power India. Safran Aircraft Engines will produce components and parts such as rotating seals for aircraft engines. Safran Electrical &Power India will make harnesses for civil and fighter jets.