Pratt & Whitney maintenance facility to be set up in Mumbai see slow progress due to GST issue?
Pratt & Whitney’s (P&W) first-ever engine maintenance repair and overhaul (MRO) facility (in association with Air India Engineering Services Ltd) that is to be set up in Mumbai is seeing slow progress due to Goods and Service Tax (GST) issue.
P&W has been seeking 5% GST on engine parts as the current tax rate of 18% is not viable for their business. However, the government has not yet officially responded to its demand. This has resulted in the MRO failing to take off, even a year after the two parties signed an agreement to establish this facility.
AIESL, Air India Ltd’s engineering wing, along with aircraft engine P&W had announced their decision to work together for maintaining engines, including the problematic ones fitted on Airbus A320neos. This had come amidst glitches in P&W engines, resulting in several mid-air scares.
Pratt & Whitney spokesperson did not clarify if there was a slow down due to GST related issues. “Our collaboration with Air India Engineering Services Limited (AIESL) remains strong, despite the challenges faced by the industry due to the pandemic and we continue to work with them to progress our MRO partnership.”
Sources close to the development said the government levying 18% GST on engines has been a concern for the engine maker, due to which the process of coming up with the facility has slowed down.
Another source close to the matter said, “Recently, the GST issue is being worked out but nothing has been made official yet. As of now, it is decided that every MRO work except the ones related to the engine of an aircraft will be performed by AIESL. Both the parties are however scheduled to discuss the details in a meeting this week. The signing of the contract between the two parties is expected to take place in the coming few days.”
“Pratt & Whitney encouraging the establishment an aircraft engine MRO in India offers more than one benefit: it brings our engine support in closer proximity to our customers in the region, it supports the government’s vision of developing India as a major regional MRO hub, and it also makes business sense for the company to leverage India’s skills – to add to our advanced and competitive global MRO capabilities. For these reasons in 2020, we expanded our global network of MRO providers for the Pratt & Whitney GTF™ engine, to include AIESL in India,” P&W spokesperson added.
Since January 2019, there have been several incidents in India involving the new Airbus A320neos fitted with P&W engines; in many of these cases, the aircraft was forced to turn around. The New Engine Option (neo) is an upgrade carried out by European aircraft maker Airbus on its aircraft such as A320, A319 and A321 from the CEO (current engine option). Neo engines are more fuel-efficient, which in turn reduces the total cost of operations.
P&W powers more than 700 aircraft in service in India, including more than 150 GTF-powered A320neo family aircraft. Hyderabad is home to P&W’s state of the art customer training centre, which provides maintenance training to India’s growing aviation workforce.