Cap lease rate at 40% upon renewal: MROs

Lease rentals account for 1O—15% of the annual cost of running MRO units

- Anu Sharma

India’s aircraft maintenance, repair, and overhaul (MRO) units have sought a reduction in rental rates at which the government renews their land leases, Mint has learnt.

“The industry has sought intervention by the civil aviation ministry on lease rentals for the MRO industry. The norms state that a new allotment of Airports Authority of India (AAI) land is approved at 40% of prevailing land lease rates for MRO companies. However, the rates during the renewal of leases are elevated, crossing even 100% of prevailing rates," an industry executive told Mint, on the condition of anonymity.

Currently, the ministry has fixed the maximum leviable lease rate for MRO companies at 40% of the prevailing price at the time of allocating land through tender.

The industry representatives want that the lease rate be capped at 40% at the time of renewal, the executive added. The heavy lease rentals have become a major concern for MRO companies at airports such as Mumbai, Delhi, Bengaluru, Hyderabad, and Mumbai.