Flight International's Andrew Doyle reports on the venture spearheading ST Aero's UK expansion
Singapore Technologies Aerospace (ST Aero) is making its presence felt in the UK after setting up a narrow-body airliner maintenance joint venture in the south coast town of Bournemouth with FR Aviation company Cobham.
Bournemouth Aviation Services Company started operations at the beginning of this month and has European Joint Aviation Authorities approvals to work on all versions of the Boeing 727 and 737.
"For the immediate term, we will focus our attention on ramping up its operations," says ST Aero president Tay Kok Khiang. "We plan to develop capabilities on other narrow-body aircraft, including the Airbus A320, over the next 12 months," he adds.
The expansion into Bournemouth comes hard on the heels of other acquisitions in the USA. ST Aero recently acquired the assets of bankrupt Dee Howard in Texas, which has started operations as the Singapore company's third maintenance, repair and overhaul (MRO) facility in the country.
Renamed San Antonio Aerospace (SAA), the unit has already clinched contracts from United Parcel Service for McDonnell Douglas DC-8 work, and from Mesa Airlines for the maintenance of its Embraer regional jets.
"The contract that Mesa awarded to SAA gives ST Aero an entry to the regional jet market, which has been gaining eminence in recent years," says Tay.
To this end ST Aero has also been holding talks directly with Embraer with a view to setting up a regional jet maintenance centre at its Singapore home base, but the project is unlikely to move forward for the time being due to the relatively slow take up of such aircraft in the Asian region.
"We are always interested to work with the OEMs," says Tay. "We are in discussions with Embraer, but we will also be interested to work on Bombardier CRJs," he adds.
ST Aero is suffering from the global air transport industry downturn along with its peers in the MRO business, but Tay sees reason for optimism as the airlines begin to recover.
"The MRO industry seems to be improving, and although there are indications that yield and load factors have been improving in recent months, we are not sure whether it will be sustainable," he says. "Many of the major airlines are still incurring losses, especially in the US where our operations are affected to a certain extent.
Improve
"But perhaps for the airlines to get out of the red quickly, one of the ways is to improve their cost structure by outsourcing MRO work," says Tay. "That's where established independent third-party MRO facilities like ST Aero with global facilities would stand favourably in securing jobs from the airlines.
"As for our Singapore operations, the impact has not been as severe and we hope to at least match up in our performance for 2002 compared to 2001. It's a matter of time for us to see a full recovery from the current downturn as there is no viable substitution for travel in business, freight transportation and tourism growth."
One concern has been the increasing trend for airlines and leasing companies to consign older, surplus aircraft to the desert whilst retaining younger, less maintenance intensive types in their fleets. If stored aircraft do not come out of the desert the market for passenger-to-freighter (PTF) conversions, of which ST Aero is a major provider, could be impacted, though Tay thinks falling aircraft values may even boost the market.
ST Aero currently has contracts to modify MD-11s on behalf of UPS, and ex-British Airways 757-200s for parcels carrier DHL.
"Our current contracts for PTF conversions are on a firm basis and therefore have not been impacted by the increasing number of aircraft being put into desert storage," says Tay. "The potential for the immediate future may be affected but then again, with the cost of older aircraft coming down in value, there may be some added opportunities, especially with the upturn in freight traffic," he believes.
Certification
On the helicopter side ST Aero has recently gained certification as an authorised Sikorsky S-76 service centre and is targeting 38 operators of the type in the Asia Pacific region, which are together flying about 100 examples.
ST Aero has invested almost $250,000 to set up the S-76 capability including training, test equipment, rigging and tools.
"We have been providing one stop services for a wide range of helicopters – ST Aero is one of the biggest Bell helicopter service centres in Asia Pacific," says Tay.
Another emerging market, being targeted by ST Aero sister company ST Elect, is aviation related aircraft and airport security products. ST Elect earlier this year signed a joint venture deal with Honeywell to develop and sell new security systems.
ST Elect president, Seah Moon Ming, says: "ST Elect's capabilities are in the area of mobile real-time communications solutions, information security and patented image-processing technologies and resource management. These complement Honeywell's design and manufacturing capabilities in airborne and airport safety, security, surveillance and control systems".
Source: Flight Daily News
