In a region packed with MRO players, Asia-Pacific could cement itself as the world’s superpower in aircraft maintenance as existing smaller players and industry stalwarts expand to cater for rising demand.
The growth story is underscored by forecasts from major airframers that the region will require massive numbers of aircraft over the next two decades.
Airbus predicts the industry will require 35,000 new commercial aircraft, with Asia-Pacific customers set to take 41% of new deliveries. European operators will take 20%, followed by North American customers with 16%. Boeing, meanwhile, expects the industry to deliver 41,000 new aircraft by 2037, with Asia-Pacific to take more than 16,000.
Flight Fleets Analyzer shows that at present, Asia-Pacific has more than 9,100 commercial aircraft in service, including regional jets, turboprops, narrowbodies and widebodies.
It is apparent that MROs in the region are determined to take advantage of the impending growth in aircraft fleets.
THAI TECHNICAL TO JUMPSTART U-TAPAO
Thailand is turning its eastern Rayong province into an aeropolis centred on U-Tapao airport, which now caters to mainly charter and military flights.
U-Tapao, 140km (87 miles) south of Bangkok, is scheduled to begin MRO operations from 2022. The site will at first have a single hangar capable of accommodating three widebodies and four narrowbodies.
In the first five years of operation, the 83-acre facility will be used solely by Thai Airways' MRO arm, Thai Technical, in partnership with Airbus. Thereafter, the authority will look to construct a second hangar within the site for third-party MRO work.
Thai Technical says the facility will provide line and heavy maintenance, wheel and brake work, as well as engine and component overhauls. It will be able to support various aircraft types including the Airbus A320, A330, A350 and A380, as well as the Boeing 737, 747, 777 and 787.
At present, Thailand’s major MRO centres are at Bangkok’s Don Mueang and Suvarnabhumi airports. The government has also earmarked U-Tapao airport as a capacity reliever for the increasingly congested capital gateways.
KAI ENTERS COMMERCIAL MRO SPACE
In North Asia, Korea Aerospace Industries (KAI) looks set to enter the MRO sector after signing a memorandum of agreement with several South Korean companies to establish a facility in South Gyeongsang province, close to its headquarters in Sacheon.
It wants the MRO subsidiary to be incorporated in July, before starting work by year-end for domestic carriers. KAI expects the MRO unit to generate W5.4 trillion ($5 billion) in revenue by 2026.
While KAI has yet to disclose the type of commercial MRO work it intends to do, the company has military MRO experience on fighters and helicopters.
South Korea's main MRO firm at present is Korean Airlines Aerospace Division (KAL-ASD). Located at Busan International airport, it is a significant player in the commercial and military MRO space, and also produces aerostructures.
BATAM AERO TECHNIC SETS AMBITIOUS GROWTH PLAN
In Indonesia, Lion Air Group’s Batam Aero Technic (BAT) wants to become one of Asia-Pacific’s leading MRO operators with big plans at its Hang Nadim International airport base.
Although it mainly provides maintenance for Indonesia's largest privately run carrier, BAT intends to attract more third-party business.
Its two hangars can accommodate up to 12 narrowbodies or four widebodies, and occupy 10 acres. It has the capability to carry out maintenance to the level of D-checks on the 737, A320, A330 and ATR 72, along with component work on wheels, brakes and landing gear.
A third hangar, which can house up to nine narrowbodies, is expected to be ready by end-2018. This year, BAT will also open an ATR APU and propeller shop, as well as a dedicated paint shop for narrowbodies.
Construction of a dedicated engine MRO centre, complete with a test cell, will start in the fourth quarter of 2018 and should be operational by 2020. This will allow BAT to work on the CFM International CFM56 engines that power the A320 family, and the 737s that Lion operates.
Thereafter, BAT will look to establish its fourth and fifth hangars in 2019 and 2020, with both able to accommodate six narrowbodies each.
GMF AEROASIA LOOKS TO SOUTH KOREA, MIDDLE EAST
Meanwhile, BAT’s rival GMF AeroAsia is looking to expand beyond the archipelago into South Korea and the Middle East.
Earlier this year, the maintenance arm of Garuda Indonesia entered into a strategic partnership with Australian aviation services company Korr Group to jointly provide line maintenance at Melbourne, Sydney and Perth airports for 737, 787, A320 and A330 aircraft operated by Australian and international airlines.
GMF is also keen to build maintenance facilities in South Korea and the Middle East.
It intends its South Korean venture to focus primarily on light maintenance and component support, while heavy airframe and engine maintenance for existing South Korean airline customers will continue to be done in Indonesia.
GMF has said it expects to announce a Middle East partner in the first half of 2018, to be followed by construction of an initial hangar set-up that can accommodate three narrowbodies simultaneously.
AAR GOES TO INDIA
The established players in the MRO sector are not sitting still, but are looking to overseas markets for further growth.
US aircraft maintenance provider AAR expects to launch its planned MRO joint venture in India in end-2018 or at the beginning of 2019, in Nagpur, in the central state of Maharashtra.
The partnership will be with Indian aviation services company Indamer Aviation, which itself already services Bombardier and Embraer aircraft.
AAR has secured land and expects to induct the first aircraft in the middle of fiscal year 2019. The site will initially include six maintenance bays for narrowbody aircraft, including one bay for painting.
ST AERO EYES INTERNATIONAL GROWTH
ST Aero wants to expand capacity further, possibly by setting up new airframe and component maintenance facilities in Southeast Asia, driven by Singapore's lack of land and cheap labour. It may also establish a component manufacturing site in ASEAN.
More concretely, its component unit, Elbe Flugzeugwerke (EFW), in Dresden, Germany, will build a new facility by mid-2018 that will add a production capacity of 200,000 composite panels per year to support the growing Airbus A320 and A321 fleet.
ST Aerospace (Guangzhou) Aviation Services has also recently stood up a second hangar for airframe MRO, which can accommodate two widebody and two narrowbody aircraft simultaneously.
GAMECO GOES SOUTH
Guangzhou Aircraft Maintenance Engineering Company (GAMECO) opened a line maintenance station in Auckland in February, supporting parent carrier China Southern Airlines.
GAMECO says the New Zealand unit is part of a wider strategy of supporting China Southern’s growth through Oceania, as well as its own ambitions to build a network of overseas operations. The MRO has also flagged plans to open branches in Melbourne and Sydney later this year.
At its home base at Guangzhou Baiyun International airport, GAMECO has plans to construct a third hangar – its largest to date – with a 2020 operational start date.
The new hangar is aimed at boosting third-party work and will be capable of handling up to six widebody aircraft, with four tail-in and two nose-in positions. Various levels of airframe maintenance will be provided, from A to D checks.
GAMECO’s two existing hangars can accommodate between 18 and 20 aircraft in various configurations.
DEMAND STILL TO SURPASS CAPACITY
Despite all the growth, consultancy Oliver Wyman believes that it will be insufficient for the region's future fleet.
It still expects Asia to be the driver of MRO growth, led by China, whose MRO's sector is expected to jump 10.6% annually in terms of revenue and eventually occupy 16% of global MRO demand. However, growth could be hindered by rising labour costs and temporary infrastructure and capacity constraints.
Indian MRO revenue is forecast to grow at 5.6% annually, but will represent less than 3% of the total market.
The Asia-Pacific region will grow an annual rate of 4%, with MRO demand "rising to equal those of Western Europe and North America".
Oliver Wyman states that carriers are currently sending nearly 24% of widebody heavy airframe maintenance to Asia-Pacific and China.
This would result in "an inflection point where capacity growth within Asia cannot keep pace with the MRO demand of its own countries plus that of foreign operators, particularly those in the mature North America and Western Europe regions".
Source: Cirium Dashboard
