Asia-Pacific is set to become more important than ever to Lufthansa Technik. August Henningsen, chairman of Europe’s leading MRO and completions specialist (pictured left), talks to Brendan Gallagher
Lufthansa Technik is firmly established in Asia-Pacific, with operations in China, Malaysia and the Philippines and on the US West Coast. Which country do you see as your centre of gravity in the region?
There are more than one - China, India, Korea, Japan and Taiwan. Each is a centre of gravity for our business and we are always looking to develop them.
Do you plan to set up any further operations in the region?
We’re focusing primarily on building on what we’ve got already, expanding our existing capability and capacity. We do have plans beyond that, but there’s nothing I can talk about today.
The A380 is here at the show – how is your new Spairliners A380 spares support venture progressing?
We’re getting very positive feedback from the market on this, the organisation has been established, and we are in serious negotiations with potential customers in Asia-Pacific.
How has activity at your Ameco Beijing and Lufthansa Technik Shenzhen facilities evolved over the past 12 months?
They have met our expectations. It can take some time before a new facility like Shenzhen has the right range of products to grow sustainably. You start with one product and if that’s not enough you have to add more. That’s what we’ve done at Shenzhen and now it’s a matter of developing the business on the basis of those capabilities, though we will look to add more in the future. A great strength of Shenzhen is its composite-repair autoclave and associated skilled labour. It means that Chinese carriers don’t have to transport nacelles and other components to facilities outside the country or the region for repair. At the same time we have expert labour in a location with easy access to other parts of the region, allowing us to send teams to nearby countries to perform local repairs.
Ameco Beijing is our VIP aircraft modification and maintenance joint venture with Air China. A number of things - Air China’s own growth, and the addition of a new runway, terminal and maintenance hangar at Beijing Capital Airport – suggest that there’s potential to do more there in the future.
Lufthansa Technik Philippines recently acquired another Japanese customer, the new domestic carrier Starflyer. How do you see your business in Japan evolving?
I think it will develop positively – these days the Japanese airlines are more open than they were to doing business with suppliers from outside the country. However, we will have to be quite clear about whether it makes sense to do the work inside Japan or outside. The total fleet of the major airlines is very big, so there are synergies there. On the other hand, places like Shenzhen not only have the technology but also offer much lower labour costs. So it could be attractive for Japanese operators to send the work there, to the benefit of all concerned.
You’re present in Malaysia through blade-repair specialist ASSB, which is aiming to quadruple its business by 2010. How will it do that?
Encouraged by the good work that’s being done there, we and MTU Aero Engines, our partner in ASSB, have decided to expand the capacity of the facility. We’re putting in a significant investment and the operation is now moving to new premises that will be able to handle a much higher throughput.
Your California-based subsidiary Hawker Pacific specialises in Boeing 777 landing-gear work. Are you hopeful of a surge in that category of business following last year’s 777 order rush?
It’s important to understand that last year’s 777 orders won’t immediately benefit Hawker Pacific, though I’m confident they will in the longer term. The 777s ordered in the last 12 months will be delivered no sooner than 18 months from now. Then they’ll fly for five years before the first heavy check becomes due. So it will be seven or eight years before work on their gear starts to come through. When it does, we’ll be ready: you must have a stock of exchange gears so that aircraft aren’t grounded while this work is under way, so we have invested heavily to acquire our own stock. I think that gives us a particularly strong position in this market
Ameco Beijing has just reported a busy year doing quick-change conversions of Air China aircraft for use on government VIP missions. Does that level of activity suggest a pent-up demand for VIP completions in China?
Yes – it’s a big country and businesses and local governments will need such aircraft. Our responses include the BBJ-based Leadership Select modular VIP completion scheme and the Airbus A318 Elite.
What are your hopes for A318 Elite and Leadership Select completions in Asia-Pacific as a whole?
The VIP completions market in general is characterised by a wide range of very good offers from all the players, not just us. There are a number of good products out there, so the customer can select exactly what he wants and needs. But I do think that our experience in completing around 20 BBJs and four or five ACJs gives us a particular leverage, and I expect the Asia-Pacific VIP market to prove to be a good opportunity for us.
How much will Asia-Pacific, including India, be contributing to Lufthansa Technik’s overall business in ten years’ time?
Given the traffic growth in places like China and India, and the number of orders for aircraft that are out there, I think the region will be even more important than it is today. Of course, that depends on whether there are any hiccups of the kind we have seen in the recent past. But if the present growth trend in the region is sustained, we can expect to see the number of airliners in service and the number of passengers carried more than doubling, which will mean a high level of demand for the kind of service packages that we offer. So I’m very optimistic about our prospects in the region.
Source: Flight Daily News
