Lufthansa Technik looks north for more China business

MRO specialist Lufthansa Technik already has major and growing operations in Beijing and Shenzhen. Now, chairman August Henningsen tells Brendan Gallagher, Asian Aerospace Hong Kong could open the door to even more business on the mainland

Q Does the new all-civil Asian Aerospace in Hong Kong offer you any advantages compared with Singapore’s civil/military Changi Air Show?

I always felt very positive about Asian Aerospace in Singapore – it was popular with visitors and easy for them to get to. But we’re very pleased to be here in Hong Kong, which is both an international hub and a gateway to southern China. This show could have even more impact on the Chinese market, with more visitors from the mainland coming to see what’s going on, and giving us a chance to contact Chinese airlines in addition to those we know already.

August Henningsen


Q Which of your products and services are you highlighting here?

We’re presenting our full package of component, management, maintenance and engineering support services, with a particular focus on what we can do for start-up airlines. We’re also looking to expand our engine business in Asia, and especially China, so we are trying to show visitors how deeply we go into engine repairs, and to explain the associated potential for cost savings – this is fundamental to our product development on the engine side. We are also emphasising our landing-gear services – we have a capability at Ameco Beijing in addition to facilities in Germany, the UK and California – and our new Manage/m [CORRECT] online MRO management service, which is just completing its initial implemention.


Q How do you see your Asia-Pacific business developing over the next five to ten years?

We’re convinced we can grow our business in the region at a rate exceeding that of the overall market. The average growth in the aviation market worldwide is around 5.5-6% a year, with Asia-Pacific a little stronger at 6.5%. The increased reliability of systems, engines and airframes - which is something we have worked on with the manufacturers over the past 10 years – means that MRO in Asia-Pacific is likely to grow at a lower rate, around 4-5%. We think we can better that when it comes to our own business.


Q Will China and India continue to be the prime drivers in the region?

I think development in China and India is stronger than ever, and I see no indications that the aviation industry in those countries will be hampered in the foreseeable future. Indeed, I expect growth to be even stronger in the coming years. On the basis of aircraft orders alone, it’s clear that the growth potential is tremendous. Right now we see nothing to affect this.


Q Has your investment in the composite structure repair facility at Shenzhen begun to pay off?

Shenzhen is most certainly beginning to show a return on our investment. Over the past two years we’ve been very successful in growing this business and getting airlines signed up so we can take care of their composite structures - mainly cowlings and thrust-reversers but also flight-control surfaces. We’re also very optimistic about the future: the aircraft fleet in the region is now beginning to mature, and that brings with it a growing need to keep an eye on composite structures. Reversers in particular experience a lot of vibration and load, and our experience with the active fleet indicates that after a certain number of flight cycles you have to make sure there are no delaminations or other minor defects that could lead to major damage if they are not rectified in time.


Q Similarly, how do you feel about your shareholding in AMECO Beijing?

AMECO Beijing, our joint venture with Air China, is a very important outlet for us in the Chinese and Asian markets. We have recently invested significantly to build a new line-maintenance hangar. Construction is under way and it’s scheduled for completion next spring. It will be very big, with a maximum capacity of four A380s nose-in and two tail-in, and it will also free space in the existing hangar for heavy maintenance work. This will help us to develop our capabilities and expand our customer base. We’re already strong on the Boeing types, but Air China’s decision to operate A380s and A320s will see AMECO Beijing developing the ability to do C-checks and later D-checks on Airbuses.


Q How are your preparations for Lufthansa Technik India progressing?

For the last two years we’ve had an organisation in place to handle all our activities in India – integration of new aircraft types into the fleets of customer airlines, component services, line maintenance. Now we’re building an overhaul facility at the new airport at Hyderabad for completion in the third or fourth quarter of next year. This will be the base for Lufthansa Technik India, which will really spell out our presence in the country.


Q How do you see the Indian market developing for you?

We want to grow as our customers grow, and that depends on the performance of our individual airline customers and on how the overall market develops. We’re currently seeing some big percentage increases, but they will probably be followed by some levelling out before big growth resumes again. Though the main driver for us is our existing customer base, we do hope to win new contracts from recent start-ups like Indigo. However, India is also now seeing some consolidation - the purchase of Air Sahara by Jet Airways, and Kingfisher’s investment in Air Deccan. All in all, the Indian air transport market is well supplied with operators and the total market continues to grow at a healthy rate.


Q What is the current status of your operation in the Philippines?

It’s healthy and growing. We’re very happy with the learning curve of our staff there, and our line and heavy maintenance customers are equally pleased with our performance. We’re sold out for this year and almost completely sold out for next, and we are adding one more hangar space for A330s, A340s, 747s and 777s.


Q And your ASSB engine parts facility in Kuala Lumpur?

We’re very optimistic about the amount of activity we can expect in this area. We inaugurated a new plant at the end of June - it’s four times a big as the one it replaced, and we are increasing the number of employees from 180 to over 500.


Q You are projecting steep growth in demand for landing-gear overhaul. How much of it will come from Asia-Pacific, and how far will it be serviced by your facilities in the region?

I expect the Asia-Pacific landing-gear market to grow to account for 20-25% of the world total market in the next two or three years. We hope to win a big part of that, as much as 40%. Most of the work originating in China is handled at Ameco Beijing. Not much leaves the country because our capabilities there are constantly increasing while the fleet is large and getting bigger still. India still needs more aircraft and in-country capability, but it’s a growing market and sooner or later it will pay off to do certain work there.


Q How do you find the skilled staff you need for your expanding Asia-Pacific operations?

Technical training is of paramount importance to us. To guarantee the top-notch product demanded by the market you must find people who are very well educated to begin with and then give them the right courses and on-the-job training. Instead of going out and poaching, we are strongly committed to taking responsibility for high-quality education and training in the individual national markets. So we have training centres at Ameco Beijing and in Taiwan and the Philippines, and we will set one up in India. Ultimately, taking care of aircraft is a people business and one that is founded on trust. So you have to develop employees who have the right attitude to their work. This is true not only of the emerging economies but also of Europe, the US and elsewhere.


Q Following the announcement that Singapore Airlines had chosen OEMServices to provide component support for its A380s, how do you feel about the Asia-Pacific prospects of your Spairliners joint venture with Air France Industries?

I’m still very positive. With the first airline delivery of an A380 now imminent, contacts with potential customers are on the rise, and I’m very optimistic that Spairliners will win business among the operators in Asia-Pacific. Spairliners is the only provider to offer a complete service - shops, logistics and a broad component and repair services capability. It will also benefit from the direct operational experience gathered by Air France and Lufthansa when they get their aircraft. So I think Spairliners has a uniquely powerful proposition to make to the A380 operators.

 

Source: Flight Daily News