Grand scale: Maintenance in the Middle East

Although modest in global terms, the ambitions of its airlines and local players such as DAE and Gamco make the Middle East a latent powerhouse in MRO

Its delayed Airbus A380s may not start arriving until late next year, but Emirates is ready for the upkeep of the ultra-large aircraft. The Dubai-based airline - the biggest A380 customer with 45 on order - last August opened a seven-hangar maintenance, repair and overhaul (MRO) centre on a 55Ha (136 acres) site on the north side of Dubai International airport. The Emirates Engineering facility, which incorporates workshops and a technical training college, is one of the biggest in the world and four times the size of its previous three-bay centre. Its former home, on the other side of the airport, is being demolished to make way for Emirates' new terminal 3, designed on two levels for the A380. Nothing stands still for very long in Dubai: all this investment is taking place as groundwork begins on the giant Jebel Ali site 30km (19 miles) away, on what is likely to be the city's international airport in the next decade.

Each of the 110 x 90m (361 x 295ft) air-conditioned hangars in the new building - four of them for heavy maintenance and three for light - is high enough to house the superjumbo. "No airline will have so many A380 bays," says Adel Al-Redha, Emirates executive vice-president engineering and operations. The centre will also house Emirates' first in-house paint hangar - "an important addition for us because we put such importance on maintaining the appearance of our livery," says Al-Redha - and will be capable of carrying out all MRO tasks on its fleet other than some component and avionics work.

Slowly coming to life

Touring the facility earlier this month, only three of the seven bays were occupied and, with many offices and much of the new training centre empty, the operation seems to be coming to life rather slowly. Despite this, Emirates does not believe it will have capacity in the medium term to take on third-party maintenance. The reason, says Al-Redha, is that the airline is stepping up a three-year refurbishment programme, mostly on Boeing 777-200s and -300s, to bring its premium cabins up to the standard of its newer 777-300ERs and -200LRs.

Other older aircraft, including Airbus A330s, are slowly being moved from long-haul to medium-range services where the first- and business-class product is not so competitive. "Even though [the 777s] are young aircraft, which we acquired in the late 1990s and early 2000s, our cabin offering is changing so fast, especially for premium customers," says Al-Redha. Emirates airline president Tim Clark recently noted that some business customers were avoiding certain flights because the aircraft had older-style cabins - anathema for an airline that puts such store in premium service.

"We do not have a problem with offering third-party work," says Al-Redha. "But we barely have enough space. Once we begin to look for third-party, Emirates launches a major programme to refurbish older aircraft. But this programme is not forever, and we may need to look outside."

Massive expansion

There is likely to be no shortage of interest in the facilities. Although much of the attention in the Gulf has been on the massive fleet expansion programmes of Emirates, Etihad of Abu Dhabi and Qatar Airways, the region has also seen a proliferation of small start-ups in recent years, such as Sharjah's Air Arabia, all with big ambitions. "The aviation industry is booming here," says Al-Redha. "There are lots of airlines with three aircraft that want to have 20. None of them will want to set up their own MRO facilities." The massive expansion of India's low-cost sector - and the lack of maintenance infrastructure on the subcontinent - also makes the Gulf a lucrative hub for attracting MRO work.

Two players hoping to take up the slack are Abu Dhabi government-owned Gulf Aircraft Maintenance (Gamco) and Dubai Aerospace Enterprise (DAE), the would-be aviation services giant launched 12 months ago. Despite losing its Gulf Air maintenance work last year - which amounted at one stage to almost 70% of its business - when the Abu Dhabi government pulled out of the former regional flag carrier, Gamco claims to have filled capacity with third-party work.

Its hangars are full and, as much of its work is complex airframe and component overhaul, it has maintained profitability in the process, according to general manager Saif Al Mughairy. This is despite the fact that Abu Dhabi's new flag carrier Etihad has such a new fleet that Gamco will not carry out anything other than light checks for almost four years, he says. Gamco's military overhaul work - although small in comparison with its civil business - gives the company another important revenue stream.

When DAE announced its intentions to the world at the air show in Singapore last February, MRO was one of the six areas in which it said it wanted to set up subsidiaries - the others included aviation training, airport development and aircraft leasing. In September DAE, along with the Abu Dhabi state investment arm Mubadala and Dubai investment house Istithmar, took over Zurich-based SR Technics, the biggest independent MRO. Although the company would retain its brand and management team, the move was seen at the time as effectively creating a maintenance business for DAE.

Specific timetable

Bob Johnson, DAE's chief executive, told Flight International this month that the objective is for SR Technics to "extend its competence into the Gulf", although "we don't have a specific timetable". He adds: "A lot has to do with how quickly and easily we can replicate their competence."

It seems likely that establishing MRO infrastructure in the Gulf under the SR Technics or DAE banner will happen at some point, possibly as part of the new Jebel Ali development, but Johnson says this is not necessarily the case. "There are facilities in the Gulf already, but there are certainly growing requirements. As we migrate [SR Technics'] competence, can we utilise existing facilities and relationships - for example, the relationship that could exist between Gamco and SR Technics or between airlines and SR Technics? It will not necessarily mean new facilities."

In March, SR Technics signed a memorandum of understanding with Gulf Air, then in the process of severing its connections with Abu Dhabi and Gamco, to establish an aircraft maintenance and technical training centre in one of the carrier's remaining two hubs, Muscat in Oman, in which Gulf Air would have a 10% stake.

However, the United Arab Emirates-led takeover of SR Technics and the subsequent departure of Gulf Air's chief executive James Hogan to Etihad appears to have cast doubt on that move. Johnson will only say that "when we did due diligence on [SR Technics] the [Muscat development] was on the list", but will not confirm whether the plan is still on course.

David Stewart of the Aerostrategy consultancy believes the "big open question" in Middle Eastern MRO is "what will Dubai Aerospace do with SR Technics?" He says: "It will be pretty interesting to see how they go about developing MRO to compete on a global basis. The other thing they need to be competitive as an independent is to pick up work both inside and outside the UAE. It's a rapidly growing region, but it's still a relatively small market - less than 5% in global MRO terms."

Goodrich is the first major systems supplier to establish a dedicated distribution and overhaul facility in the Gulf, breaking ground in November on a 10,000m2 (32,800ft2) centre in the Jebel Ali free trade zone in Dubai. The US company is currently trading from a temporary warehouse. The high proportion of Goodrich product on latest-generation aircraft entering the region's fleets, including the A380 and Boeing 787, and the lack of MRO capability to cope with these components and systems means the move "gives us closer proximity with our customers", says the president of Goodrich's customer services division Paul Snyder. The amount of Goodrich product on the region's military aircraft was another factor.

"There is very little capacity in the Gulf and a lot was going to have to be shipped back to the UK or USA," he says. "It meant we had a challenge on the customer satisfaction side. These aircraft coming in are products with a lot of new technology, and airlines might be reluctant to establish that sort of capability on their own. We had a glaring hole and strategically it made sense to get in early and establish a local presence."

Specialist facilities

The centre has 20 staff, but that is expected to grow to up to 100 "if the situation demands it", and is the first multi-product overhaul facility Goodrich has established from scratch, says NS Pandarinath, who heads the Dubai operation. Initially it will concentrate on five product areas: escape slides and safety equipment cargo PDUs cockpit surveillance systems angle of attack sensors and water heaters.

Later Pandarinath expects this to extend to nascelles, hoists and winches, engine controls and basic assembly and disassembly of landing gear. The facility, he says, will complement rather than compete with existing airline and third-party MRO operations, because it will be able to carry out more specialist work.

The expansion of the airline fleet in the Gulf has led to the possibility of Airbus and other equipment suppliers basing spares distribution operations in the new Emirates Engineering centre, says Al-Redha. Under the proposal, which Al-Redha says is being discussed with the airframer and other "interested parties", the original equipment manufacturers would continue to own the inventories, but they would be held in the Emirates facility. "We don't want to go down the traditional route of stocking everything, but at the same time we don't want to dilute our protection level," he says. "We target 99% dispatch reliability and achieve 98.5%. The risk with any new type is the unknown. If something fails and our supplier's inventory is not geared up for it, it is a problem." Under the proposal, expensive and slow-moving but critical parts such as flaps would be held in a "separate pool", available at short notice to Emirates and other customers in the region.

One of the strengths of the region's MRO sector has been that an open immigration system, and the attraction of low taxes and an agreeable lifestyle, has meant that the UAE in particular has been able to handpick shopfloor staff from developing regions and keep labour costs competitive. However, the need to develop capabilities for more sophisticated modern equipment and a drive to enhance the skills of UAE nationals mean training has taken on a new importance.

Al-Redha says that, although Emirates never cut back its apprentice programme during previous downturns, there is a looming shortage of qualified mechanics. "That is our true challenge. It is not a problem now, but it might be in three years," he says. "That is why we are tackling it by making prompt decisions now."

Emirates is in the process of moving its technical training department into the new engineering centre. The airline's 17 classrooms, two workshops and two exam rooms will soon be turning out the airline's next generation of technicians, ready to work on the A380 and possibly the A350 or Boeing 787 as Emirates' fleet breaks through the 200 mark in the next 10 years.

Source: Flight International