From its base in a secluded area of Batam's Hang Nadim International airport, Lion Air Group's Batam Aero Technic (BAT) is aiming to become one of Asia's leading MRO operators.
Formed in 2007 to provide maintenance for Indonesia's largest privately-run carrier, BAT has been building up its maintenance capacity since opening its first hanger in 2014.
"We were created by Lion Air to help reduce their operating costs, as they do not need to fly their aircraft overseas or to a direct airline competitor's MRO subsidiary to do maintenance work," says I Rai Pering, BAT's president and director, referring to Garuda Indonesia's GMF AeroAsia unit.
BAT's two hangars, which can accommodate up to 12 narrowbodies or four widebodies, occupy a land area of four hectares (10 acres). It has the capability to carry out maintenance to the level of D-checks on the Boeing 737, Airbus A320, A330 and ATR 72, along with component work on wheels, brakes and landing gear.
LION-SIZED PLANS
Regulatory delays have stretched the timeline for developing BAT's full facilities to 2020, but Pering says Lion remains committed to the $250 million project, which will ultimately "make the region sit up and take notice of us".
The coming year will see BAT expand its facility most aggressively.
For starters, its third hangar, which can house up to nine narrowbodies, is expected to be ready by end-2018. Once hangar 3 becomes operational, hangars 1 and 2 will be converted to work purely on widebodies. In the same 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 with a target to be operational by 2020. This will allow BAT to work on the CFM International CFM56 engines that power the A320 family, and the 737 narrowbodies that Lion operates. It is also looking to develop overhaul capabilities for the Leap engines that power the A320neo and 737 Max.
Thereafter, BAT will look to establish its fourth and fifth hangars in 2019 and 2020. Each hangar will be able to accommodate six narrowbodies.
Pering says that BAT is also in discussions with Pratt & Whitney Canada to help it develop the capability to work on PW127M engines.
In addition, it has plans to set up an ATR airframe and propeller MRO facility in East Indonesia. It has acquired two hectares of land in Manado, and is awaiting approval from Jakarta.
THIRD-PARTY THRUST
While BAT's focus will remain primarily on supporting the Lion group's fleet of 258 in-service aircraft, along with the 415 it has on order. But it wants to bid on third-party work, which it currently does not do.
This week, the company was certified by the US Federal Aviation Administration as a Part 145 repair station for the 737NG. In August, it will also undergo a European Aviation Safety Agency (EASA) audit for the 737. In addition, it is developing A-check capabilities for Lion's new 737 Max aircraft.
When fully developed in 2020, Pering expects one-third of the firm's revenue to come from third-party clients. He is confident that in the competitive MRO landscape of Southeast Asia, BAT can carve out a name for itself.
"In terms of quality, we are now the same as big-name competitors because we are all FAA-certified," he says. "However, at Batam, our advantage is in our low labour costs and good location. We are also supported via supply chains for spare parts from our OEMs. For overseas operators, the import of spare parts, labour and material costs are all tax-free. We can pass on the savings to them."
Pering adds that MRO firms today should have a "complementary mindset", saying that MRO players can work together to bring mutual benefits. He explains that no single company that can cover all the various maintenance that an aircraft requires. "We can share the workload, as we all have peak and non-peak seasons. When all of us grows, the industry grows too."
Nonetheless, Pering acknowledges that BAT has to prioritise servicing Lion's expanding fleet.
"Without the Lion Air Group, it would be hard to develop something that is going to be as big as BAT, especially in today's uncertain economic market. We already have a captive market and they should be our first responsibility."
BUILDING SKILLS
The firm, which now has 1,000 staff in Batam, expects to more than double its workforce to 2,500 people when all its facilities are operational.
One major challenge that BAT faces is securing skilled labour – but the company is taking matters into its own hands. With the support of the Indonesian government, BAT has partnered with local aviation schools and polytechnics to develop an aviation engineering diploma, allowing students to graduate with a basic engineering license.
"The students come to us for on-the-job-training, and we hire them," says Pering. "Based on our expansion, we calculate that we will need around 60 to 90 trained technicians a year," says Pering.
BAT is also in discussions with its parent company and Jakarta to establish a dedicated aircraft engineering polytechnic in Batam to meet its manpower needs. Besides benefitting the firm, developing advanced skills in aircraft maintenance will also bring benefits to Indonesia, says Pering.
"We are helping raise the quality and skills of our labour force. Indonesia has a high human capital potential. In doing so, Indonesia will be more competitive on the global stage."
Source: Cirium Dashboard
