The link-up between DAE and SR Technics shows the Dubai start-up means business. It also makes clear where the future market lies
Mature aerospace companies in Europe or North America who toil to grind double-digit annual profit growth from even a buoyant market must despair when a start-up that has never sold as much as a widget coolly announces that it intends to become a global player in six aviation sectors. The old stagers' pain must be even worse when they find out that it has taken the new company just half a year for them to achieve at least one of these objectives.
When Dubai Aerospace Enterprise (DAE) launched itself on the industry stage at February's Asian Aerospace in Singapore, it vowed to become a serious contender in established markets such as aircraft leasing and maintenance, aviation training and aerospace manufacturing.
Anyone who doubted DAE's ambitions has not visited Dubai recently, where the amount of construction and the scale of projects is breathtaking. When the ruling Maktoums say they will build something, whether it be the world's biggest tower, airport or aviation services company, they generally mean it.
But few could have envisaged just how fast DAE would make its mark in MRO. Most imagined that it would slowly enlarge its footprint around the fledgling in-house facilities of Emirates Airline, with perhaps a tie-up with its Abu Dhabi neighbour Gamco. But the purchase of Swiss maintenance provider SR Technics, by a consortium in which DAE and one of the investment companies behind it jointly hold a 60% share, vaults DAE into the major league and gives SR Technics a foothold in expanding markets in the Middle East, China and India that - once fleets begin to mature in five to 10 years - could eclipse the MRO business in the West.
The move is also a major step towards a consolidation of the global MRO market around a small number of aggressive independent (or quasi-independent) companies which include Lufthansa Technik and Singapore Technologies Aerospace. They are swallowing up or building ties with local or regional players and bidding for outsourced work from start-up and low-cost carriers who have absolutely no interest in owning their own maintenance hangars.
It is a move to be welcomed. MRO - other than at its most routine - is a business that ought to be left to the experts, who can provide regional services while exploiting global economies of scale to introduce new technologies and practices and drive down costs. So long as competition can be maintained, consolidation is a good thing.
The next big business DAE plans to launch is aircraft leasing. Although it has relatively modest ambitions - it forecasts a fleet of up to 70 widebodies in the next few years - do not be surprised if it achieves this target soon through an acquisition rather than slowly acquiring individual aircraft.
For many of the world's established aerospace companies, DAE could be as much opportunity as threat.
Source: Flight International
