Growing beyond its home base continues to be a key strategy for Singapore Technologies Aerospace, with the company seeking to reinforce its position as a leading global maintenance, repair and overhaul services provider.
Singapore remains a key player in the Asian MRO market, and ST Aero's investment in the country will continue, says its president Tay Kok Khiang. The company's hangars at Seletar airport can accommodate seven narrowbodies, and it is constructing another hangar that can fit two narrowbodies. It also has five widebody lines at Changi airport, and three widebody and four narrowbody lines at Paya Lebar airport.
"This is the airframe dimension of our business. We'll invest in Singapore on an incremental basis to serve the requirements of our customers, who are global airlines," says Tay.
The aim is for an international network to serve customers, and that is where a global strategy kicks in, he adds. "All the hubs have the same brand and service we are known for. With a global presence, we can much better serve our customers. If their fleet is in Asia, we can support them here. They will also get similar service in the Americas, Europe and north-east Asia if they are there."
The company has invested heavily in the Americas over the years. It has 12 narrowbody lines at the former Howard AFB in Panama. In the USA, it has 18 narrowbody and 14 widebody lines in total at San Antonio, Texas, and Mobile, Alabama. While it does not have hangar facilities in Europe, it is eyeing potential investments there. It does have a majority stake in SAS Components, providing airlines with components support.
ST Aero is a relatively late entrant into China and set up Shanghai Technologies Aerospace (Starco), a joint venture with China Eastern Airlines, in 2004. This company has one narrowbody and three widebody lines at Shanghai's Hongqiao airport, and plans to start construction of a widebody facility that can accommodate an Airbus A380 in Shanghai's Pudong airport by the end of 2007.
The country is seen as a potentially big market. The target is not just China Eastern aircraft or Chinese airlines. ST Aero has US Federal Aviation Administration and European Aviation Safety Agency certifications, meaning it can work on aircraft registered in both regions. Shanghai's position as China's financial capital makes it a good catchment area, with the company planning further investments in Hongqiao and Pudong in the coming years. With more US and European carriers flying into China, they could potentially become Starco's biggest source of revenue.
"China is a very successful part of our business," says Tay. "The big focus of this joint venture is to support the global airlines that fly into China. By the end of this year, about 40% of the work that we do will be external work. We expect this to grow to around 75% in a few years."
A notable absence in ST Aero's portfolio is India. Many believe the high quality of India's technical education and its relatively low labour costs give it immense potential for the MRO business. That has prompted providers including Boeing and Lufthansa Technik to start MRO joint ventures in the country with local partners.
But companies such as ST Aero tend to be more cautious. Tay points out that while Indian airlines have ordered several hundred aircraft, the existing fleet is still small and young. "We are looking at the options, but India will take a few years before it warrants a major investment," he says.
One area where the company is keen to make its mark is the aircraft conversion business, says Tay. The company has a contract from freight specialist FedEx Express to convert 87 Boeing 757-200 passenger aircraft into freighters, and is the first company to be contracted by Boeing to conduct 767-300 passenger to freighter conversions.
"This is important in several ways. It is not just labour, but also engineering that is needed, and we are showing that we have the capability needed to take on that kind of work," says Tay. "All the major freight companies are our customers and it is important to provide different products to them. There is life-cycle support potential and it also complements our MRO work."
Source: Flight International
