Meeting engine MRO needs
Over the next two decades, Asia is predicted to lead growth in air traffic. With airlines once again placing substantial orders for new aircraft, the region’s MRO providers are expanding engine maintenance capabilities to tap that segment of the market, reports Andrzej Jeziorski.
While the air transport industry still faces challenges and economic uncertainty, orders for new aircraft have recovered to healthier levels since the industry’s slump at the end of the last decade. In January, Boeing reported that 2012 was its second-best year for new orders and Airbus recently said that its backlog rose to a new industry record of 4,973 aircraft in April this year.
A substantial proportion of the new aircraft on order are destined for Asia-Pacific carriers, with the region poised to lead growth in passenger traffic over the next two decades.
Naturally, demand for maintenance, repair and overhaul (MRO) services for the world’s expanding airline fleets is set to grow proportionally, with engine MRO comprising the global industry’s largest market segment. It is also a highly competitive sector for the Asia-Pacific commercial aviation industry.
Recognising the sector’s potential, engine manufacturers have been offering increasingly attractive after-sales support packages to customers, in an effort to compete with dedicated MRO service providers.
[Subhead:] Expanding market
US-based aviation consultancy TeamSAI predicts that the total global market for MRO services for commercial jet aircraft in 2013 will be valued at US$53.9 billion, of which engines will account for US$23.1 billion. The total market will grow to US$65.1 billion in 2018 and US$72.6 billion in 2023, with the engine MRO sector expanding to US$29.1 billion in 2018 and US$31.9 billion by 2023.
Also by 2023, TeamSAI says Asia will have become the largest MRO market, with a total value (for both jet and turboprop aircraft) of US$24.3 billion, compared with US$13.9 billion today – smaller than both the current European (US$16.9 billion) and American (US$19.9 billion) markets.
Original equipment manufacturers (OEMs) have substantial advantages in the engine sector, offering unique expertise in their own products, while also being able to provide a single-source solution for their customers’ maintenance needs with ‘power-by-the-hour’ support programmes.
“Engine MRO is almost entirely outsourced; as a result of the need for specialised knowledge when it comes to such repairs and the success of engine OEMs controlling the aftermarket,” says TeamSAI. “Engine work is sent outside the region more often than any other market segment, reflecting the relatively fewer number of providers. According to the publicly available information on engine contracts, as much as 33 per cent of engine MRO is outsourced to a different region.”
According to TeamSAI, non-OEM maintenance providers are being compelled to come up with carefully-devised strategies to compete with the OEMs – making efforts to offer their customers maximum value and stable costs over the long-term.
[Subhead:] Major providers
Key providers of engine MRO services in Asia include: Singapore Aero Engine Services (SAESL); Hong Kong Aero Engine Services (HAESL); Beijing-based Aircraft Maintenance and Engineering (Ameco Beijing); MTU Maintenance Zhuhai; Sichuan Services Aero Engine Maintenance (SSAMC); GE Engine Services Malaysia; Eagle Services Asia; and Taipei-based Evergreen Technologies.
Singapore-based SAESL is a joint venture of Singapore Airlines’ SIA Engineering unit, which holds 50 per cent of the company, Rolls-Royce with 30 per cent and HAESL with 20 per cent. One of the biggest engine MRO providers in the region, SAESL is Rolls-Royce’s regional ‘centre of excellence’ for the repair and overhaul of Trent-family turbofan engines.
Since it started operating in 2001, SAESL has expanded its capabilities to support the full range of Trent-family powerplants. The company has now developed into an essential component of Rolls-Royce’s aftermarket service capabilities.
The venture offers the region’s first in-line gantry system for engine strip assembly, as well as the world’s first fully automated engine-parts cleaning line. SAESL was named by Rolls-Royce as the UK engine manufacturer’s first Trent 900 centre of excellence, supporting Singapore Airlines’ fleet of 19 Airbus A380 ‘Superjumbos’.
Rolls-Royce and SIA Engineering are also shareholders (45 per cent and 10 per cent, respectively) in Hong Kong-based HAESL, alongside local MRO venture Hong Kong Aircraft Engineering (HAECO), which holds the remaining 45 per cent stake. HAESL offers complete repair and overhaul capabilities for the Rolls-Royce RB211 and Trent engine families and says it has an annual throughput of approximately 230 engines.
“We have overhauled more than 2,400 Rolls-Royce RB211 and Trent engines since HAESL’s establishment [in 1997],” the company says. “Our extensive component repair capabilities allow us to provide these services to the Rolls-Royce engine overhaul repair network worldwide.”
The company says it recently completed its Phase IV workshop facility, increasing engine throughput by as much as 25 per cent and improving workflow efficiency to meet increasing demand for component repair. The US$50 million Phase V component repair workshop was opened in mid-2011.
In China, Ameco Beijing – a 60-40 joint venture between Air China and Lufthansa – offers full MRO capability for Rolls-Royce RB211-535 E4 and E4B engines and an engine test cell handling up to 100,000lb of thrust. Air China also holds 60 per cent of SSAMC, with the remaining 40 per cent belonging to engine manufacturer CFM International, itself a joint venture of GE and Snecma.
[Subhead:] CFM56 overhaul
SSAMC was founded in December 2010 after three years of complex negotiations between the partners, when the Chinese government gave the green light for the venture. The company’s facility at Chengdu Shuangliu International Airport provides overhaul services for CFM56-5B and -3/7B engines, which power Air China’s narrowbody fleet of more than 200 Airbus A320 and Boeing 737 Next-Generation jetliners. The airline’s six Airbus A340-300s are each powered by four CFM56-5C engines, which are also overhauled by the joint venture.
The CFM56 and the International Aero Engines (IAE) V2500 – which is also offered as a powerplant on the Airbus A320 single-aisle aircraft family – are seen as ‘cash cows’ for engine MRO providers, since they power the most ubiquitous single-aisle jetliner types.
CFM- or IAE-powered A320s and 737s are widely used across Asia, helped by the boom in low-cost carriers. About 3,000 CFM56 engines are operating around the region, with China-based carriers accounting for more than half of that total.
It therefore comes as no surprise that more MRO providers have begun to offer services for these engine types. Singapore MRO giant ST Aerospace grabbed a hold on the market with the opening in 2011 of its ST Aerospace Technologies (Xiamen) (STATCO) joint venture with Xiamen Aviation Industry (XAIC). The US$78 million, 38,620 square metre facility has initially been offering engine MRO and total support services for CFM56-7B and -5B engines, with capacity to handle up to 300 engines a year.
STATCO, located near Xiamen Gaoqi International Airport, received Part 145 certification from the Civil Aviation Administration of China (CAAC) the day it opened, and also has approval from the US Federal Aviation Administration (FAA) and Korea’s Ministry of Land, Transport and Maritime Affairs, permitting maintenance of CFM56-7Bs used by US and Korean operators.
The venture offers a state-of-the-art, fully computerised data-acquisition engine-test facility, capable of testing engines up to 90,000lb thrust. The facility complements ST Aerospace’s engine MRO site in Singapore, which can handle up to 350 engines annually.
[Subhead:] Indonesian ambition
In Indonesia, Garuda Indonesia’s Jakarta-based maintenance unit GMF AeroAsia has been expanding its engine MRO capabilities.
In February, the company introduced a new CFM56-7B engine test cell as “a strategic step that will help Garuda Indonesia enhance GMF AeroAsia’s engine shop capabilities”.
The new facility was jointly developed by GE and CFM International, with involvement from GMF’s engineers, which, the company says, provided opportunities for technology and knowledge transfer to GMF employees.
According to Garuda president and CEO Emirsyah Satar: “Building the CFM56-7B engine test-cell capability is an important milestone for Garuda Indonesia and GMF AeroAsia in our goal to have engine shop capabilities and to become a maintenance and service centre of excellence in ASEAN. With the new CFM56-7B engine test cell facility we can maintain and service our growing Boeing 737-800 fleet locally.”
Satar said that GMF AeroAsia will have “full overhaul capability” for the CFM56-7B in 2015, and will be able to maintaining 150 engines per year by 2016.
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