MRO
MASAE aims for the top
Malaysia Airlines’ maintenance arm has ambitious plans to lure more customers and increase revenue, writes William Dennis.
Malaysia Airlines’ MAS Aerospace Engineering (MASAE) unit aims to be the world’s number one airframe maintenance, repair and overhaul (MRO) service provider in terms of utilised man-hours within two to three years.
The company currently ranks third, with 4.8 million man-hours recorded last year. Third-party work alone accounted for more than 50 percent of that total and the service provider carried out 711 ‘C’ and ‘D’ maintenance checks during the year.
“This is an achievement for the company as the global MRO industry then had yet to show signs of recovery,” says MASAE Managing Director Mohamed Roslan Ismail.
As part of its growth plan, MASAE is developing a Designated Engineering Repair Scheme (DERS), which will be instrumental in reducing turnaround times. It will also bring financial benefits to customers, leading to lower costs.
Once developed, DERS will need the approval of the appropriate regulatory authorities before implementation.
Demanding customers
“We can’t possibly go into the global MRO market pitching for business using the same old maintenance scheme, as customers are getting very demanding and are looking for faster turnaround times to get their aircraft back quickly for operations,” Roslan said.
Airlines have increasingly begun to re-examine their fleet-maintenance schedules to increase efficiency and minimise costs. MRO service providers are identifying new market needs and value-added services that support airlines’ requirements.
Roslan says that MASAE has to develop its own strengths as high quality, fast turnaround times and competitive pricing are becoming the norm, with airlines seeking service providers who offer better deals without compromising quality.
MASAE plans to expand its airframe-maintenance capabilities to include heavy maintenance for the Airbus A380 – the world’s largest jetliner – starting with ‘C’ checks. “It could start with the Malaysia Airlines A380, one year after the carrier commences operations with the aircraft, or even earlier with a [third-party] customer aircraft,” Roslan said.
MAS will start taking delivery of its first of six A380s on order in May 2012. The aircraft is expected to enter operational service a month later.
Twenty MAS engineers are currently undergoing training to prepare them for the A380, conducted by Airbus specialists at MASAE’s training school at Sultan Abdul Aziz Shah Airport in Subang, 25km outside Kuala Lumpur.
The MRO company is investing significantly to acquire the tooling and equipment required to carry out A380 maintenance, and will work towards European Aviation Safety Agency (EASA) approval once training is completed.
Many procedures cannot be carried out on the A380 using current equipment, because of the sheer size and weight of the double-deck ‘Superjumbo’.
“The A380 is a new-technology aircraft that requires different equipment and tooling for maintenance,” Roslan says, citing as an example the hydraulic system, which requires 5,000psi pressure compared with 3,000 psi for other aircraft flying today, as an example.
MASAE’s aim is to tap the market for A380 maintenance as more carriers introduce the aircraft.
Roslan notes that although the A380 MRO market may not be as big as that for smaller, more common aircraft types, it provides numerous opportunities for MASAE especially with airlines that placed orders for smaller numbers of aircraft and would therefore be less likely to invest in in-house MRO capabilities, and possibly with Qantas, which has been outsourcing more maintenance to reduce costs.
Securing a contract for Qantas A380 maintenance would be a big boost for MASAE, while representing a massive saving for the Australian flag carrier.
Qantas currently sends its A380s to Lufthansa Technik in Hamburg for base maintenance.
Roslan points out that, although labour costs in Malaysia have risen, they remain lower than in Europe. MASAE will pitch for Qantas maintenance when it is ready, he adds.
A380 potential
Qantas, which sponsored Malaysia Airlines’ entry into the Oneworld global airline alliance, has ordered 20 A380s. Other customers for the Superjumbo in Asia are Thai Airways International, Korean Air and Asiana Airlines, each with six aircraft.
An official at Thai Airways’ engineering division in Bangkok says the airline is likely to outsource A380 maintenance, as investing in tooling and equipment would be a huge cost to the airline.
Thai will take delivery of two A380s in October 2012, with the remaining four scheduled for delivery from 2013 through to 2014. Korean Air has taken delivery of three so far, with the fourth set to be delivered in October.
Roslan is confident that MASAE will be able to secure contracts for the aircraft. “We are capable of competing with the big MRO service providers in the market for a slice of the business,” Roslan says.
The MASAE A380 hangar at the Kuala Lumpur International Airport (KLIA) is designed to be able to accommodate two A380s and one smaller widebody aircraft any one time. The company’s airframe MRO capability covers Boeing’s 747, 777, 767 and 737 (Classic and Next-Generation) models, as well as Airbus’s A340, A330 and A320 families and ATR 72-500 turboprops. The company also has passenger-to-freighter (PTF) conversion capabilities for the 737-300 jetliner.
Roslan says the company has no plans to expand its PTF capability, as the air cargo market is soft at the moment. “There has been talk that the market has rebounded, but I believe it is more [as a result] of clearing the backlog,” he says.
MASAE has certification from 35 regulatory bodies around the globe and more than 100 customers.
Expanding workforce
Overall, the company operates six maintenance hangars with a total of 18 bays, 11 of which are in Subang and seven at KLIA. The 18 bays can be stretched up to as many as 24 if the need arises.
With a workforce of 5,300 currently, Roslan expects this to increase to 7,000 within the next three years. By that time, the six hangars will be working around the clock on three-hour shifts – up from the current two – to reduce heavy maintenance turnaround times and to exceed industry standards.
“Currently, our turnaround time, depending on customer specifications, is comparable to industry standards and our aim is to improve on it,” Roslan says, adding that today’s MRO business is about speed and quality.
Customers are willing to pay more for faster turnaround times, he says.
In the period 2013-2017, MASAE plans to set up more MRO joint-venture companies overseas. Its first, MAS-GMR Aerospace Engineering in Hyderabad, India, will open for operations in September.
The company is a 50-50 partnership between MAS and GMR Hyderabad International Airport. The venture’s initial capability will be for maintenance of A320 and 737NG aircraft, gradually expanding to include other aircraft types.
MASAE is now in talks with a Chinese partner to set up a venture in Dalian, north China, the only region in the country where there is now no MRO service provider.
China expansion
“It is a challenge to be in the MRO business in China, as its airlines are expanding at a rapid pace,” Roslan says. Chinese airlines are expected to acquire 3,000 new aircraft over the next three to five years.
“We aim to take advantage of the growing MRO Market in China, which will enable us to also bring work from Mongolia and Japan to achieve our vision of developing the Malaysian MRO industry,” Roslan noted.
MASAE has projected modest revenue growth of 7-8 percent for 2011. “MRO in Asia will continue to grow, and it will be more exciting in 2012 with, more aircraft due for heavy maintenance,” Roslan says.
US-based aviation consulting company TeamSai has projected 10.8 percent growth for the global MRO sector in 2011, with revenue expanding to US$46.9 billion, of which the Americas will generate US$17 billion, Europe US$13.7 billion, Asia US$11.6 billion and Africa US$1.5 billion.
