Malaysian MRO business flying high

by Andrew Ponnampalam
THE Malaysian aircraft maintenance, repair and overhaul sector is set to go places, thanks to the advantage of cost-effectiveness. THE MALAYSIAN AIRCRAFT maintenance, repair and overhaul (MRO) sector has seen tremendous growth in recent years. Despite very stiff competition from Singapore to become the MRO hub of choice in Asia, Malaysia is determined to carve out its place in the sun. Pundits say the recent crisis in the aviation industry caused by soaring fuel prices, and the current global economic downturn, is shifting the balance of cost- effectiveness in Malaysia's favour. Some sources say that Malaysia aims to capture a full 5% of the global aviation MRO market by 2015, and that the country is well on track to achieve this objective. In June 2008, an Aerospace & Defence consultant from global growth consulting company Frost & Sullivan said Malaysia has the potential to capture more market- share in the aircraft MRO industry with its existing infrastructure and available facilities. At the KL International Airport, Sepang Aircraft Engineering (SAE) was supposed to have signed Malaysia-based low-cost carrier AirAsia as its launch customer. It is building two large hangars at the airport and says it is looking to attract third-party work. Apart from MRO and technical design services for wide and narrow body aircraft, SAE aims to provide full maintenance system and configuration management, reliability data, cost control and status reporting for customers, through its self- developed computer system. Composites Technology Research Malaysia Sdn Bhd (CTRM) was incorporated in 1990 with Ministry of Finance Incorporated as its principle shareholder. Its strategic role was to develop the aerospace and composites industries. The Malaysian DCA has certified CTRM's wholly owned subsidiary CTRM AV as an Approved Maintenance Organisation for light aircraft such as the Eagle 105B, Cessna 300 and the Cessna 400. DCA Malaysia also approved CTRM AV and its engineers to sign off the Certificate Release To Service for the Diamond DA40 & DA42, Piper PA34 & PA28, and the Cirrus SR3G. CTRM AV also provides out-ofbase maintenance by posting its qualified engineers and technical personnel in Ipoh, Kota Bahru and Bintulu. It also offers maintenance services in Johor, Subang and as far away as Bangkok, Thailand. One of the pioneers in Malaysian MRO was Airod; the name being an acronym for `Aircraft Inspection, Repair & Overhaul Depot'. Airod was established in 1976 as the first and only incountry facility to support maintenance, repair and overhaul of aircraft belonging to the Royal Malaysian Air Force (RMAF). In 1985, Airod was privatised as a joint- venture company between National Aerospace & Defense Industries (NADI) of Malaysia and Lockheed Aircraft Systems International (LASI) of USA. Today, Airod is a fully Malaysian-owned company under the NADI group of companies and is a leading MRO facility in the region providing quality services to regional and global customers. Airod is strategically located at the MIAC, occupying a 77.4-acre site within the

Sultan Abdul Aziz Shah Airport Complex in Subang. The company's multi-million dollar facility is an internationally- recognized MRO centre with both narrow and wide-body hangars, paint & strip hangar, support shops and engine test cells. Airod is a premier maintenance and modification centre for the Lockheed Martin Hercules C130/L-100 aircraft, and is authorised by Lockheed Martin for C-130/L-100 Service, C-130 Tanker Conversion, C- 130 Landing Gear MRO and C-130 Fuselage Stretch Modification. Airod has held the C-130 Service Center certification since 1986 and to date has completed heavy maintenance on more than 220 Hercules C- 130 aircraft. The company is also an authorised Service Centre for Agusta A109 series to A119 helicopters. The `big daddy' of the Malaysian MRO industry, however, is the national carrier, Malaysia Airlines. Noting the great potential in MRO business, Malaysia Airlines' Engineering & Maintenance (MAS E&M) has outlined a three-year transformation plan to become MAS Aerospace Engineering (MAE) Sdn Bhd by 2011. A key thrust of the plan is to step up the third-party revenue, with a target of RM520 million for this year. Key priorities for the year include finalising all joint-venture activities, on-shore and overseas including JV agreements with Qantas, Alenia Aeronavali of Italy and GMR of India. MAS E&M has over 30 years of experience in the MRO business. It is a certified approved MRO organisation by 31 National Aviation Authorities including the Civil Aviation Safety Authority (CASA), European Aviation Safety Agency (EASA), the US Federal Aviation Administration (FAA) and Malaysian Department of Civil Aviation. Senior General Manager Mohd Roslan Ismail says, `We are poised for further growth as there continues to be a high demand for our services, even in these tough times. Over the last two years, our third-party revenue contribution has increased 100% from RM218 million in 2006 to RM438 million in 2008, and we have seen a 50% increase in the number of customers. We are a highly-competitive MRO Centre, delivering a comprehensive range of services, including the servicing of aircraft such as the F50, B737 Classic and B747 series, A330, A320 families and B777. We also provide extensive engineering services, including quality assurance, technical services, engineering planning, production planning, aircraft projects, technical training and major aircraft modification. In addition, our team of engineers is being trained to service the Next-Generation aircraft, and we have built a new hangar in KLIA to accommodate two A380 aircraft.' MAS E&M was recently recognised as the best MRO centre in Asia Pacific by Frost & Sullivan Singapore, for its extensive capabilities, ability to deliver high value to customers and for demonstrating strong revenue growth. Frost & Sullivan also said that MAS E&M's potential revenue for the coming years remains strong. MAS E&M's current portfolio lists 80 customers including Saudi Arabian Airlines, Jet Airways and GECAS, one of the world's largest fleet owners and lessors. GE Commercial Aviation Services (GECAS) is a leading global player in commercial aircraft leasing and financing, with over 1,800 owned and managed aircraft, 28 offices, and more than 250 customers in over 70 countries. GECAS is a unit of GE Commercial Finance, itself part of the large conglomerate General Electric. General Electric has decided on Malaysia as the regional hub for its aircraft engine MRO activities. GE vice-chairman, president and chief executive officer John G Rice recently announced a US$ 5 million (RM16.5 million) investment for the expansion of the company's engine overhaul and service maintenance facility in Subang. He said, "The capabilities expansion at GE Engine Services Malaysia (GEESM) sees a further US$ 3 million to be

invested in the next three years that will generate US$ 50 million in revenue. These new investments will offset the projected drop in older product lines and will keep GEESM at the leading edge of engine MRO technology." GEESM is a joint venture between GE Engine Services, Inc, owning 70% and MAS, which holds the remaining 30%. Not content to rest on its laurels as the biggest MRO player in the country, MAS E&M is also venturing overseas. Malaysia Airlines and GMR Hyderabad International Airport Ltd have entered into an agreement to set up a world-class MRO organisation that will cater to narrow- and wide- body aircraft at the Rajiv Gandhi International Airport (RGIA) at Shamshabad in Hyderabad. The MRO will be able to handle all types of aircraft, from light jets to super-jumbos such as the A380. With some 300 aircraft in operation currently, the Indian aviation market is one of the fastest-growing in the world. More than 2,200 new planes are expected in the next decade. With an estimated potential for US$ 1.6 billion by 2018, the Indian MRO market is one that promises to be a strong revenue-source for Malaysia Airlines in years to come.
The world-class standards and competitive costs of Malaysia MRO are a potent combination that seem certain to establish Malaysia as the MRO Hub of choice in Asia.

The writer is an aviation writer and tourism consultant. Copyright 2009 Provided by ProQuest Information and Learning Company. All rights Reserved.

  

The commercial aircraft MRO market value is expected to grow to $46.9 billion in 2011, which is 10.85% higher than 2010. (TeamSAI) 1400 new aircraft should have entered global service by the completion of 2011. Asia Pacific dominated the order book in 2010, with 29%. China alone nabs 10%. Engines represent 46%of all MRO send. (IATA/TeamSAI) By 2021, the Asia Pacific MRO market will be $21.1 billion of the $69 billion global market (30%), with China representing $7.2 billion. It counts 30% of Asia Pacific and 10% of the global MRO market.

Malaysia Airlines & GHIAL, India to set up world class MRO in Hyderabad

Subang (20 August 2008): The sealing of an agreement between Malaysia Airlines and GMR Hyderabad International Airport Limited, India has opened up new opportunities for both companies to capitalize on the fast growing aviation market in the Indian sub-continent.

With some 300 aircraft in operations currently, the Indian aviation market is one of the fastest growing in the world. More than 200 new aircraft will be headed for India in the next two years, while 2,000 new planes are expected in the next 8-10 years.

The two companies signed a memorandum of understanding, which will see the establishment of a world class Maintenance, Repair and Overhaul (MRO) organisation to provide maintenance services on narrow and wide body aircraft at the Rajiv Gandhi International Airport (RGIA), Shamshabad, Hyderabad.

Malaysia Airlines was represented by Executive Director/ Chief Financial Officer, Tengku Azmil Zahruddin and GMR Group by Chairman - Airports, Mr Kiran Kumar Grandhi. Also present were Malaysia Airlines Senior General Manager, Engineering & Maintenance (E&M), Mr Mohd Roslan Ismail and GMR Hyderabad International Airport Limited, Chief Executive Officer, Mr P.S. Nair.

Tengku Azmil said, The timing of this partnership, representing MAS E&Ms first foray into the Indian aircraft maintenance market, is perfect, as the Indian market is experiencing strong aircraft growth with manufacturers bullish on aircraft orders.

All the narrow and wide body aircraft requires maintenance but the current MRO providers in India are unable to cope with the requirements. Currently, most of the aircraft are sent to Malaysia and other MRO providers overseas for heavy maintenance. As such, we will be able to capitalize on these opportunities and position the JV company as a leading MRO player in the sub-continent.

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He added, As the leading MRO is South East Asia with over 36 years of experience, MAS E&M will provide certifications, technical and management expertise in addition to operations and maintenance know-how. We have already commenced by providing technical training to the first batch of 70 Indian trainees.

Commenting on the partnership, GHIAL CEO, Mr. Nair said, We are happy to have MAS E&M set up a modern MRO facility at RGIA. This facility, strategically located within close proximity to the three main cities of New Delhi, Mumbai and Chennai, with modern infrastructure, will be another step towards our endeavor to make the airport an integrated aviation facility for our key business partners.

The MRO centre will be able to handle all types of aircraft from light jets to super-jumbos such as the A380, he added.

MAS E&M is the leading MRO and one of the biggest in South East Asia, with strong technical and engineering capabilities. It is a certified MRO organization by 31 National Aviation Authorities of various countries including the European Aviation Safety Agency (EASA), the U.S Federal Aviation Administration (FAA), Indias Directorate General Civil Aviation (DGCA) and Malaysian Department of Civil Aviation, amongst others.

In addition to maintaining Malaysia Airlines, MASKargo, Firefly and MASwings fleet, MAS E&M have more than 80 customers including Lufthansa, Saudi Arabian Airlines, Jet Airways, Qantas, Austrian Airlines, AWAS, RBS and GECAS, one of the worlds largest fleet owners and lessors.