What are the perspectives for the MRO sector in the Middle East? |
| Romain Guillot in Dubai |
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28 FEB 2019 | 1036 words
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The aviation maintenance sector has been especially dynamic in the Middle East for several years now, largely driven by the rise in fleets and the increase in the number of operators across the region. But new trends are emerging, as we were able to observe at the MRO Middle East show which was held in Dubai (United Arab Emirates) on 11th and 12th February, at the same time Aircraft Interiors Middle East (AIME).
According to the Oliver Wyman agency, which presented its traditional figures during a summit on the eve of the show, the Middle East is still one of the most active regions for the MRO sector, especially in relation to engine maintenance (over 9% annual growth).
Over ten years, the installed fleet has risen from 543 to 1 384 aircraft (at the end of 2018), still mostly composed of wide-body aircraft (758) even if the single-aisle aircraft share has tended to rise over the years with the increase in new actors on the market, and in Saudi Arabia in particular. MRO spending should reach 11.4 billion dollars across the region within five years, compared with 9 billion currently (5% annual growth). Better still, the fleet will practically double within ten years to reach 2 200 planes, generating 4.3% annual growth in MRO spending to reach 13.6 billion dollars, with over 60% for the engines activity alone.
However, Robbie Bourke, vice president at Oliver Wyman, explains that the region is still facing four major challenges: the high number of commercial planes which are reaching the end of their first operational life, the production problems that engine manufacturers are facing with a few key programmes (PW1100G, LEAP, Trent 1000), the need to reduce maintenance costs and finally the difficulties in training enough technicians to meet demand.
This final issue has been discussed in Dubai a great deal over the last few years and many players in the region agree on the fact that the famous "millennial" generation is particularly difficult to attract to this type of technical career, unlike PNT careers for example. Trends such as the digitisation of hangars will perhaps be one part of the solution. For the case of the United Arab Emirates, the work force is also mostly composed of expatriates (only 20% are local), which also adds the problem of being able to retain them faced with competitors who can offer more. According to Shevantha Weerasekera, Etihad Airways Engineering's technical services director, the collapses and difficulties facing certain European maintenance companies have had a positive impact on the recruitment of qualified personnel over the last few months, even if he feels that this input of labour is clearly not sustainable.
Etihad Airways's MRO division has been busy over the last few months, both for major inspections and for the cabin modification activity. Shevantha Weerasekera also explained that this activity doesn't just cover complete modifications, as cabin refresher operations are also significantly up. As examples he mentioned cabin upgrades or conversions of three-class planes into two-class planes. "This is an option which we are adding to the C-Check activity to remain competitive in the market", he explained.
These sentiments were also echoed by Joramco, DAE's MRO subsidiary based in Amman (Jordan), which is currently the largest maintenance centre in the region. Fraser Currie, its commercial director, explained that the activity has been experiencing significant growth for a few years now, both for major inspections (C-checks) and for cabin modification work. He feels that the region is particularly vast and has very diverse requirements, which does not prevent the company from also winning contracts for airlines located "in the north, west and east". He also noted that this type of contract had been unusual until now, but that "operators are flying a little further to get the services they want". "Of course, we're not China, but we've been growing significantly for some time now", he explained, restating Joramco's good geographical location, while emphasising the major pressure on prices in Europe.
The persistent rumour of a possible merger between Emirates and Etihad Airways also resurfaced during this edition of MRO Middle East. In relation to this topic, Shevantha Weerasekera, who is directly concerned, indicated that this potential consolidation would not generate much change initially, as the two actors based in Dubai and Abu Dhabi already cooperate regularly in the maintenance sector.
One other slightly taboo subject discussed in Dubai was of course the tension relationship with Qatar and the new maintenance issues related to Qatar Airways. For example, OEMs based in Dubai were providing maintenance for certain components and equipments for the Qatari airline, but the breakdown in discussions between the two countries has led them to provide their services from their main bases in Europe and the United States. According to our information, other actors have even been forced to set up in Doha as a last resort over the last twelve months, without of course being able to announce it during the Dubai show.
For engine maintenance sectors, the activities of Turbine Services & Solutions (TS&S), a subsidiary of Mubadala and the former engine shop of ADAT (Abu Dhabi Aircraft Technologies) have been experiencing sustained growth for a few years now, as Mansoor Jahani, its interim CEO, explained. With a diverse portfolio comprising traditional (Trent 700, V2500, etc.) and latest generation (GEnx) engines, TS&S has seen its number of inspections increase by 60% in just five years (94 services in 2018). "This diversification is a competitive advantage", he explained. The engine shop, which became fully independent in 2014, even took advantage of the MRO Middle East show to land a contract with the Portuguese airline TAP for the Trent 700s of its A330 fleet, a first for this type of engine with a European customer.
One other actor whose stock is rising is Aerostructures Middle East Services (AMES), the joint enterprise owned 50-50 by Safran Nacelles and Air France KLM E&M. The nacelle and aerostructure specialist has just received its first LEAP-1A (A320neo) nacelle for servicing, an activity which is due to develop significantly given the some 3330+ planes in the region which will be directly concerned. AMES is also taking up a position on Trent 7000 nacelles, while the A330neo will soon be landing in Kuwait.
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Romain Guillot
Chief editor
Cofounder of Journal de l'Aviation and Alertavia
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