Printed headline: Mature and Steady
For a relatively small aviation region compared to the more established hubs of North America and Western Europe, the Middle East is still forecast to see its airline fleet double in size over the next two decades. In November 2017, Airbus’ Global Market Forecast estimated that the region’s fleet will grow to 3,320 by 2026 from its current 1,250 aircraft.
The largest fleets in the region are operated by the trio of Emirates, Qatar Airways and Etihad Airways, with the three carriers combined accounting for nearly 50% of the Middle East’s in-service aircraft. While the three have established in-house engineering capabilities able to deal with anything from line maintenance to cabin retrofits, some of the region’s low-cost carriers have followed the usual path by choosing to outsource some of their maintenance requirements.
Exemplifying this approach is FlyDubai, which has signed a number of support deals with third parties in its 10-year history. Most recently, the low-cost carrier has aligned with U.S. component specialist AAR, first on support for its Boeing 737-800 aircraft fleet in 2016, then for its 737 MAX aircraft.
The Middle East also has a healthy backlog of engines set to enter the fleet, with Aviation Week Fleet & MRO Forecast data projecting MRO demand of $30.8 billion in 2017-26. The same forecast indicates orders and commitments for 2,528 units, higher than those anticipated to enter the regions of Eastern Europe, Latin America or Africa individually. Topping the backlog are the CFM International Leap 1A (534) and 1B (326), the GE9x (490) and Rolls-Royce Trent XWB (308).
Yet with relatively few engine specialists in the Middle East, and the region anticipated by Aviation Week to account for 10% of overall MRO spending over the next decade—with engine MRO work forecast by Aviation Week at $12.2 billion in 2017-21—an opportunity exists for local MRO providers to gain a stronger foothold in the segment.
One of the prominent players among the region’s engine repair specialists is Turbine Services & Solutions (TS&S), derived from the engine services division of Abu Dhabi Aircraft Technologies in 2014. As the region’s only MRO center of excellence for the IAE V2500, Rolls-Royce Trent 700 and GE Aviation GEnx, TS&S carries out a sizable volume of its work with OEMs, along with some maintenance for Etihad and other customers across the Middle East, Europe and Africa.
Mansoor Janahi, deputy CEO of TS&S, says market demand is “exceptionally strong” for the V2500 and the Trent 700 models, with both engine types continuing in production past the initial manufacturing end date set by the OEMs. Such is the strength of demand, that last year, Janahi says, the company reached a record of almost 100 engine inductions across its Airbus A320-powering V2500 product lines, while a record number of overhauls were carried out on the Trent 700, used on the Airbus A330.
TS&S says it has completed work on the engine in the past year for a diverse customer base, including Rolls-Royce, SriLankan Airlines and Ammroc (Advanced Military Maintenance Repair Overhaul Center). “The additional interest that we are receiving on our non-OEM Trent 700 program offerings has also emerged as a large portion of our services portfolio,” Janahi adds.
Moving even further back on the engine age scale is Jordan Aeronautical Systems (JAC), which has long focused on some of the oldest commercial powerplants, holding repair capabilities for the CFM56-3 and Pratt & Whitney JTD8 series engines. Engine services are offered along with base and line maintenance for the Boeing 737 Classic, cabin interior maintenance services, painting and a parts brokerage business.
In the next two years, however, Ziad Abuain, CEO of the Amman-based business, says JAC will look beyond the older engine types and target the current-generation market, specifically aircraft such as the A320 family and Boeing 737NG aircraft. Ultimately, offering line maintenance services from its two bases in the Jordanian capital for the CFM56-5B and -7B powering the A320 and 737NG, respectively, is a target, Abuain says.
However, while servicing new-generation aircraft and engine types will open up a larger market, Abuain predicts upgrading capabilities will not come without competitive challenges. “Adding these capabilities will place us amid the fierce competitors among more than 40 MROs in Europe and the [Middle East-North Africa] region,” he says.
Abuain explains that the planned move to the current-generation market is being driven by a drop in demand from the company’s African and Middle Eastern customers still operating legacy engines. He says that based on its current projections, JAC forecasts MRO demand for engines such as the CFM56-3 and JT8D will be gone within 4-5 years’ time.
While TS&S, like JAC, sees plenty of mileage in mature engine types, not all older engines present long-term opportunities. In 2016, TS&S phased out the GE CF6-80C2, an option for 11 widebody aircraft, most notably the increasingly scarce Boeing 747-400 and MD-11. Janahi said the decision to discontinue the CF6-80C2 repair line made financial sense and meant the company could be more aligned with Etihad’s fleet modernization strategy, according to which Airbus A350-1000s, and Boeing 777-8s and 787-10s start entering the fleet this year.
With this in mind, it is no surprise that the future markets in which TS&S sees more potential are for the Rolls-Royce Trent XWB, the sole engine option for the A350, and the GEnx, an option for the 787. The MRO announced cooperation at the Dubai Airshow in November 2013 with both GE Aviation and Rolls-Royce to establish capabilities for the new engine types, and according to Janahi, these plans are still under development.