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Tracking MRO Development In The Middle East

MRO growth in the Middle East should be burgeoning, but there are factors in play that are keeping it in check for now, although this is expected to change soon.

Boeing predicts Middle Eastern airlines will add more than 3,000 airplanes over the next 20 years, 70% for fleet growth. Nearly half the new aircraft will be widebodies, double the widebody share of other markets.

The OEM sees traffic growing at 6.2% annually in the region. So with only 5% of global traffic now, the Middle East would require almost 10% of new aircraft.

That represents a lot of MRO and possibly new MRO facilities. Roughly two-thirds of the region’s $5 billion in annual MRO spending falls to four carriers—Saudia, Etihad Airways, Emirates Airline and Qatar Airways—and all are building substantial in-house capabilities.

For instance, Etihad Airways Engineering, located next to Abu Dhabi International Airport, operates facilities spread over 165,000 sq. meters (1,776,045 sq. ft.)—including a hangar that can accommodate up to three Airbus A380s simultaneously, two paint hangars and a technical training center. Jeff Wilkinson, senior vice president-technical, says: “We anticipate sizable growth over the next 10 years, with plans underway for additional hangars” and capability expansion.

Etihad Airways accounts for 40% of the MRO work, but Wilkinson expects to grow third-party work as it focuses on new platforms such as the A380, A350 and Boeing 787.

The big carriers not only spend the most, they lead the way for smaller carriers. Emirates, Saudia and Qatar have agreed to collaborate on maintenance training, audits, line maintenance and joint purchase of consumables with Algerie, EgyptAir, Kuwait Airways and Middle East Airlines.

Three-quarters of airframe maintenance is completed in-region. Given that the Middle East has a larger share of widebody aircraft, airframe MRO there requires large hangars and many worker hours.

Engine maintenance was once predominantly the domain of Asia-Pacific or European shops. Now some engine capabilities have been located in the Middle East.

Etihad Airways Engineering recently “established a quick-engine-change facility to improve our turnaround times and support the operational needs of airline customers,” says Wilkinson.

GE and Rolls-Royce will install more of such facilities at Mubadala’s Turbine Services and Solutions (TS&S). “The new strategy is to maintain engines in the region; that’s a big change,” notes ICF Principal Richard Brown. Whether in or out of region; engine support is usually provided under flight-hour terms.

The region still has limited capacity for component maintenance, with more sales offices and warehouses than repair shops. “We’ve yet to see OEMs add much test and repair capacity,” Brown notes. “There’s UTC Aerospace Systems [UTAS], B/E, Aircelle, Zodiac and Thales IFE, but otherwise very little. My question is ‘when is it going to arrive?’”

Major carriers and governments want to build a more comprehensive maintenance capacity in the region, to provide skilled jobs and enhance their industrial base, but there are some roadblocks.

One is a pipeline of trained personnel. “Recruiting and retaining experienced aviation professionals is one of our major challenges,” says Etihad’s Wilkinson. “The United Arab Emirates is a young country, and we have to draw on the global talent pool while we work with educational institutions to develop a new generation of well-qualified UAE nationals,” he adds. Etihad offers a graduate engineer training program for local talent.

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In-region support has been slow in coming because the fast-growing Middle East still represents only a small portion of global flying. Big orders for A380s, 777s and 787s are in hand, but these new aircraft will be under warranty initially. Furthermore, “components travel easily,” Brown notes. “Why duplicate Singapore facilities?”

Brown does not see the recent drop in oil prices affecting basic traffic or MRO trends. He notes that “Emirates has a solid commercial network, Etihad and Qatar traffic continues to grow, and they offer products passengers desire.”

Customs and logistics matter and are reasons the region’s airlines favor large in-house inventories. But conservative policies and oil money also spur inventory buildups.

Global MROs are very interested in the Middle East, and airlines there are looking for partnerships to strengthen their own capabilities. Air France Industries KLM Engineering & Maintenance (AFI KLM E&M)  has opened a logistics center in the Jebel Ali Free Zone near the new Dubai World Central International Airport. Jean Michel Picard, vice president of sales for Europe, the Middle East and Africa, says the logistics facility is located at AMES, an aerostructures center where AFI KLM E&M has been repairing composites for four years. “There is lots of room for components, and we can now help Gulf Air’s A320s and A330s without flying parts in from France,” Picard says. Gulf Air recently extended its agreement with the MRO to auxiliary power unit (APU) maintenance on six A330s.

Picard hopes the new logistics center in Dubai will support all components on all models for many Middle East airlines. Dubai will mainly stock major, no-go components vital to operations, such as mechanical, hydraulic and electronic components.

Etihad Airways recently expanded its cooperation with AFI KLM E&M on component maintenance for 33 777s. The 10-year deal gives both Etihad and equity partners such as Jet Airways access to a global pool of components. Picard says the agreement covers about 400 part numbers. Etihad will own its stocks at Abu Dhabi.

AFI KLM E&M also has entered into a strategic partnership with Saudia Aerospace Engineering Industries (SAEI) for power-by-the-hour support of Boeing 777 and 787 components and development of SAEI’s component capabilities on both Airbus and Boeing models in Jeddah. Saudia’s 787 and 777-300 components have been added to the current 777-200 agreement. And the Saudi MRO recently completed construction of a 1-million-sq.-meter space for hangars, component and engine shops. Picard sees the partnership with SAEI as a major deal in the region.

AFI KLM E&M is in discussion with many other Middle East carriers, but “competition is tough,” Picard acknowledges. He expects to sign several 787 and A350 operators up for component support this year.

For example, Oman Air has opted for 737 component support from AFI KLM E&M for a long time, and Picard confirms the airline will sign for support of CFM56-7B engines and 787 APUs this month.

Picard says AFI KLM E&M is working to build Middle East capabilities. Projects with Etihad and FlyDubai are in the offing, and he hopes to offload some component repairs to SAEI under its new partnership.

“Some airlines, as soon as they sign, ask cooperation to develop their capabilities and offload some work,” Picard notes. For example, Oman wants AFI KLM E&M assistance in constructing hangars, and the MRO will help Gulf Air develop internal maintenance capabilities.

Adding local engine capacity is much more difficult than adding component capability. “We can help some MROs add module capabilities,” Picard says. Huge investments, technology transfers and construction times of up to two years make adding full engine capabilities very tough.

AFI KLM E&M supports some Embraers in the region, with one E-Jet customer signed—Royal Air Maroc—and one in negotiation. It supports ATRs mainly in Africa.

Lufthansa Technik (LHT) performs maintenance on Saudia’s A320s and A330s and will assist SAEI in developing its MRO capabilities. The global MRO will use SAEI as a subcontractor for strategic parts that the Saudi MRO can repair. And LHT and SAEI will market their services to other customers in the Middle East.

LHT also is maintaining radomes on Air Arabia’s A320s. Ziad al Hazmi, CEO of LHT Middle East Services, says several projects are planned this year to expand support in the region.

LHT is setting up a local aircraft-on-ground (AOG) and material support desk so airlines can check material availability locally. And it is extending local spares at its Dubai Airport facility to cover A350 parts. By the end of third-quarter 2016, LHT’s new facility in Dubai South will repair airframe-related components. And Lufthansa Technik Logistics Services will be added to LHT’s sales office.

As observed, engine-makers have been very active in the region. More than 1,000 Middle East aircraft are powered by GE or GE joint-venture engines, and this fleet is growing rapidly, notes Muhammad Al-Lamadani, senior GE executive for the Middle East, Turkey and the Commonwealth of Independent States.

More than 430 GE Aviation employees work in the Middle East. Facilities include a six-year-old Advanced Technology and Research Center in Doha, Qatar. Nearly 150,000 sq. ft. of this is dedicated to training and comprises six digital classrooms and 14 engine or tooling bays that provide  hands-on experience.

GE recently opened an Aviation Technology Center in the Dubai Airport Free Zone to help increase operational efficiency with analytics and software built on GE’s Predix cloud platform. 

GE has helped Emirates develop in-house capabilities on GE90s and Engine Alliance GP7200s. Emirates’ equipment will include a 13-meter turbofan test cell for up to 150,000 lb. thrust and an APU test cell.

GE’s agreement with Mubadala to build a GEnx engine MRO facility at the Nibras Al Ain Aerospace Park in Abu Dhabi extends a partnership with TS&S. The new facility is expected to begin performance-restoration shop visits in 2021, chiefly on Etihad engines.

Al-Lamadani points out that GE’s approach is unique in allowing customers very broad choices among services: “Intense local and customized service is fundamental to our approach, and that won’t change.” The company will continue to offer technical expertise, experience, logistical support and training for MRO operations. He says transport and customs create no issues in the region: “Governments [here] have done an excellent job streamlining customs.”

Five years from now, Al-Lamadani expects GE will be helping the GE9X enter service in the Middle East, its biggest market.

Some OEMs with broad portfolios also have been very active. UTAS and Revima Group recently partnered to support landing gear on Emirates’ 777-300ERs. Revima is primarily responsible, but a portion of the work will take place at Goodrich’s MRO campus in Dubai.

This Dubai facility has 80 employees and works across UTAS product lines, including nacelles, evacuation slides, engine controls, interior equipment and tear-down and minor repairs of 777 landing gear. “We have a large portfolio of repairs in Dubai and can send many other components to the U.S. or Europe,” says Brian Costa, vice president of business development and customer care. “Most parts we can repair in the Europe, Middle East and Africa region.”

Costa notes that UTAS continually reviews the need for capabilities in the Middle East and has plenty of room to expand its Dubai facility of 115,000 sq. ft. Middle East carriers are growing rapidly and prefer local stocks of rotables. But Costa points out that new aircraft simply need less maintenance.

Supporting the region’s airlines is no more challenging here than elsewhere. UTAS has been able to recruit skilled labor in Dubai and is experienced in handling transportation and customs. Fortunately, the Middle East is close to Europe. Costa expects local MRO capabilities to grow steadily as fleets increase in size and age.

Repairs, parts, entry-into-service assistance and other technical services are all provided by UTAS in the region. It hopes to offer full-service support, especially on new models such as the A380, 787 and A350. The company is eager to help carriers exploit the Big Data these new, e-enabled jets provide.

Honeywell Aerospace has more than 1,800 employees throughout 17 offices in the Middle East, including Dubai, the UAE, Abu Dhabi, Doha, Jeddah, Cairo, Muscat, Kuwait, Bahrain and Baghdad. Senior Technical Sales Manager Amir Emam says Honeywell will support the region with market-tailored strategic local partnerships and technologies. His company continues to invest in local manufacturing and research and development facilities.

Honeywell’s key Middle East partnerships include satellite communications with Oman Air, SmartLanding and SmartRunway with Emirates, APU support for FlyDubai and avionics collaboration with Jet Aviation Dubai, Transworld Aviation and Hawker Pacific.

AAR recently relocated its Middle East office to the World Trade Center in Abu Dhabi. The company is active in both military and commercial aftermarkets in the region, says Rahul Shah, senior vice president for business development, Asia-Pacific, Middle East and Africa. On the military side, for example, AAR will help design the Advanced Military Maintenance Repair and Overhaul Center in Abu Dhabi for Mubadala, Sikorsky and Lockheed Martin.

For components on commercial jets, AAR provides supply chain management, AOG and round-the-clock power-by-the-hour support for Middle East customers from its warehouse in Brussels. Components can be repaired in Amsterdam, and repairs can be managed by Airinmar, an AAR subsidiary in the U.K. Shah predicts growth in AAR’s flight-hour support for Middle East airlines.

Shah expects opportunities for independent aftermarket experts, partly because the region’s demands are growing so fast—up to 11 million maintenance worker hours by 2024. He expects attracting talent in sufficient volume at reasonable rates will remain a challenge for shops located in the Middle East.

Regional-aircraft OEMs also have been increasingly active. Bombardier is working with Abu Dhabi Aviation to establish the MRO as the first Middle East facility authorized to do line and base maintenance on the Q-Series. Customer Service Vice President Todd Young notes Bombardier now has five customers flying 17 Q Series aircraft in the region. The Canadian OEM also has 7,800 part numbers for its commercial aircraft stocked in Dubai, plus a sales office and field service representatives.

Five Middle East companies operate 19 CRJs, and Young expects the C Series will do well in the region. Bombardier annually reviews support arrangements in the Middle East based on fleet sizes. 

This article was originally published on January 26.

TAGS: Middle East
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