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Chinese MRO Infrastructure Falling Behind Growth

Skilled labor is challenging the country's MRO growth while carriers in China are still wary of used parts and PMAs due to safety concerns.

The main challenge for Chinese MRO is rapid growth in traffic and fleets, according to Beijing consultants of Alton Aviation. Chinese mainland MRO infrastructure has not been able to meet recent growth.

Existing facilities provide about 140 airframe maintenance positions, inadequate even for the current fleet and way below future needs. Further, “the MRO labor force can barely meet the challenge,” the consultants say. “Low-level, labor-intensive MRO is less of an issue, but as for highly skilled MRO workers, this could be a problem in next few years.”

As a result, Chinese MRO prices and labor rates are both increasing rapidly, and this trend will likely continue in future. Especially in Tier-1 cities such as Beijing, Shanghai and Shenzhen, the price and labor-cost advantage MROS once had over competing suppliers has rapidly eroded in recent years, according to Alton.

Generally, there are no challenges in supplying new spare parts of OEMs or certified part suppliers to Chinese airlines. However, it is more difficult to gain acceptance of used parts by the three major Chinese airlines, say the Alton consultants. These difficulties stem from the strong emphasis placed on safety by the Civil Aviation Administration of China and the Chinese government itself.

“The Chinese government is generally very conservative with regards to safety, which takes precedent over cost,” the Alton consultants say. “The three major airlines are under less pressure to achieve cost savings, compared with maintaining high safety standards for used parts and aging aircraft.” Apart from the big three, most Chinese airlines also have a negative attitude towards used parts. “In the near term, we don’t believe that this attitude will change, and it is related to the CAAC’s concern over safety.”

Chinese airlines, especially the three major airlines, do not accept PMA parts for critical structural parts. Although smaller airlines have less concern over the PMAs, the Chinese domestic market is still very cautious about PMAs. “They will accept some low-cost consumable parts, provided they are approved by the regulator and from a reputable source,” the Alton consultants say. “We are seeing more PMA usage for interiors and other non-safety-critical parts.”

Leased aircraft also cause some complexities. During lease terms, some airlines use PMAs to reduce cost, but when aircraft are returned to lessors the airlines replace PMAs with OEM parts.

TAGS: Asia Pacific
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