Roland Berger Aerospace and Defense Partner Robert Thomson says the chief maintenance challenges in the Middle East include hot and sandy environments, which are tough on aircraft and, especially, engines, and rapidly expanding fleets, some of which are aging as fewer new aircraft are delivered due to the economic slowdown.
The recent moderation of oil prices has worked chiefly to delay retirement of older, less efficient aircraft and thus increased maintenance demand. Furthermore, “some aircraft are reaching the trigger point for major component overhaul, for example landing gear reaching a 12-year overhaul point,” Thomson adds.
Berger Middle East Partner Richard Paton notes that MRO pricing has often been high in the region, leading to outsourcing deals being made, such as Saudia's outsourcing to Lufthansa Technik. “Having multiple large airlines leads to poor economies of scale in MRO.” In addition, Middle East MROs lack home-grown work forces.
It is thus hard for Gulf Coast carriers to compete for non-Middle East airframe maintenance, where labor costs are so important. But providers such as JORAMCO and Egyptair Maintenance & Engineering are highly competitive on cost. “For engine and component services, where labor is a smaller portion of total costs, Middle East providers can be competitive, particularly if they invest in facilities such as test beds for engines and develop their capabilities," Thomson notes.
Paton supports this view, arguing that the competitive picture will change in the near future as greater investments are made in MRO in both the United Arab Emirates and Saudi Arabia to support both airlines and defense aircraft. The new facility in Jeddah will be the largest MRO in the world, and the new airport in the Emirates will have enough capacity to serve a much wider customer base.
On the procurement side, Thomson suspects Middle East MROs are a bit wary of PMAs and used parts. “Most Middle East airlines trade on an image of very high quality, and PMAs are not really consistent with such an image. The same would apply to used parts to a lesser extent, although cost savings can be considerable.”
To deal with recruiting and training challenges, some Middle East airlines have set up Part-147 training schools, for example Emirates and Etihad. “In addition, there is a steady inflow of trained mechanics from MRO facilities on the Indian sub-continent.” But Paton says more investment is needed to ensure a robust supply of qualified mechanics. “As Saudi Arabia pushes its localization and Saudization agenda it will need to rely more on home-grown talent going forward.”