One mature aviation giant and a nearby fast-growing aviation giant have a complex relationship that may be getting even more complicated.
While Chinese aviation continues rapid growth, the biggest news in Japanese aircraft maintenance has been the announcement of MRO Japan, Japan’s first airline-affiliated MRO service provider, says Yuichi Takayama, the new head of Alton Aviation consultancy’s Tokyo office. The maintenance and engineering division of All Nippon Airways is the driver of the new venture, which is supposed to begin operating in January 2019 performing airframe heavy maintenance in Okinawa.
“It is our understanding that ANA Holdings will have a 45% ownership stake, with JAMCO, Mitsubishi Heavy Industries and other financial institutions jointly funding the remaining shares,” Takayama says. MRO Japan will actively pursue airframe MRO opportunities with other Asia-Pacific carriers, in addition to supporting the ANA Group’s fleet.
ANA has been outsourcing to Chinese MRO providers and other Asian MRO providers with facilities in China for a long time. Takayama predicts that, due to a lack of maintenance capacity within ANA even as MRO Japan ramps up, reliance on Chinese maintenance will probably increase over the short to medium term.
Japan Airlines has been outsourcing heavy maintenance to its long-term partners, HAECO Xiamen for work on Boeing 767s, 777s and 787s, and ST Aerospace (Guangzhou) Aviation Services Co. for work on 737s. Because JAL has the same maintenance capacity constraints as ANA, its reliance on Chinese companies will probably increase as well.
But Takayama says the major Japanese carriers have two concerns about outsourcing maintenance to China. First, Chinese labor costs are continuing to increase and could converge on Japanese rates within 10 years, undercutting the benefits of outsourcing to China. Second, the capacity of Chinese MRO providers is a concern. “When we look at the tremendous planned increases in fleet sizes of Chinese airlines, Japanese airlines will have to compete with Chinese airlines for hangar slots.”
Apart from the majors, since 2010 Japan’s low-cost carriers have continued to evolve. Their average fleet age is now about approximately 6.5 years, so aircraft are hitting their first heavy checks, which will increase demand for maintenance. “In addition, as Japanese LCC fleets age, we understand that they are beginning to experience an increase in unscheduled maintenance,” Takayama says.
But Japanese LCCs are facing very difficult challenges in recruiting maintenance staff. “Full-service carriers like JAL and ANA have a huge recruiting advantage as they can leverage better total compensation packages and strong global brand reputation,” Takayama explains. As a result, the country’s LCCs may have to consider outsourcing line maintenance, which has traditionally been performed in-house.
In general, all Japanese carriers face major challenges in staffing maintenance departments. This may call for an industry response. “Maintenance and engineering divisions of Japanese airlines have begun cooperating with regards to certain technical data,” Takayama notes. “Recruiting and training could be a next logical step.”