The trend of OEM incursion in the aftermarket was exemplified at the Singapore Air Show this week with the event seeing a number of industry giants forming new airframe, engine and component joint ventures.
With Asia-Pacific’s in-service fleet expected to grow at a 5.8% compound annual growth rate according to Aviation Week’s 2018 MRO & Fleet Forecast, along with a projected MRO sector value of $22.5 billion by 2027, the region’s maintenance opportunities are attractive to increasingly service-centric OEMs.
In recent years, their MRO strategies in the region have been characterized by them setting up shop often through partnerships and JVs, particularly focusing on new widebody aircraft types from Boeing and Airbus.
Much of the airframe activity at Singapore was centered on Boeing, operating with ambitious goals to accrue $50 billion in annual revenues for its Boeing Global Services (BGS) unit within five to 10 years. This intent outlined last year has led to many second guessing its next move in the aftermarket. One prevailing belief in the industry is that acquisitions to aid this growth are inevitable.
While Singapore didn’t serve up any buying activity from the U.S. airframe maker, it did see nearly $1 billion worth of new service deals signed in Singapore. These included deals for Singapore Airlines to use Boeing’s Electronic Logbook on its 777 and 787 fleets, a landing gear exchanges contract with Japanese carrier All Nippon Airways, and partnering with China Southern Airlines and Guangzhou Aircraft Maintenance Engineering Company to develop services for the BGS program.
Rival Airbus, which is seeing its Services By Airbus aftermarket division growing in double digits while heavily pushing its Skywise open data platform, had MRO-related announcements of its own at Singapore.
It confirmed a new customer services center at its Airbus Asia headquarters located at Seletar Aerospace Park in the city-state. The center adds to its existing regional presence, which includes Malaysia-based acquisition Sepang Aircraft Engineering and its Heavy Maintenance Services Singapore JV with SIA Engineering.
Airbus has also operated a technical training center with Singapore Airlines since 2016 to address the projected global demand for 200,000 new technicians in the region by 2036.
In the engine and component segments, which will account for around 30% of the overall Asia-Pacific aftermarket this year according to Aviation Week data, the major OEM activity centered on SIA Engineering, the airline-affiliated MRO which ranks among the region’s largest service providers.
GE Aviation was among the engine makers to form partnerships with SIA Engineering focusing on next-generation engine types. These included finalizing a 51%-49% JV agreement for GE90 and GE9X overhauls with SIA Engineering, following on from the first announcement of the initiative in summer 2017 at the Paris Air Show. It also announced plans to build a new facility to manufacture GE9X engine parts in Singapore, growing its presence in a components segment, which accounts for the largest MRO market in the region in 2018 at 33%.
Pratt & Whitney, through its Pratt & Whitney Eagle Services Asia business, expanded its offering in Singapore by launching full services for the Engine Alliance GP7200 used to power the Airbus A380. Pratt & Whitney Eagle Services Asia, which previously carried out low pressure compressor module overhauls on the engine, plans to carry out its first full service on the widebody engine in the first quarter of 2018.
Meanwhile, in an increasingly data-driven and sensor heavy engine industry that has seen concepts such as the Internet of Things and digital twinning come to the fore, British engine maker Rolls-Royce used Singapore to showcase its IntelligentEngine strategy, which it says will change the way it designs, manufactures and services its engines.
“We see it almost as being as big a shift as going from piston to gas turbine. It’s almost a new way of thinking,” Rolls-Royce’s marketing senior vice president Richard Goodhead told Aviation Week’s Guy Norris on Feb. 6.