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Independents Seize Mature Market Opportunities

OEM dominance more prevalent in newer aircraft types but market opportunities exist for independents in older models.

The fortunes of independent MROs in an aftermarket seeing more OEM growth appear to somewhat mixed. It is no secret that competition is increasing from manufacturers wanting a larger share of the market. However, an opportunity exists for independents to form effective partnerships with OEMs while also providing the additional capacity to service certain airframe and engine types needed in a capacity constrained market.

At Aviation Week’s MRO Asia in Singapore last week, a four-person panel of MRO representatives saw a mix of positives and negatives for independent providers in today’s market.

Mansoor Janahi, acting CEO of Abu Dhabi-based engine specialist Turbine Services & Solutions (TS&S) which works with Rolls-Royce, GE Aviation and IAE in its commercial engine unit, says the climate in which it operates has proved positive for the company. He estimates around 65% of TS&S’s business is OEM-based.

Operating from the Middle East region is also advantageous he says, not just for its fleet growth but because of what he sees as a gap in the market for OEM-MRO partnerships. “OEMs are focused on many different things and they need hungry and capable partners, and this is the way we’ve positioned ourselves.” He sees some OEM dominance in the way they control intellectual property and the sale of parts for engines, yet feels independent providers play important roles on their behalf by investing in MRO capacity.

Jonas Butautis, board member of Estonia’s Magnetic MRO, headquartered in Estonia but with a fledgling presence in the Southeast Asia region, says the perceived OEM dominance lies more in newer generation aircraft types. Older aircraft types of 10 years or more will not typically have their power by the hour contracts re-signed with the manufacturers, he says. “When technology ages the market opens for independent MROs in areas such as components, engines, line and heavy maintenance and modifications," Butautis says. "Anything more than 10 years of age means a very open market as I don’t see too many value added points brought to the table by OEMs here.”

Fraser Currie, chief commercial officer at Joramco, a Jordanian independent MRO which provides heavy maintenance on a mix of Airbus, Boeing and Embraer aircraft, agrees with Magnetic MRO’s Butautis that a perceived OEM threat isn't making much of an impact and says the company has benefited from its independent status. “Several customers with fleets that cover the three aircraft types we serve (Airbus, Boeing, Embraer) would have to have their aircraft serviced in three different locations if Joramco wasn’t an independent provider,” he says.

Nevertheless, much like its fellow Middle East MRO TS&S, Currie says forging strong partnerships with manufacturers is crucial to Joramco. “Older airframe types such as A330s and A340s will remain our bread and butter, but when considering newer models such as A320neos and 787s, it is essential we have strong links with OEMs be it with parts or airframe suppliers," he says.

Ang Chye Kiat, EVP, aircraft maintenance and modification, ST Engineering Aerospace, which has operations in Singapore, China, the U.S. and Europe, says the company has accepted the reality of manufacturers wanting to play a larger role in the aftermarket of newer aircraft types. “We find niches where we can complement them [OEMs] such as in our airframe operations, where we’ve successfully ventured into passenger to freighter conversions,” he says. “For engines, we are mainly focusing on CFM models as we see them being very dominant in the narrowbody engine market. Trying to find areas where we can work with them and provide our capacity for customers is where the value lies.”   

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