China’s domestic market and the maintenance demands of a number of regional and international airlines rank among the few highlights of the Asia-Pacific maintenance, repair, and overhaul (MRO) market in the past two years, as a zero-Covid strategy to help minimize the spread of the coronavirus continues.
While the majority of the aftermarket MRO providers in the region remain in recovery mode, few companies working with domestic carriers have been operating at full capacity, a Commercial Aerospace Insight Report issued in April 2021 by Accenture said. The report projects 2021 year-over-year growth to come equally from the first and second halves of the year as opposed to North America or the European Union, where projections call for growth to come primarily in the second half of the 2021 financial year.
Guangzhou Aircraft Maintenance Engineering Company (Gameco), a 50-50 joint venture of China Southern Airlines (CSN) and Hong Kong financial investor Hutchison Whampoa, ranks among the largest MRO players in mainland China. Located at Guangzhou Baiyun International Airport, it employs about 6,600 people and has seen work for CSN continue to proliferate with the expansion of that airline's fleet to more than 300 Airbus A320-family aircraft and 200 Boeing 737s, as well as other group constituents.
“Outside of the U.S., China Southern is the biggest airline in the world by fleet size. They have a total fleet of around 860 aircraft,” CEO Norbert Marx told AIN. “We have 31 heavy maintenance lines today. We do heavy maintenance, all the heavy checks basically, on all the Boeing and Airbus aircraft, except the A340. We also do the Comac ARJ21 and will do the C919 when it comes out. We also do the Embraer ERJ-145 and E190.”
Marx said FedEx is another big customer, with four widebody lines. Work also involved A300s as well as Boeing 767s and 777s. “We do a lot of work for Korea’s Asiana and Cebu Pacific of the Philippines here in the region," he said. "Then domestic airlines in China, like China Eastern, for example, or Hainan Airlines, send us aircraft, as do many cargo airlines—including SF Express, Longhao, China Postal, and YTO.”
CSN's heavy maintenance workload constitutes about 60 percent of GAMECO’s portfolio. Chinese and non-Chinese third-party customers account for the other 40 percent. “Not all of them are in heavy maintenance; some are line maintenance, other components, and so on,” he said.
The company’s main role centers on supporting China Southern's growth. Before Covid-19, the airline took delivery of an aircraft a week. “We have to keep up with their demand and growth,” Marx said. “The 60-40 mix is a healthy ratio for us. We are also building a new component and composite repair center to be ready in the first half of this year. We partner with a lot of the OEMs, as their authorized repair centers in China.”
Mayur Patel, OAG Aviation head of Asia, named Hong Kong Aircraft Engineering Company Limited (Haeco), Singapore’s SIA Engineering and ST Engineering, Indonesia’s GMF AeroAsia, Aircraft Maintenance and Engineering Corp (Ameco) and Haeco Xiamen in China, and Lufthansa Technik Philippines (LTP) as the Asia-Pacific region's main MROs.
LTP performs line maintenance for Philippine Airlines and other international airlines flying into the Philippines as well as base maintenance for a wide range of regional and global customers, including British Airways, Lufthansa, Korean Air, Asiana, Kuwait Airways, Saudia, India’s Indigo, Jetstar Japan, and Air Asia Group, Thomas Boettger, Lufthansa Technik's vice president of corporate sales, told AIN.
“They had a relatively low level of induction until August, September last year,” he said. “There was not too much work and many aircraft were parked on the apron in front of LTP’s hangars. This changed [soon after], and many airlines made a decision to reactivate or prepare their fleet for entry back into service. Also, leasing firms that parked multiple aircraft in front of the hangar decided to go in for deferred base maintenance checks. The order book is pretty strong for the New Year.”
In August, LTP announced that British Airways had extended its contract for base maintenance services for its fleet of 12 A380s. The contract will run from August 2022 for more than five years, it said.
The A380 business also shows some important signs of recovery after a number of operators decided to reactivate A380 operations, Boettger said. “There are other existing A380 customers and this segment will remain a relevant market for us in the years to come. We see aircraft coming in to do 12-year checks where customers also revisit the cabin and go for upgrades and a full airframe check.”
Lufthansa Cargo’s decision to entrust its Boeing 777 freighter fleet to LTP represented an important milestone, he said. “The first 777F of Lufthansa Cargo arrived at LTP on December 26 for a base maintenance check," noted Boettger. "We're also getting more commitments from Lufthansa for the A330; this includes requirements from other A330 operators for the coming years.”
During the crisis, LTP reduced its workforce by almost 20 percent, an adjustment required due to Philippine Airlines’ restructuring and fleet reduction from 79 to 60 aircraft. The airline emerged from Chapter 11 proceedings late last year.