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Airbus Expands MRO Footprint In Asia

Airbus Expands MRO Footprint In Asia

Following separate announcements by Asia Digital Engineering Sdn BhD (ADE) and Korea Aviation Engineering & Maintenance Service Ltd. (KAEMS) for Airbus customers in Asia, Mathew George, Ph.D, Analyst, Aerospace, Defense and Security at GlobalData, a leading data and analytics company, offers his view:

“AirAsia Group’s ADE and KAI’s KAEMS made separate announcements on the expansion of maintenance, repairs and overhaul (MRO), thus marking an increased footprint for Airbus customers to avail MRO services in Asia. With the pandemic still wreaking havoc, airlines and countries had put on hold the programs to purchase new aircraft and make sure that the lives of the present aircraft be extended safely as much as possible. Countries, including India, actively started to explore MRO services and proposed the possible mechanisms and programs to turn themselves into regional MRO hubs.

According to GlobalData, the military aerospace MRO market is expected to grow at a compound annual growth rate (CAGR) of 2.93 percent in the Asia-Pacific (APAC) region between 2020 and 2030 and will be valued at US$17.85bn by 2030.

While ADE obtained the approval for base maintenance (hangar or C-Checks) from Civil Aviation Authority of Malaysia (CAAM), KAEMS was able to sign an MoU with Airbus Defense & Space (ADS) for technical support for C-212 and CN-235 aircraft. ADE’s support extends not just to AirAsia fleet of A320, A321 and A330 aircraft, the approval allows it to undertake MRO services for other airlines as well. ADE was also able to secure approvals from India’s DGCA and Indonesia, raising the bar for ADE and Malaysia to provide MRO services for airlines across Southeast Asia.

Governments have shown their resolve to fund upgrade and replacement programs. However, with lockdowns continuing in countries, and increasing cases like India’s still a possibility in other geographies, airlines and governments will continue to focus on sustainment of existing capability. In addition, with long lead times and unexpected delays still a possibility, a lackadaisical approach to MRO is not something anyone can afford.”

 

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Advancing MRO Solutions With Additive Manufacturing

Advancing MRO Solutions With Additive Manufacturing

ST Engineering and EOS have collaborated to introduce multiple AM solutions for the aerospace sector—from qualified systems and materials to 3D print certified parts that are more durable and more effective in operations.

ST Engineering’s Aerospace sector has been building its portfolio in virtual inventory to enhance customers’ air operation performance, including solutions for commonly damaged aircraft components. Printing on demand helps eliminate waste when platforms are retired, reducing non-moving inventory. In addition, with approved digital files and qualified 3D printers & processes, certified parts can be produced close to aircraft sites, vastly reducing delivery-related carbon emissions and improving cost efficiencies.

Confident that additive manufacturing (AM) is the way forward, the company collaborates with technology partners and like-minded airline customers to develop multiple AM solutions. Here, ST Engineering shares how they successfully broadened and deepened their capabilities for AM solutions. 

Overcoming Challenges

Back in 2018, ST Engineering already had plans to expand their AM capabilities from Filament Layer Manufacturing (FLM) technologies to include Laser Powder Bed (LPB) technologies- covering the two processes of Selective Laser Sintering (SLS) and Direct Metal Laser Solidification (DMLS) – so as to offer a wider range of additive manufacturing solutions to customers. 

Originally, it only had Design Organisation Approval (DOA) and Production Organisation Approval (POA) from the European Union Aviation Safety Agency (EASA) for FLM technology. For the LPB technologies, the plan was to build in-house capabilities in managing and qualifying the systems, materials and processes, which would in turn open more application potential to produce AM aircraft parts. 

As a new adopter of LPB AM technologies, ST Engineering decided to collaborate with EOS, one of the industry’s pioneering leaders specialising in LPB AM systems, to jumpstart their learning curve in understanding the possibilities and limitations of both SLS and DMLS processes.

AM Solution

By the end of 2018, ST Engineering and EOS’ consulting arm, Additive Minds, established an Additive Manufacturing Capability Transfer program. The program comprised customised training and consulting workshops that aimed to build strong fundamentals among attendees in the following topics: parts screening and selection, design for AM, business case analysis, and introduction on critical-to-quality requirements for AM processes.

After the Capability Transfer Program, ST Engineering selected a load-bearing cabin interior assembly with no impact on flight safety from their converted freighter aircraft as a benchmark to kickstart their adoption journey with both SLS and DMLS technologies. 

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Rolls Royce Discovers Cracks In Engine Blades

Rolls Royce Discovers Cracks In Engine Blades

Already dealing with the financial struggles of COVID-19, Rolls Royce has discovered technical problems with its Trent XWB engines. Routine inspection found cracks in its compressor blades on a small number of its XWB engine which powers the Airbus A350 widebody aircraft.

Previously, issues with its turbine blades fitted to its Trent 1000 engines powering the Boeing 787 are costing £2.4 billion to fix over 2017-2023. Adding on to the costs, Rolls Royce could spend an estimate of £50 million to fix the issue with its Trent XWB engines.

None of the Trent XWB engines in service have reported any issues with flight prior to the discovery of the fault, however those with similar service life will also be inspected. The group assures investors and customers that this issue will not cause significant disruptions for carriers or material annual costs.

According to Globaldata, Rolls-Royce has been one of the worst affected aerospace companies and has announced 9000 job cuts. Its wide-body engine flying hours, the lifeline of the company’s commercial business, fell by 75 percent in Q2.

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[WATCH] APMEN Speaks On The Impact Of COVID-19 On ASEAN’s Metalworking Industries

[WATCH] APMEN Speaks On The Impact Of COVID-19 On ASEAN’s Metalworking Industries

In a webinar hosted by Taipei International Machine Tool Show (TIMTOS), Kenneth Tan, Publisher of Asia Pacific Metalworking Equipment News (APMEN) speaks about the impacts of the pandemic on ASEAN’s metalworking industries, including the automotive, and aerospace & MRO sectors and what we can expect in the post COVID-19 era.

Besides the ASEAN region, the webinar, organised by Taiwan External Trade Development Council (TAITRA), also addresses the impact of COVID-19 in the European and US markets. Other speakers include Gabriel Pankow, Head of Digital Editorial Office of mi connect and Michael Vaughn, Chief Consultant of Indiana Research Institute.

Watch the full webinar here:

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ASEAN Aerospace And MRO Industry In The Wake Of COVID-19

ASEAN Aerospace And MRO Industry In The Wake Of COVID-19

The COVID-19 pandemic has an unprecedented adverse impact on the aviation industry and, consequently, on the MRO business, without clear visibility on the timing of its recovery, according to Singapore-based SIA Engineering Co. Ltd. Border controls imposed by countries worldwide and the precipitous decline in travel demand has forced drastic cuts in flight capacities and grounding of aircraft.

In response to the worsening crisis, the International Air Transport Association (IATA) is projecting a more realistic U-shaped recovery for the air travel industry, with domestic travel coming back faster than the international market. 

Many expect that because of the impact of the pandemic, activity in the commercial aerospace market will take several years to return to the levels seen just a few months ago. Some players in the aerospace manufacturing industry, including Boeing and Rolls-Royce, have even announced workforce reduction and production cuts.

However, Boeing is seeing some green shoots. Some customers are reporting that reservations are outpacing cancellations on their flights for the first time since the pandemic started, while some countries and U.S. states are starting cautiously to open their economies again.

  • Boeing, in fact, has resumed production of the 737 MAX at the company’s Renton, Washington factory.
  • On 14 April 2020, IATA released an updated analysis showing that the COVID-19 crisis will see global airline passenger revenues drop by US$314 billion in 2020, a 55 percent decline compared to 2019. Airlines in Asia Pacific will see the largest revenue drop of US$113 billion in 2020 compared to 2019 (-US$88 billion in 24 March estimate), and a 50 percent fall in passenger demand in 2020 compared to 2019 (-37 percent in 24 March estimate).

According to Oliver Wyman:

  • As of late April, over 65 percent of the pre-COVID fleet of 27,500 commercial aircraft have been parked
  • The current trajectory for fleet reductions and lower aircraft utilisation would reduce global MRO demand in 2020 by over $48 billion, or 53 percent

Here’s an update of what has been happening in ASEAN’s aerospace and MRO industry amid the ongoing COVID-19 pandemic.

Indonesia

  • Indonesia’s national airline, Garuda Indonesia, has resumed domestic flights starting May 7, 2020.
  • PT Garuda Maintenance Facilities (GMF) AeroAsia expects to see increasing demand for MRO services from non-affiliated international airlines and has projected an 80 percent y-o-y increase for MRO services, from 71 percent in 2019

Philippines

  • AirAsia is set to gradually resume services in the Philippines on June 5, 2020, following the Philippine government’s directive of easing community quarantine restrictions in Metro Manila and several parts of the country. The resumption of services will initially be for key domestic routes, and will gradually increase to include international destinations by July 1.
  • Air Carriers Association of the Philippines (ACAP), comprising: Philippine Airlines, Cebu Pacific and AirAsia Philippines, sees the industry shrinking in the next two years. The association has requested government assistance, including waiver of airport charges and credit guarantees
  • Infrastructure projects still ongoing: Lufthansa Technik and Metrojet Engineering

Thailand

  • Airbus withdraws from MRO joint venture with Thai Airways
  • Thai Airways has filed for bankruptcy protection to rehabilitate business (to restructure under the supervision of the local bankruptcy court). Will not resume its international flight operations until 30 June.
  • The proposed MRO project at the U-Tapao Airport will proceed as planned despite Thai Airways International (THAI) entering bankruptcy. The THB11 billion project has already been approved by the Cabinet and a contract is expected to be signed in June. (The Nation Thailand)

Singapore

85 percent of the Singapore industry is involved in maintaining and repairing aircraft. Singapore also plays a small but critical role in the global aerospace supply chain, with its SMEs having a key role in MRO and manufacturing—supporting special processes, tooling, testing, logistics, manpower, and other services. (Association of Aerospace Industries Singapore)

  • SIA has announced that it will resume flights to 27 destinations and increase no. flights for other services in June & July
  • Government has set aside S$750 million of support for the aviation sector and consolidation is expected to happen over the next 12 to 18 months.
  • Collins Aerospace, which just opened a 10,000 sq ft innovation hub in Singapore, is “monitoring the evolving market conditions very closely”. 
  • Rolls-Royce has scaled down its operations in its facility which tests Trent aero engines (Channel News Asia)
  • ST Engineering 
    • expects a slowdown in its aerospace unit due to deferred MRO services and lowered original equipment production rates 
    • however, the company has secured about $838 million across its spectrum of aviation manufacturing and MRO businesses
      • The MRO contracts included A320 heavy maintenance contracts and CFM56-7B engine maintenance contracts from Chinese airlines, and a component Maintenance-By-the-Hour (MBHTM) contract from a Southeast Asian airline to provide comprehensive component maintenance services for its entire fleet of Boeing 737 and Bombardier Q400. 
    • The Group is discussing with its customers to adjust delivery schedules or address order cancellations due to the evolving crisis. As at the end of 1Q, the Group’s order book remains robust.
  • BOC Aviation, a company involved in aircraft sales and leasing has extended its Engine MRO contract with Lufthansa Technik for another five years.
  • Through the enhanced Jobs Support Scheme (JSS), companies such as ST Engineering and SIA Engineering Company (SIAEC) will receive millions in additional wage support to cushion the devastating blow that COVID-19 has dealt the aerospace industry. (The Business Times)

Vietnam:

  • Suspended all international and most domestic flights in March and April in an effort to curb the spread of the coronavirus, domestic flights have resumed since April 22, after the government lifted a lockdown order, while international flights are expected to partially resume from June 1.
  • Will not consider applications for new airlines as it looks to prioritise the recovery of its aviation sector after the impact of the novel coronavirus, according to the Civil Aviation Authority of Vietnam (CAAV). (Bangkok Post)

 

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How Is COVID-19 Impacting The Aircraft MRO Industry In SEA?

How Is COVID-19 Impacting The Aircraft MRO Industry In SEA?

Global air traffic has practically been brought to a standstill and the global airline industry has plummeted as countries worldwide implement travel restrictions and fleet groundings to curb the spread of the coronavirus.

Airlines in Asia Pacific will suffer a large revenue drop of US$113 billion in 2020 compared to 2019, and a 50 percent fall in passenger demand in 2020 compared to 2019 with the worsening COVID-19 crisis, according to the International Air Transport Association (IATA). Furthermore, IATA expects a $314 billion drop in total world carrier earnings this year. Here are some of the measures in the region:

  • Singapore Airlines has grounded 96 percent of its approximately 200-plane fleet on March 23 and resuming of operations is unclear.
  • Thai Airways has cancelled all international flights and transferred flights from Bangkok to Phuket, Krabi and Chiang Mai to its sister company Thai Smile Airways. The cancellations will last until May 30.
  • Philippine Airlines and Cebu Pacific flights have been suspended until May 15. The airlines are committed to resume operations starting May 16, 2020, depending on government mandates and regulations.
  • Malaysia Airlines suspended flight operations across its network until May 2020 for domestic and June 2020 for international services.
  • Indonesia commercial flights—domestic and international—are banned until June 1
  • Vietnam’s Jetstar Pacific has suspended international flight and cut back domestic flying

The demand for Maintenance, Repair and Overhaul (MRO) services are high dependant on the size and flight activity of global fleets. With grounded aircrafts, demand for these services diminishes and MRO providers and spare parts suppliers will suffer, according to a report by Roland Berger.

The original forecast for MRO spending in 2020 has been adjusted with a 59 percent drop for the region—from US$91.2 billion to US$42.7 billion (Oliver Wyman). Major players such as Boeing are switching its focus to defence from commercial flights to weather the crisis while Airbus has postponed ramp up of commercial aircrafts (Globaldata). Furthermore, Airbus has recently dropped out of a joint venture with Thai Airways International for the development of a 11-billion-baht MRO facility at Thailand’s U-Tapao Airport due to the impact of COVID-19.

Despite the bleak outlook, there is hope for the industry with global efforts. Companies like Rolls-Royce has established a COVID-19 data alliance to kickstart economy into recovery. Moreover, general aviation is playing an active role in the fight against the pandemic by providing transport of medical supplies and key personnel.

 

WE LOVE TO HEAR FROM YOU!

As the pandemic is still evolving, what is the future of the aviation and MRO industry? How is the situation in your region? How have you been impacted? What do you think are some strategies which could help this sector recover from the impact? 

Do send us you insights and drop us a note at  [email protected]!

 

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Singapore’s Aerospace Infrastructure Strengthened With $500 Million Investment

Singapore’s Aerospace Infrastructure Strengthened With $500 Million Investment

JTC Corporation has signed a series of agreements with local and international aerospace companies that are looking to expand operations in Singapore. These leading aerospace companies have committed S$500 million new investments in Singapore over the next 5 years. Companies involved include GE Aviation, Overhaul Services – Singapore; SIA Engineering Company Limited (SIAEC); Singapore Aero Engine Services (SAESL); Ametek MRO; GE Aviation, Engine Services – Singapore; Pattonair; and RLC Group (Singapore).

Amidst global economic uncertainties, the long-term prospects for the aerospace sector remain bright. Since 2015, total output for our aerospace industry has enjoyed a compound annual growth rate of 10 percent and surpassed S$11 billion in 2018.

This investment will expand the aerospace ecosystem and supplier networks and strengthen Singapore’s position as a global hub.

GE Aviation, Overhaul Services a joint venture between GE Aviation and SIAEC is setting up a state-of-the-art engine overhaul facility which will adopt digitisation and data analytics to enhance productivity. SIAEC has identified Changi North estate as a potential site for its facility for its engines. While SAESL, a joint venture between SIAEC and Rolls-Royce is exploring an expansion in JTC’s aerospace enclave in Loyang estate.

Furthermore, new entrants are establishing their operations in Seletar Aerospace Park. This includes Proponent, which will open a 20,000-square-foot regional distribution facility and PPG which will complete its new 38,750 square-foot Application Support Centre (ASC) at Seletar Aerospace Park.

To meet strong industry demand, JTC also launched aeroSpace Three, a new cluster of nine ready-built standard factories to provide “plug & play” solutions for aerospace manufacturing and MRO activities. These new standard factories will incorporate the industry’s requirements for higher technical specifications to cater for Industry 4.0 technologies and the use of heavier and larger equipment.

 

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Lufthansa Technik Philippines May Cease Operations Due To Tax Reform

Lufthansa Technik Philippines May Cease Operations Due To Tax Reform

Lufthansa Technik Philippines, the country’s largest aircraft maintenance, repair and overhaul (MRO) service provider are at risk of closing its operations if the government passes the proposed Corporate Income Tax Incentives Reform Act (Citra) bill in its current form.

The company has invested $270 million in infrastructure and personnel training in Philippines since 2000 and currently employs 3,000 workers. Furthermore, Lufthansa has announced plans to invest $40 million to expand its operations in the country, which would generate 300 jobs in the workforce. However, with the added custom duty and value-added tax (VAT) on imported spare parts, the company fears of struggling with unbearably high costs, hampering its future plans.

“In its current form, the MRO industry is not properly represented in the bill. The new Citira has no representation for MRO companies, so we consider that as a technicality; [and] if you don’t solve that, then we cannot survive,” said Elmar Lutter, Lufthansa Technik Philippines President and Chief Executive Officer.

The company might have to close all four facilities in Philippines and look for an alternative location for its Asia hub such as Vietnam.

 

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Asia To Soar In The Commercial Aircraft MRO Market

Asia To Soar In The Commercial Aircraft MRO Market

The commercial aircraft maintenance, repair and overhaul (MRO) market is estimated to register a CAGR of 4.35 percent during the forecast period, 2019-2024, according to a report released by Research and Markets.

With the growing air traffic, carriers are more inclined toward maintaining the health of their current fleet, going for new aircraft only if they have no other option, since the cost of buying a new aircraft is considerably higher than the cost for the maintenance of the current fleet. Different airports have introduced improvement processes to enhance efficiency, and several are using new technological systems to gain additional upgrades and prepare for the bigger data requirements of next-generation aircraft, and this shall lead to the growth of the market in the near future.

Asia Pacific is expected to see the highest growth in the MRO market. At present, Asia Pacific is generating the highest revenue in the commercial aircraft MRO market, with Singapore dominating the market in the region. In the recent years, several other Asian countries have also increased their investment in MRO facilities. The market for aircraft maintenance is also changing, as companies in countries like Indonesia and Thailand are also entering the market to challenge the dominance of established Singaporean players.

Government policy also plays a key role, and the Singaporean government has been very forward-looking in supporting the aerospace industry. With the growing frequency of flights to and from the Asian countries, the demand for MRO centres is expected to rise in this region in the coming years. Moreover, due to the huge potential of the Asia-Pacific aviation market, several global players are establishing new centres in the region to cater to the growing demand.

 

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Growth Of Malaysia’s Aerospace Industry

Growth Of Malaysia’s Aerospace Industry

Malaysia’s government has identified the aerospace industry as one of its new growth industries and aims to be the leading aerospace nation by 2030, with a targeted annual revenue of RM55.2 (US$13.5) billion. In 2017, the industry has recorded a total revenue of RM 13.5 (US$3.3) billion and aerospace manufacturing contributed to 48 percent of the revenue.

“The aim is to shift Malaysia’s economy from labour intensive to high value added, knowledge and innovation based economic activities with a focus on the services and manufacturing sectors,” said Minister of International Trade and Industry Datuk Darell Leiking

Many multinational companies have invested and established facilities in the country over the years which has also encouraged growth if the local supply chain. Furthermore, Airbus and Boeing will be delivering an estimated of 16,000 aircrafts to the Asia Pacific region by 2037. With this increased supply of aircrafts, greater support for aerospace manufacturing and MRO activities will be needed.

“The positive development has also spurred the government to view the aerospace industry as a critical sector which offers abundant opportunities for the transfer of advanced technologies in engineering, electronics, composite materials, system integration, MRO (maintenance, repair and overhaul) and industry-led Research & Technology,” said Darell.

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