Gallery: The State of Play In Asia-Pacific’s MRO Industry

Driven by airline Cathay Pacific and its largest MRO provider Hong Kong Aircraft Engineering Company (HAECO), Hong Kong’s commercial aftermarket has seen a steady continuation of maintenance work throughout the crisis, albeit from outside of Hong Kong. HAECO said its base maintenance work remained stable despite drop offs in other parts of the business and remained profitable over the course of the COVID-19 crisis, mostly thanks to its U.S. operation.

In Hong Kong meanwhile, extended restrictions meant line maintenance services were particularly hit domestically. Some domestic MROs are looking to add further scope in the Chinese market. Hong Kong-based Topcast acquired Shanghai AML Aviation Technologies in summer 2021 in order to establish a presence in Shanghai to focus on the Chinese aviation sector.

With a large population and access to skilled labor, Indonesia was regularly discussed as a key growth country of the Asia-Pacific region pre-crisis. Efforts by the country’s government to diversify economic output outside of the island of Java—estimated to contribute nearly 60% of the country’s overall GDP—included tax incentives for companies to grow MRO activities.

Like many in the region, Indonesia’s flag carrier Garuda has been severely impacted financially by the crisis over the past 18 months. Its MRO unit, GMF AeroAsia, is wary about the slow recovery of the market and has stated plans to look at MRO work outside of aviation to plug holes in its workload. Aviation Week’s Fleet & MRO Forecast predicts a steady recovery over the next decade for Indonesia’s commercial aftermarket, with a 7% CAGR from 2021 to 2030.

Japan is one of Asia-Pacific’s largest aviation markets, with its MRO industry worth $2.2 billion in 2021, according to Aviation Week’s Fleet & MRO Forecast data. Japan’s efforts to become a player in commercial aircraft manufacturing may have been thwarted by the pause in the development of the M90 Spacejet, but its manufacturer Mitsubishi Heavy Industries (MHI) is instead switching its focus to increased MRO activities. MHI aims to tap into its knowledge as a type certificate holder for the CRJ program it acquired from Bombardier, while also stating its desire to work on non-CRJ aircraft types.

Malaysia is among the few countries in Asia-Pacific that has seen its airlines benefit from government support. Malaysia Airlines, the national flag carrier, has implemented a new long-term strategy which will bring about a reduced fleet. However, to compensate for its smaller airline operation, it is looking to grow cargo and MRO going forward.

Air Asia, one of the region’s biggest carriers by fleet size, has branched out into third-party MRO with the launch of its Asia Digital Engineering business last year and will look to capture more customer carriers. Over the next 10 years, MRO spend in Malaysia is forecast by Aviation Week to stand at $10 billion.

National carrier Philippine Airlines' financial struggles have resulted in its filing for bankruptcy, job losses and fleet reductions numbering more than 20 aircraft. Lufthansa Technik, which has been conservative in its recovery predictions, cut around 300 staff from its Philippines operation based in Manila earlier this year. However, its widebody aircraft workload was boosted in summer 2021 after its parent group extended its agreement to service British Airways’ Airbus A380 fleet for another five years.

While the region has been characterized over the past decade through MRO joint ventures being established, the Philippines has seen two disband in the past year. SIA Engineering Company and Cebu Pacific Air ended their two joint venture partnerships in the country to take sole ownership of the businesses.

Despite its relatively small size, Singapore is one of the region’s biggest MRO markets by spend. Aviation Week’s Fleet & MRO Forecast data measures this at $822.8 million for this year. Home to several domestic MROs as well as Eastern-Western aftermarket joint ventures, Singapore also has the world’s second largest aircraft leasing industry. Two of its largest MRO providers–SIA Engineering Company and ST Engineering Aerospace–are beginning to see some form of financial recovery following hits to MRO revenues over the past 18 months. It is anticipated that narrowbody aircraft will lead the country’s recovery from 2022 onwards.

South Korea is another country in Asia-Pacific looking to grow its MRO industry, valued at $1.5 billion for this year by Aviation Week’s Fleet & MRO Forecast data. The country’s Ministry of Land, Infrastructure and Transport outlined plans to grow the sector in August 2021 to a targeted £4.3 billion value by 2030. The MRO landscape could be altered by the mooted merger of Korean Air, its largest airline, and Air Asiana.

Overseas MRO companies have also looked to grow their interests in Korea in recent times, particularly in the cargo segment. This year has seen Israel Aerospace Industries establish a passenger-to-freighter conversion site in Seoul for Boeing 777F aircraft. In addition, Atlas Air has entered into a partnership with domestic MRO Sharp Technics K to develop a dedicated MRO facility at Incheon International Airport, which is set to open by 2025.

Thailand’s aftermarket has been characterized by the dwindling fortunes of debt-laden flag carrier Thai Airways, which posted its largest ever loss of $4.7 billion for 2020. The novel coronavirus crisis has also directly impacted its MRO interests: the airline’s proposed maintenance joint venture with Airbus at U-Tapao airport stalled last year after the aircraft manufacturer withdrew from the partnership. Despite a sluggish recovery from the COVID-19 crisis, Thailand remains attractive to western MROs due to its low-cost labor market and proximity to the Asia-Pacific region. Earlier this year, Revima set up a landing gear maintenance center in Chonburi.

The Vietnamese commercial aftermarket is valued at $370.3 million in 2021, according to Aviation Week data. Just before the crisis outbreak in early 2020, ST Engineering announced a new airframe maintenance joint venture with Vietnam Airlines. While international air travel was severely impacted for Vietnam, which has become an ever-growing tourist spot, its domestic market rebounded quicker. This meant a relatively smaller drop-off in maintenance work last year, estimated at around 15% by Trinh Quoc Cuong, commercial director of Vietstar Aero Engineering. More MRO activity is expected to follow once the recovery is in full flow. Aviation Week data projects an impressive 10.6% compound annual growth rate for Vietnam’s MRO industry from 2021 through to 2030.