Home' Asian Aviation : AAV October 2017 Contents 34 AsianAviation | October 2017
THE YEAR OLD AIRLINE signed a memorandum of understand-
ing in June to do scheduled work on the cabins of Boeing aircraft,
the airline's president, Hsieh Su-chien, told Asian Aviation magazine
in an interview. The memorandum lets Boeing help China Airlines
become a possible site for converting passenger aircraft into cargo
planes as well, and o ers training so the airline can supply Boeing
cabin modification work.
Six months earlier China Airlines signed a memorandum with
Airbus to work toward cooperation on becoming a maintenance con-
tractor for the A320, A330/A340 and A350 models. Airbus has more
aircraft in Asia than Boeing, Hsieh said, forming "a very big market."
The airline's pursuit of the lucrative maintenance, repair and over-
haul (MRO) business, follows a trend among carriers from around
fast-growing Asian civil aviation market.
" The business opportunities are huge," Hsieh said, expecting the
number of aircraft to double in Asia over the next 10 years --- a func-
tion of rising wealth in places such as China. A major Boeing-man-
dated check costs about US$1.3 million, he said. "Once you use a
plane you have to maintain it. This business has a lot of potential."
Net MRO profits should reach 10 percent, Hsieh said, higher
than what airlines normally get from flight tickets. China Airlines
estimates its business to be worth at least 2 billion Taiwan dollars
(US$66 million) on its way to 30 billion Taiwan dollars, Hsieh said.
" That growth space I'd say is pretty big," he said.
Maintenance, repair and overhaul demand is estimated at US$65
billion a year worldwide now, said Tina Chen, an aviation analyst
with SinoPac Securities in Taipei. The market will be worth US$96
billion by 2025, the American consulting and technology services
firm ICF International forecasts.
China Airlines will do maintenance work in five bays at the Taiwan
Taoyuan International Airport with a dedicated sta of about 2,500.
But the Taiwanese airline is hardly Asia's only one with sights
on MRO work. Airlines in Hong Kong and Singapore are chasing
the same business. Singapore Airlines is working with Airbus on
a simulator plant, for example. Lufthansa does aircraft component
maintenance work in Shenzhen, China.
EVA Airways, the other major airline in Taiwan, does contract
maintenance at its home base.
"Working with the two big airpl ane makers brings in tidy revenue,"
said Shukor Yusof, founder of Malaysia-based aviation consultancy
Endau Analytics. "More aircraft will be delivered into these parts
of the world in the next 10 years, so the market is huge. Profits are
more stable than from the deteriorating yields for premium airlines."
Only China Airlines and EVA have the capacity for commercial
MRO work in Taiwan, Chen, with SinoPac Securities, said. EVA has
been at it longer and China Airlines will probably start out with
relatively few orders, she said.
Once the Taoyuan airport's third terminal opens, both airlines
could add space for maintenance work, she said. The MRO busi-
ness in Asia is "massive," Chen added. About 40 percent of future
market demand for commercial airplanes will come from the
Asia-Pacific region, Boeing estimates. The roughly 7,500 planes
in the region now will reach 12,000 by 2025, the China Airlines
Boeing intends to work further with China Airlines to qualify it
as a supplier, meaning the airline can bid for Boeing products and
services, the aircraft maker said in a statement in June.
" The collaboration with China Airlines in Boeing's largest mar-
ket will provide flexibility for global airline customers, while also
contributing to Taiwan's growing commercial aviation industry," the
Chicago-based manufacturer said.
As cooperation with Airbus unfolds, the two partners will evaluate
China Airlines' abilities to do retrofits and modify cabins, Airbus said
in January. The two will decide further whether Airbus a iliates such
as component and service company Satair Group should become
"key parts providers" for China Airlines, it says.
China Airlines expands maintenance contracting
Taiwan's flagship carrier, China Airlines, is growing its contract aircraft maintenance business,
taking advantage of its base at a North America-Southeast Asia air transit hub, as those services
pay more than selling tickets for its commercial flights, as contributor Ralph Jennings reports.
China Airlines President Hsieh Su-chien
(left) speaks to Asian Aviation magazine
at the Taiwan head o ice.
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