Home' Asian Aviation : AAV June 2010 Contents 18 AsianAviation | JUNE 2010
China's civil aircra maintenance,
repair and overhaul (MRO)
market is projected to grow
at an average 7.7 percent
annually over the next ve years.
However, labour costs are also
expected to increase, weakening the local industry's
competitiveness in providing ser vices to overseas
As the fast-expanding Chinese economy continues to
boost demand for air transport, driving local carriers to
expand, this will also lead to higher demand for MRO
ser vices. According to Liu Shen, a spokesperson for the
Civil Aviation Administration of China (CAAC), the
local MRO market has grown in value from US$1.19
billion in 2002 to US$1.83 billion in 2009.
Heavy engine maintenance accounted for about 40
percent of that revenue, with airframe maintenance and
modi cation, and component repair and maintenance,
each accounting for 20 percent.
Based on the projected 7.7 percent average growth,
China's MRO market will be worth US$1.97 billion
this year. e sector will be helped by healthy tra c
growth for the country's domestic airlines, which
expanded by an impressive 20 percent last year, even
as the global industry su ered the e ects of recession.
Liu says the Chinese MRO market has recovered
earlier than expected, attributing that rebound to the
growth of the domestic airlines.
According to Denver-based consulting company
TeamSAI, the global MRO market can expect revenue
of US$42.3 billion this year, down 7.5 percent from
2009. TeamSAI predicts that the world annual
average growth rate from 2011-2015 will be just 3.4
percent, rising to 5.4 percent from 2015-2020.
e global downturn is taking its toll on some
MRO ser vice providers, which are seeing revenue
fall as airlines reduce capacity, as well as facing
pricing pressure from some customers and tougher
competition from competitors. Some analysts say
smaller MRO companies may end up consolidating.
But with China's airlines expected to operate bigger
eets from this year and market demand for travel
increasing signi cantly, the local MRO industry is
poised to bene t.
Chinese airlines now operate a collective eet of
1,279 aircra . China is expected to take delivery of 213
aircra this year, the bulk of them being narrowbody
jetliners, such as Boein 737-800s and Airbus A320s.
e CAAC expects more Chinese airlines to contract
their airframe maintenance needs out to China-based
MRO companies, as the maintenance providers expand
their capabilities and capacity. e global downturn has
prompted many of the country's airlines to keep the
maintenance of their eets at home, to minimise costs
and avoid exposure to currency uctuations.
e projected growth of China's MRO needs and the
expansion of local eets is prompting more and more
domestic and overseas companies to compete for a slice
of the market.
e surge began in 2005, when Chinese airlines
embarked on ambitious eet-expansion plans. ere
are now more than 20 MRO companies in China
that provide heavy maintenance either for airframes or
engines, as well as scores of smaller companies o ering
repair and maintenance of aircra components.
e latest to receive certi cation is Taikoo Spirit
AeroSystems, a joint venture between Hong Kong
Aircra Engineering (HAECO) and Xiamen-based
Taikoo Aircra Engineering (TAECO). Located in
Jinjiang , in Fujian province, the facility will provide
composite repair and overhaul ser vices for engine
nacelles and components for Boeing 777 widebodies
and 737 Next-Generation single-aisle aircra . e
Jinjiang facility complements Spirit's repair facilities in
Wichita, North America and Prestwick in Scotland.
Boeing Shanghai Aviation Services (BSAS) is another
MRO ser vice provider that has recently entered the fray.
e company is a Boeing joint venture with Shanghai
Airlines, which holds a 25 percent stake, and Shanghai
Airport Authority, which owns 15 percent. e US
airframe manufacturer holds 60 percent.
e venture is initially o ering heavy maintenance
ser vices for 737NG aircra , with plans to expand its
capabilities to include widebody 767-300 maintenance
and passenger-to-freighter conversion work. The
company's two -bay facility is located at Shanghai
Claiming market share
is is Boeing's rst time a partner in an MRO joint
venture, and is a way for the US company to claim a slice
of the Chinese maintenance market. Airbus says it has
no current plans to compete for a share of the market.
Among the other major MRO ser vice providers
in China are Beijing-based Aircraft Maintenance
Engineering (Ameco), TAECO, Taikoo (Shandong)
Aircra Engineering (STAECO), Guangzhou Aircra
Maintenance Engineering (GAMECO) and GE
Engine Ser vices (Xiamen).
Ameco, China's biggest MRO ser vice provider,
has expanded rapidly over the years. e 60-40 joint
venture between Air China and Germany's Lu hansa
has huge client base of about 80 customers, including
both Chinese and western airlines. e company's
primary customer is Air China and the venture is
aggressively marketing its ser vices to the European
and North American markets. Its e orts have paid o
handsomely to date.
In March, Ameco secured a major, ve-year, heavy
maintenance contract from United Airlines covering
the US carrier's eet of Boeing 747s, with a ve-year
extension to an existing 777 heavy maintenance
arrangement. e initial 777 contract, which was inked
in 2005, was completed last year.
China's MRO market
poised to grow
With China's airline industry continuing to expand,
especially on the domestic front, demand for
maintenance, repair and overhaul services is also
seeing healthy growth, writes William Dennis.
As China's aircraft fleets grow,
demand for MRO services from
companies such as Ameco
Beijing will rise. Credit: Ameco
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