Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily, on May 9, 2016.

 

KUALA LUMPUR: Malaysia is set to carry out propeller overhaul and repair work on as many as 500 ATR turboprop aircraft in the Asia-Pacific region by 2018. This could mean big money to be made for US-based Aircraft Propeller Service LLC (APS) and national carrier Malaysia Airlines Bhd, which have formed a partnership to set up an aircraft maintenance, repair and overhaul (MRO) centre for propeller blades in Kuala Lumpur International Airport (KLIA).

“We have a backlog of 250 aircraft, which are firm orders that are going to be produced and delivered in the next three years, and half of them are going to be delivered to Asia-Pacific,” ATR Eastern Support president Luigi Celmi told The Edge Financial Daily in a phone interview.

Celmi said currently there are 370 ATR aircraft operating in the region. Of this, 80% are between two and eight years old, which means a portion of them is already subject to their scheduled maintenance.

This is the first such MRO centre in Asia-Pacific for ATR 72-500 and ATR 72-600 aircraft. The centre, which will start operations in August, is housed within Malaysia Airlines’ Centre of Excellence in KLIA.

The MRO centre will serve airlines in Asia-Pacific, where the use of turboprop plane is on the rise, according to ATR, the French-Italian company that makes the aircraft. 

Over a conference call, APS chief executive officer Daniel Colbert said his company is the sole MRO player in Asia that possesses such a licence, and there are only four places in the world that have access to US-based aerospace and defence product supplier UTC Aerospace Systems’ proprietary technology to conduct MRO for these propellers.

UTC has awarded a licence to APS to perform MRO works for this component. In other words, MRO checks for propeller blades in the Asia-Pacific region can never be completed without going through the facilities of UTC or APS.

According to Colbert, MRO works for a single blade would cost airlines about US$10,000 (RM40,000) to US$20,000 depending on the condition. “If we look at the number of airplanes in Asia-Pacific, and the fact that each has 12 propeller blades, every time the plane hit roughly 10,500 flying hours, those blades have to come off for [an] overhaul,” he said.

“And as the fleet grows — each aircraft is roughly flying between 1,500 and 2,000 flying hours per year — the market size for just the blades gets interesting very quickly, and that is not a secret. Most [people] in the MRO industry understand that Asia, specifically the Asean region, is a growing market,” he said.

“It is a lot of business. Depends on how frequent they fly, the scheduled maintenance is between five and seven years, or 10,500 flying hours, but there is also a calendar limitation, so even if they fly less, seven years are the scheduled inspection,” he explained.

“Now, we are able to do that work in [the] US, and soon we will be able to do that in Brazil and then Malaysia,” Colbert said.

“For the ATR propeller, we will have the proprietary capability up and running by the third quarter of 2016, and then we are talking about possibly adding additional components, like the hubs and the actuators. So, there is this potential of keep adding and growing components,” he said.

Propeller hubs are a central component where the blades are attached to, while actuators are the motor that spins the blades.

Malaysia Airlines owns 30 ATRs through its wholly-owned subsidiaries, FlyFirefly Sdn Bhd and MASwings Sdn Bhd, and has placed an order for another eight aircraft.

Malindo Airways Sdn Bhd, another ATR operator, has 11 of these planes under its fleet. Malindo’s parent, PT Lion Mentari Airlines, an Indonesian low-cost carrier more commonly known as Lion Air, has also placed an order for 100 ATRs. To date, Celmi said, Lion Air had taken delivery of 60 of them.

Celmi noted that airlines are servicing their blades in Europe and the US. “With the establishment of this new centre, customers are already able to have almost half of their ATR aircraft components’ MRO done in the Asia-Pacific region,” he said.

Meanwhile, Colbert said, the new centre will start off with 12 to 15 technicians, and will increase its capacity according to market demand.

“The amount of ATRs being sold is quite extensive, and when airplanes get older, the number of blades that come off from these airplanes is going to increase very quickly with a steep flow,” he foresaw.

“We are talking about hundreds of blades annually by 2020 and 2021; it is a big market for ATR. Therefore, it is a big market for propeller MRO,” he added.

Meanwhile, Celmi said, the Malaysian MRO industry is conducive for international players due to existing infrastructure and the availability of talent. He said this is aided by the fact that the Malaysian government has a focused objective of developing the local aerospace industry.

“We estimate that the MRO businesses today in Malaysia would be worth US$2 billion. We really see [a] strong focus on Malaysia to ensure growth for the MRO business[es], so I guess this [is] also why APS opted to jump on the bandwagon,” he said.

Celmi also noted that there are more than 100 aerospace MRO companies in Malaysia, exporting “billions of ringgit” worth of services annually.

“The aerospace market is high on the agenda of [the] Malaysia government for development ... that is very good news for the year to come,” he said, referring to the Malaysian Aerospace Industry Blueprint 2015-2030, and initiatives under the Economic Transformation Programme.

The blueprint outlined strategies that aim to lift Malaysia to be a major player in the global aerospace market by capturing up to 5% of global MRO market share by 2030, compared with over 3% currently.

“The country has proven to be very successful in gaining work from operators around Southeast Asia. Airlines from Indonesia, Thailand and Myanmar have been sending their aircraft to Malaysia to undergo scheduled heavy maintenance checks,” Celmi noted.

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