Special Reports: MRO
Foreign carriers boost China MRO earnings
Mainland China’s MRO business is expanding as demand from the nation’s airline fleets combines with foreign carriers’ need for line maintenance on aircraft they fly into China.
May 1st 2014
Servicing aircraft operating the expanding schedules of international flights into China is an increasingly profitable business for Mainland MROs. Read More »
The growth trend was highlighted in April when Etihad Airways signed up Ameco Beijing for line maintenance on the A330 airliners the Middle East carrier flies daily between Abu Dhabi and Chengdu.
Etihad was the third international airline, after Qatar Airways and British Airways, to become an Ameco customer at Chengdu. Ameco’s headquarters is at Beijing’s Capital International Airport, but it has established several outstations in recent years. The Chengdu facility opened last September and was the seventh to be established by Ameco outside Beijing.
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| Rising labour costs challenging China MRO’s global competitiveness |
In December, number eight in Ameco’s domestic network came on line, at Hangzhou International Airport, marking an expansion that has put 20 international carriers on Ameco’s customer list in Beijing, Shanghai, Guangzhou, Chongqing, Tianjin and Nanjing as well as Chengdu and Hangzhou.
China’s MROs contracts with foreign airlines is increasing rapidly as international carriers expand their networks into China by identifying destinations outside the big three cities that have populations in the tens of millions.
Ameco Beijing, a joint venture between Air China (60%) and Lufthansa German Airlines (40%), was established in 1989. The company said competition is intensifying at both domestic and international levels, but business from foreign carriers is expanding steadily. It reports 60% of its aircraft overhaul work is from international third party customers.
An Ameco spokesman has reported full hangars at its facilities from foreign airlines requiting airframe overhauls as well equipment and cabin modifications. In the last 12 months new Ameco clients have included Turkey’s ACT Airlines, South Korea’s T’way Air, Thailand’s Nok Air, and U.S. carrier, Southern Air (for both Boeing and Airbus airliners). In February, Ameco signed up Thailand’s Sabaidee Airways for four years of AOG support, airframe C & D checks, engine and landing gear overhaul.
In March it redelivered the last Lufthansa B747 aircraft for winter season layover during 2013-2014 and will complete C & D checks on 12 Lufthansa B747s in the coming 12 months.
Airframe modification has become one of Ameco’s main product offerings, representing a third of the company’s total airframe overhaul business, up by nine percent in its latest reported year.
Wing rib modification on the A380 commenced last June, which has elevated Ameco’s structural modification competence and turnaround times of modifications, said Ameco. Component revenue has risen by 30% over the same months of last year, with landing gear business doing exceptionally well.
In March this year, Ameco’s Beijing landing gear shop had more than thirty landing gears in repair on B747/ 737-300/737NG and A320 aircraft.
An emerging issue for Ameco is the rising cost of labour. Chinese MRO shops have long enjoyed a competitive edge over their global competitors because Chinese labour costs have been low. But the the gap is closing between China and MRO centres elsewhere in the region.
Dr. Andreas Heizner, Ameco’s chief executive, said he believes cost development in China will become a topic of more importance in the industry. “Ameco’s response is to increase efficiency and productivity by management tools such as lean, high-tech innovation,” he said.
