ANALYSIS: Latin American MROs plan ahead for fleet needs

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Today, fleets in the Latin American and Caribbean region are young – but maintenance providers are making moves to plan for the opportunities that booming growth in the region will create over the next 20 years.

New narrowbodies will help grow the Latin American fleet some 90% by 2032, the Flightglobal Fleet Forecast predicts. The region’s 1,860 aircraft today will expand to nearly 3,550 aircraft over that period at a 3.3% growth rate per year, says the forecast, prepared by Flightglobal’s advisory arm Ascend.

As a result of fleet growth, the MRO spend for the Latin American and Caribbean region will more than double in the next decade, suggests consultancy TeamSAI in its own forecast.

The MRO market in the Latin American and Caribbean region will grow from $2.6 billion to $5.4 billion between 2014 and 2024, says TeamSAI. The region makes up about 5-6% of the global MRO market today.

TeamSAI forecasts the maintenance spend in the region to grow from about $500 million this year to about $1 billion in 2024. Engine MRO spend in Latin America and the Caribbean will grow from $800 million to $1.3 billion within the 10-year period. Component MRO spend in the region is to grow from $700 million to $1.3 billion by 2024, while line maintenance will rise from $600 million to $1 billion.

TechOps Mexico – a joint venture between SkyTeam partners Aeromexico and Delta Air Lines – has just started operations and is likely to be one of the biggest players in the Latin American MRO scene over the next decade.

The airlines split a $55 million investment to open the new 100,000ft2 (9,290m2) facility at Queretaro International airport, which became operational on 5 January, says Miguel Uribe, chief executive of the new maintenance outfit.

“We’re aiming to be the biggest MRO and the greenest MRO in the region,” says Uribe.

Two hangars with six lines are supplying maintenance checks for Delta’s Boeing MD-88s, Aeromexico’s 737s, and Embraer regional jets flown by Aeromexico Connect, he says.

The MRO hopes to add other operators by year-end, says Uribe. A third hangar is to be completed by August, adding three more maintenance lines.

“We are looking for the Central American operators, the US operators and Canadian operators,” says Uribe.

TechOps Mexico has approvals to perform maintenance on Boeing 757s, MD-88s, MD-90s, 717s, 767s and Embraer ERJ-145s. The focus is on narrowbody maintenance. The MRO is working to add Embraer 170 and 190 capabilities by the third quarter, says Uribe.

The maintenance provider has made plans to add another hangar in order to double capacity – to around 18-20 lines – by the second half of 2016.

Lisbon, Portugal-based TAP Maintenance & Engineering is preparing new capabilities at its Brazilian operation to prepare for fleet growth in the region.

“Most of our customers, our existing customers, are expanding their fleets in the region, so Azul is expanding their fleet, Avianca is expanding their fleet, and also we are looking into getting additional new customers,” says Valter Fernandes, executive vice-president of operations at TAP Maintenance and Engineering Brazil.

The MRO specialist plans to ramp up its heavy maintenance lines from 10 to 11 by July, adding another narrowbody line, says Fernandes. When complete, that amounts to six narrowbody and five widebody lines between its facilities in Rio de Janeiro and Porto Alegre.

The growing fleet of turboprops in Latin America has prompted TAP M&E to extend its range.The airline added ATR 72-600 capabilities this year and has completed its first check, he says.

The maintenance firm is also adding lines for overhauls of the Pratt & Whitney Canada PW100 engines that power ATR turboprops. The carrier is completing two to three engine overhauls per month now in Brazil, but this will likely grow to between four and five per month by June to support ATR customers like Azul, he says.

The new TechOps Mexico facilty will be a “strong competitor, no question about it”, says Fernandes. However, the opening of a maintenance facility with capabilities to do maintenance for third parties is a positive for the region, he says.

“We were needing a player like this in Latin America, because [we don’t have that many] Latin America independent MROs which don’t support 100% of their fleet,” he says.

LATAM – the airline with the largest fleet in Latin America, formed from a merger of LAN Airlines and TAM – has consolidated its maintenance operations to rely less heavily on contract maintenance and conduct more of its heavy checks in-house, says Sebastian Acuto, LAN’s vice-president engineering and maintenance.

“The main strategic move have been the decision to unify our maintenance processes under one single system, which also includes the revision of existing maintenance programmes at each organisation to come up with a single maintenance programme for each fleet in all airlines within LATAM Airlines Group, adjusting for local authorities’ needs,” says Acuto.

As part of the merger, TAM will be phasing out its Airbus A330s, A340s, Boeing 747s and Bombardier Dash 8/Q400 and Q200 turboprops.

Although LAN and TAM will continue to fly under separate operating certificates, the two airlines are unifying their maintenance procedures under a single system using the same software, says Acuto. As a result, fewer C-checks are being outsourced this year compared with 2013. The airlines are also nearly complete with the process of merging line maintenance operations.

About 70% of the heavy maintenance needs for the LAN and TAM fleet are performed in-house in Chilean capital Santiago and Sao Carlos, Brazil. The two facilities have three and nine lines of heavy maintenance, respectively.

“In heavy maintenance, we expect to continue doing the majority of our work internally, but keeping the flexibility of outsourcing C-checks when needed, just as we operate today,” says Acuto.

The growth of the Latin American fleet is also gaining attention of North American maintenance organisations looking to add customers. For example, Everett, Washington-based Aviation Technical Services sees opportunities to support the aircraft in Latin America after tooling acquisitions allowed it to add Airbus A320 capabilities back into its operation. These checks tapered off in the mid-’90s, says Tilson, but it has revisited the airframe type by partnering with JetBlue to equip its A320s with wi-fi.

“I think South America and Latin America is a growth opportunity for us,” he says.