Western original equipment manufacturers (OEM) and maintenance companies are busy setting up repair facilities in the Middle East and North Africa (MENA) region as they strive to gain access to its growing aftermarket. While operators around the globe expect close, reliable and responsive relationships with their suppliers, direct contact and proximity to customers is particularly important in the Arab world, says Fouad Benbrahim, regional sales director Middle East & Africa at Air France Industries-KLM Engineering & Maintenance (AFI KLM E&M)
This may not only provide technical services for the operator's fleet, but become a partner in establishing in-house engineering capabilities. "Some airlines want to develop their own MRO [maintenance, repair and overhaul operations], so the idea is to help them develop part of their MRO business," Benbrahim says.
The Franco-Dutch company generates about 25% of its total third-party maintenance revenues in the MENA region, with the business being equally split between customers in Middle Eastern and African countries.
© AFI KLM O&M/Patrick Delapierre
Air France Industries' A320 airframe maintenance joint venture with Royal Air Maroc, ATI, is doubling capacity
In 2010, AFI teamed up with Safran's Aircelle division to open a 50:50 engine nacelle overhaul joint venture in Dubai - Aerostructures Middle East Services (AMES) - which employs about 15 staff. The partners decided to pool their MRO capabilities, with AFI contributing its experience with General Electric and CFM International engines, while Aircelle brought in its OEM expertise for Rolls-Royce Trent nacelles.
The capacity of the 2,200m² (23,680ft²) facility, which comprises eight workstations for large and eight for smaller powerplants, has yet to be filled, says Benbrahim. The operational start in August 2010 was initially slow, with a single contract for Gulf Air's Trent 700 engines, but more customers have been added.
An existing GE90 fan thrust reverser overhaul contract with Saudi Arabian Airlines has been transferred to AMES, and Qatar Airways has been won for Trent 700 work. Casablanca-based Aerotechnic Industries is a 50:50 airframe maintenance joint venture with Royal Air Maroc, established in February 2010. It specialises in Airbus A320-family aircraft and works mainly for third-party customers.
Air France sent "a few aircraft" to Casablanca in 2011 as an overflow measure when the MRO facilities in Toulouse and Paris-Orly were fully occupied, says Benbrahim. This is likely to increase in future, however, as the airline group considers "potentially more extensive outsourcing in some areas", including maintenance, to slash costs and increase productivity of its short- and medium-haul fleet.
Aerotechnic Industries operates out of a rented Royal Air Maroc hangar, which is only set up with sufficient personnel, tools and equipment to use one of its two bays for airframe heavy maintenance. The second bay will be activated by mid-2012, but construction work is due to begin in the first quarter for a purpose-built hangar the company is scheduled to move into 18 months later.
© AFI KLM O&M/Patrick Delapierre
Air France is evaluating whether to send more A320s to ATI to slash costs
But might Aerotechnic Industries service other types in the future, such as the Boeing 737? Benbrahim says extending capabilities to additional models is "not a priority at the moment".
AFI KLM E&M is looking at a number of other investments in the MENA region. Benbrahim says the company is discussing multiple projects covering airframe, engine, and component support with different potential partners. "We don't have plans to set up MROs ourselves. The idea is to set up joint ventures with local airlines."
Proximity to customers is also the main reason Lufthansa Technik decided to open a nacelle repair shop in Dubai. The first stage of the new facility is due to open early this year and will comprise a spares store and repair shop where engineers flown in from Germany can work on nacelle components from Middle Eastern customers on an ad hoc basis.
The site will be built up for basic overhaul of GE90 engine nacelles by mid-2012. However, the facility has yet to be equipped for full overhaul tasks such as composite repairs, which require an autoclave. Lufthansa Technik also extended its partnership with Riyadh-based NAS Holding in November to jointly offer MRO services to Saudi Arabian operators. Since September 2010, the companies have been co-operating to set up NAS Tech, which focuses on maintenance and smaller overhauls, while the German company provides engine and component support for NAS Air's fleet.
SPACE FOR GROWTH
Goodrich opened a dedicated service centre and overhaul shop for engine nacelles, electronic components, evacuation and cargo loading systems in Dubai in 2008. The 11,600m² facility offers enough space for business growth in the next three to five years, says Joel Haldemann, vice-president, MRO Europe, Middle East and Africa.
Nacelle MRO is a growth area
About 85 staff work at the site, rising to 90-100 in the next 10 to 15 months, he says. The main growth area will be engine control electronics, and Goodrich plans to add another test rig.
However, the United Arab Emirates' first dedicated landing gear shop, which Goodrich wanted to set up with Mubadala Aerospace, has been put on hold. At the Farnborough air show in 2010, the partners agreed to open an MRO facility for undercarriages of Airbus and Boeing aircraft, including A380s and 777s, in Al Ain, Abu Dhabi, in 2012.
"We recently postponed the discussion with Mubadala on this project for the moment," says Haldemann. He declines to specify reasons why the projected has been halted, but says the two companies remain partners and are holding "other discussions" about joint projects. The outcome will be revealed in "the next few months", Haldemann adds.
While the MRO industry in the UAE has not suffered a major impact from the political unrest across the region during the past year, companies with custom in other Arabian countries have nevertheless felt the impact. AFI KLM E&M recorded 10% lower revenues in the MENA region until the third quarter of 2010, before the situation improved again later in the year.
However, political changes have also led to fresh business opportunities, says Benbrahim. "Now things are much better. These countries and airlines need their operations to come back to business."
AFI KLM E&M recently reactivated a support agreement with Tripoli-based Afriqiyah Airways and signed a new MRO partnership with its sister carrier Libyan Airlines.
Especially in those countries where the public demonstrations led to more promising governments, it seems the right time for foreign companies to build bridges with the new administrations.