The rapid growth of the airliner fleet in the Arabian Gulf has been mirrored by an expansion of the maintenance, repair and overhaul sector, with several North American and European manufacturers investing in facilities to support their products, and specialist aftermarket companies also establishing a presence. However, the past few years have also seen a number of changes, with two of the biggest regional players – Etihad Engineering, formerly Abu Dhabi Aircraft Technologies (ADAT), and Jordan’s Joramco – changing ownership, and the establishment of an engines MRO provider in Abu Dhabi.

When in 2014 new signage appeared outside the MRO complex at Abu Dhabi International that had formerly been Gulf Aircraft Maintenance (or Gamco) and then ADAT, many assumed Etihad Airways Engineering (EAE) would be largely turning its back on external work to focus on its parent carrier. The business had been handed over to the airline by Abu Dhabi investment fund Mubadala, but not before the latter spun out ADAT’s lucrative engine maintenance activities into a new entity, based next door, called Turbine Services & Solutions (TS&S), a manufacturer-approved shop for the General Electric GEnx and Rolls-Royce Trent 700.

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“When we took over, the first thing we asked ourselves was, what do we want to do?” says Frederic Dupont, vice-president technical sales and customer service at EAE. “People assumed we would not be in the third-party business.” However, with work from Etihad’s own, relatively young fleet accounting for just under half the available hours – and due to fall to about 30% by next year – “we quickly came to the realisation that Etihad would not be enough”, he says.

There were a number of priorities. First, the management team had to ensure the industry was aware of the brand and what services EAE offered. “People knew ADAT, and Etihad, but not Etihad Airways Engineering,” says Dupont. “We had to ensure we were able to support the growth of Etihad, but on top of that, because we have our own P&L [profit and loss], we had to continue to build our third-party work.” Because the engine activities were hived off, “we also started with a reduced scope,” he says. “So we began a significant exercise to see what we needed to take on, portfolio-wise.”

A380 Maintenance Etihad

EAE expects parent Etihad to make up an increasingly smaller proportion of its capacity

Etihad Airways Engineering

EAE’s managers realised that success did not depend on attracting more low-value airframe maintenance work and began focusing more on higher-margin cabin modifications and supplemental type certificate contracts. “ADAT was doing work for some tier three and four airlines, but we have been focusing on more premium customers,” says Dupont. “The message has been: ‘If you’re looking for cheap, don’t come here'." The result has been contracts to refurbish Airbus A380s with Qantas, Lufthansa and Singapore Airlines. “We have had work from markets we never dreamed of,” he says.

EAE, which employs 2,200 people, has invested heavily in specialisms such as repairs of sidewalls and other plastic cabin fittings, refurbishing cockpit seats and laundering seat coverings. A team of 30 design engineers work on STC projects. “We can now offer full STCs with design capability in house,” says Dupont. Its in-flight entertainment shop – specialising in Thales – handles entirely third-party work: a necessity after Etihad itself switched its IFE to Panasonic, which has its own MRO facility in the UAE.

On the airframe side, the business is qualified for every major platform with the exception of the Boeing 747 – of which there is a rapidly diminishing global fleet – and the Airbus A350, which is some years off becoming a major opportunity for the MRO sector. “But we are developing as a centre of excellence for the A380 and the 787,” says Dupont. All the efforts appear to be paying off. EAE expects to carry out 1.6 million hours of work this year, an increase of a third over 2016, and has set a target of 2.5 million hours for the early 2020s. “We are fully in growth mode,” he maintains.

Chief executives at the region’s big MRO concerns have been swapping offices too. Abdul Khaliq Saeed was named chief executive of EAE in September, replacing Jeff Wilkinson, who after 11 years with the Abu Dhabi operation has moved to the same role at Jormaco. The Amman-based MRO has since September 2016 been an 80%-owned subsidiary of Dubai Aerospace Enterprise (DAE), the aircraft leasing firm. Saeed, meanwhile, had been chief executive at TS&S from its establishment in 2014 and, before that, headed ADAT.

Joramco was once the technical department of Royal Jordanian, but like many airline MROs has been increasingly pushing into third-party work. DAE bought its majority stake in the business after divesting US-based MRO group Standard Aero in 2015. After EAE, Joramco is the largest third-party MRO in the region with five hangars capable of housing 10 aircraft. It recently added Boeing 737 Max capabilities to a series of Airbus and Embraer approvals, and has recently secured contracts from Flydubai, Gulf Air, Lufthansa and TUI, among others. DAE shares the same ultimate owner as Emirates and Flydubai in the Dubai government.

Dubai South is the aviation district being developed around the city’s new Al Maktoum airport, previously known as Dubai World Central, and its owner, again an agency of the Dubai government, is targeting MRO operators. A number of MRO facilities have begun operations there or have plans to open. One of them, DC Aviation Al Futtaim, will during the Dubai air show officially open its second hangar for business aircraft maintenance. The joint venture between the German business aviation charter operator and a local business opened its fixed-base operation and first hangar in 2013.

Another is Lufthansa Technik, which officially unveiled its 2,000m2 (21,500ft2) workshop in May specialising in the repair of thrust reversers, inlet cowls, radomes, flaps and other airframe components. The German engineering business had been offering clients light repair support at Dubai International Airport, but decided to step up its activities in 2016 sensing an opportunity with local MROs which lacked the expertise in these areas and manufacturers needing local repair and servicing support for their products. “It was all about showing a commitment to the market here,” says Lufthansa Technik Middle East chief executive Ziad Faisal Al Hazmi.

One of the areas LTME has focused on is spares support, says Al Hazmi. “We had lots of discussion to convince the board as it’s a lot of money tied up in stock, but we have invested a lot in the material pool. Scheduled work is one thing, but when you need it done – and we are seeing a lot more unscheduled work – that is when you need that inventory here.” LTME, which currently employs about 30 staff, is also looking at branching out into interiors repairs. “We are looking at anything where we can add value and we have the competencies, and where it would be cheaper than sending that part back to Europe,” he says.

Not far away, in Dubai’s Jebel Ali Free Zone, Aerostructures Middle East Services (AMES) has been offering a similar service since 2010. With about 20 employees, the joint venture between Safran Nacelles and Air France Industries/KLM Engineering & Maintenance specialises in the French manufacturer’s nacelles and thrust reversers for the Airbus A320’s CFM International CFM56, the Rolls-Royce Trent 700 and Trent 500, as well as the ultra-large units that house the General Electric GE90, R-R Trent 900 and Engine Alliance GP7200s. It has also been offering radome repairs – often a result of bird strike or ice damage – since last year.

General manager Alexandre Mule says the two owners combine “an airline’s mindset and a manufacturer’s industrial approach”, but also a range of capabilities. Safran is the original-equipment provider for the engines on a range of Airbus types including the A380’s Trent 900, as well as the Embraer 170 and 175, while Air France operates and maintains in Europe the A330’s GE CF6-80E and the GE90-115B on its Boeing 777-300ERs. “There are not many in the middle except the [A380’s Engine Alliance] GP7200 and the CFM56,” says Mule.

Facilities in the 2,000m2 facility include a composite shop, 3m-diameter autoclave, and a 5.5m wide paintbooth big enough for a GE90. It also employs teams of remote technicians for field repairs. Mule says the business covers a territory from North Africa to the Indian subcontinent, and, while it will not disclose customer names, they include some of the biggest brands in the Gulf. He says AMES’s biggest selling point is convenience: “For a Middle East airline, sending a component here saves massive amounts of time over shipping it back to Europe.”

While the region has seen a flurry of MRO activity in recent years, not every MRO start-up has gone to plan. In 2010, Bahrain’s national investment fund set up Gulf Technics at the country’s main airport – initially as a joint venture with Singapore Airlines’ technical arm SIA Engineering – to support Gulf Air’s fleet and develop a third-party MRO business. Three years on, with SIA Engineering having pulled out early on, the business was wound up after failing to win any contracts beyond its parent carrier. The Bahrain government still hopes to establish an MRO facility as part of an airport expansion initiative, but that seems some while off.

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Source: Flight International