As one of the largest maintenance, repair and overhaul companies in China, Guangzhou Aircraft Maintenance Engineering Co is focused on its core business of airframe and component maintenance and expanding to capture more third-party work.
GAMECO’s general manager Norbert Marx explains to FlightGlobal that part of the organisation’s success is credited to its strategy of not unnecessarily diversifying into various business streams, but instead placing an emphasis on supporting 50% shareholder China Southern Airlines.
“We are in the best market from a growth perspective with development opportunities. We need to focus and not do some ‘adventures’,” Marx says, emphasising that it is not looking to diversify its business into other areas.
Rather, he sees China Southern's plans to add 200 aircraft to its fleet over the next three years as the MRO's major growth driver.
Flight Fleets Analyzer shows that the SkyTeam carrier operates 570 aircraft, spread across various aircraft types. The wider airline group operates around 800 aircraft, and expects that to grow to 2,000 by 2035.
Marx says that the MRO and the airline have a symbiotic relationship, and while it is looking to grow its third-party business, China Southern remains its most important customer.
“China Southern cannot develop their plans if they are not supported by GAMECO. Both of us need each other,” he says. “I would not put China Southern business away to increase my third-party market share. Third-party business is important for our mechanics to be in touch with other various customers maintenance systems, [but] we need to do that without [jeopardising] our opportunities with China Southern.”
Marx says the company has already acquired capabilities for maintaining new generation aircraft types that the airline has added to its fleet, including Airbus A320neos, Boeing 737 Maxes, 787s and A350s.
The company is also innovating some of its processes. Last year, it developed a new way to remove A330 landing gear that can shorten the process by up to two days. It is now looking to do the same for removing 787 landing gear.
China Southern is also the anchor customer for its Auckland, Melbourne and Sydney line maintenance stations that opened earlier this year. It is working towards getting those stations certificated to work on other Chinese-registered aircraft.
Nonetheless, Marx admits that the MRO has not yet met the “sweet spot” for third-party work, but needs more hangar capacity to chase more of that work.
GAMECO’s two existing hangars can accommodate between 18 to 20 aircraft in various configurations. Marx says that those facilities allow it to capture around 30% of its revenue from third-party customers, mostly on an ad-hoc basis.
Under its “Phase Three” programme, GAMECO is building a third hangar at Guangzhou airport, which is set to commence operations in 2021, and will be key to offering more third-party work.
“When Phase Three is completed, we can then commit full lines to third-party airlines instead of providing them with spot business and ad-hoc checks,” explains Marx.
The 95,000m² (1 million ft²) facility will be capable of handling up to six widebody aircraft, with four tail-in and two nose-in positions. Various levels of airframe maintenance will be provided, from "A" to "D" checks.
GAMECO is also building a new CNY573 million ($83 million), 60,000m² aircraft component repair centre in Guangzhou that will open in 2022.
Separately, the company will also soon have another heavy maintenance line at Beijing’s new Daxing airport when a new aircraft maintenance facility becomes operational in 2019.
China Southern has "topped off" construction of a mammoth maintenance facility at Daxing that will be able to handle up to 12 aircraft simultaneously, including Airbus A380s.
Marx says that GAMECO and the airline are in talks to see how much of it will be used by GAMECO to support its parent airline initially, before expanding to third-party work.
JOINT VENTURES AND PARTNERSHIPS
Marx says that the MRO is in discussions with several potential partners to develop new joint ventures, noting that there is a “good window of opportunity".
“A lot of new airlines with a substantial fleet size are looking to partner up with an MRO for their fleet maintenance needs. We could maybe build a hangar somewhere with their fleet as base customers. There are also expanding airports that are underserved with MRO facilities. They can then attract more flights and offer MRO services.”
Marx adds that he is seeing some airlines discussing in-sourcing their maintenance work, but notes that starting those activities without an MRO partner “is costly, risky and too self-centered”.
“[It is] better to have an established partner that can bring in third-party load [and] help you with training. This is what we are looking for.”
The company is also deepening its partnerships with other MROs and Airbus through the manufacturer's alliance programme. Last June, it started talks to enter the alliance, which includes China Airlines’ and Etihad Airways' engineering arms, as well as AAR, Aeroman and Sabena Technics.
The alliance is aimed at enhancing the airframer's after-sales service, capitalising on new digital capabilities, and potentially shortening turnaround times for some checks.
Airbus is supporting the participating MROs by providing "a wide portfolio of services". This will leverage Airbus services such as flight hour services, upgrades and parts from its Satair unit.
Marx expects that joining the alliance will allow it to benchmark against the other MROs, and allow them to work together to create new maintenance solutions. He also expects GAMECO to gain more work from maintenance packages sold by Airbus with new aircraft.
“It is a win-win for the members and Airbus. We do not have a timeline to its full implementation, but it is taking shape step by step. We are embarking on an exciting project,” he says.
Source: Cirium Dashboard