is not planning to expand its MRO services in Singapore, opting instead to invest in the Philippines and China, because the cost of labor in Singapore makes labor-intensive maintenance services cost-prohibitive, the company’s chairman, August Wilhelm Henningsen said on Wednesday.
Singapore is still a valuable location for the company due to its ideal “network’ capabilities, said Henningsen. For this reason, the company is expanding its marketing functions here. It also opened a new warehouse at Changi to enable the quick transport of high-value components to airlines in the region.
Technik last week opened a new hangar in the Philippines that is capable of servicing . “The labor difference is meaningful, so it is why we are in the Philippines,” Henningsen said. “The cost of labor here is not low, especially for Asia, which is why we have facilities in the Philippines and Beijing.”
The potential to expand MRO in Asia is great, Henningsen added. “The population across Asia is better and better educated and is young,” said Henningsen. For these reasons, Lufthansa Technik has expanded its technical education programs in both the Philippines and in Beijing.
The company hasn’t written off Singapore. It has smaller schools in both this country and in Taiwan, said Henningsen.
The facility in Beijing is capable of servicing A380s, but there are no Chinese carriers operating the type now.
Lufthansa Technik also is expanding its presence in Bangalore. That facility is a warehouse, similar to the one in Singapore, that allows Lufthansa Technik to speed high-value components to carriers in India. The components have already cleared customs, so aircraft downtime is minimized, Henningsen said.
Separately, when asked how Lufthansa Technik is grappling with competition from the OEMs, which are beefing up their aftermarket maintenance programs, Henningsen said Lufthansa Technik has an advantage. The company services aircraft “24 hours a day, 365 days a year,” so it is more familiar with the maintenance needs of each aircraft. “The OEMs should concentrate on building the aircraft,” he said. “Their pipeline is big enough.”