ADE’s 2025 Road Map Includes Workforce, Hangar And Tech Investments

Asia Digital Engineering (ADE) opened a large new aircraft maintenance hangar in Kuala Lumpur, Malaysia on Sept. 26. CEO Mahesh Kumar spoke with Aviation Week Network about its Malaysian facility expansion and its strategies for training, digitalization and supply chain.

Congratulations on the successful launch of Malaysia’s largest hangar facility. Could you tell us about the hangar, its sustainability features and any future expansion plans moving forward?

The maintenance work in the new hangars is already started. ADE is a bit different than other conventional MROs because they build a facility and then they build a business. ADE was a typical low-cost MRO; we built the business with whatever facility we had at that point in time and then we slowly expanded our facilities and business. We had a one-line hangar, then we leased a military hangar and slowly we have grown to six-line hangars. Now, from six, we are moving to a 16-line facility on 22 acres of land—almost three times the growth.

Of the 16 lines, 14 will be based at Kuala Lumpur International Airport and two will be at Senai International Airport in Johor Bahru. Thus, we will be able to service 14 narrowbody aircraft or two widebodies simultaneously, plus eight narrowbodies in the new, expanded facility. The facility is one of the largest in Southeast Asia and is well-prepared for European Union Aviation Safety Agency approvals, as well as approvals from other nations. By the end of this year, we are planning to build a four-line hangar in addition to the existing 14-line hangar. For this, we have already acquired a five-acre plot adjacent to this facility. We know exactly what we want, hence, in terms of tooling, manuals and documentation, the facility is completely digital and I am proud to say very advanced.

We are building our roofs with solar panels. The one challenge we are facing is that our hangars are close to the taxiway and runway, so the panels cannot give out any glare during aircraft touchdowns and take-offs. There are some challenges with air traffic control and the airport authorities. Hence, we came up with a creative method of developing car parks covered with solar panels. We are also [pursuing] green building certification. Malaysia is keen on the environmental, social and governance side, so we are also looking at rainwater harvesting and energy saving mechanisms. We have electric vehicles (EV) for commuting within the facility, and we are even considering larger EVs for commuting between our warehouse and hangar facility.

We have established three entities focused on line maintenance: ADE Indonesia, ADE Philippines and ADE Cambodia, and I [believe] we are the only MRO with exposure in four countries. Just recently, we signed up with PT Garuda Maintenance Facility AeroAsia (GMF AeroAsia) to combine our expertise for providing landing gear service to the operators in Indonesia. With our 14-line MRO hangar now fully operational and our digital products gaining international recognition, this partnership with GMF comes at the perfect time.

Considering the industry’s global skilled workforce shortage, how are you approaching recruiting and training at this big new facility?

We have our in-house trainee program, and I would like to call us very blessed in terms of skilled workforce. To give you a small background on this, during COVID-19, the lockdown was very severe [here] compared to the rest of Southeast Asia. We had an almost 18-month complete lock on even domestic flights—all the aircraft were AOG. During that time, we had a batch of people who had completed their basic technician training, and we took that opportunity to completely train this batch into fully skilled aircraft maintenance engineers (AME). When the lockdown lifted, we had a ready batch of engineers and technicians to deal with the rising MRO demand.

ADE is the engineering arm of AirAsia and AirAsia is from different countries (Thailand, Malaysia, Indonesia and the Philippines). Since we are well connected in these four countries, we can pool our human resources from other neighboring countries, and this is how we grew from a six to 16-hangar facility. I will not claim to never have manpower issues; we also face attrition with our trained engineers leaving for other competitor MROs or the Middle East, but it was still manageable.

Traditionally, AirAsia is a company that focuses on career growth. For example, I started my career in ADE as a technician. The pipeline is always promising. We prefer to hire people as junior staff and then train them and establish them as engineers—that’s something in our DNA. We prefer that rather than poaching expensive engineers from other companies.

What do your in-house training capabilities consist of? How are you approaching training as airlines modernize fleets with newer, more advanced aircraft?

Currently, we have tied up with several training schools in Malaysia along with an online training school from France. It is true that engineers need to be upgraded constantly these days with the new technologies and innovations coming up. Moreover, we are not limiting our capabilities with just the AirAsia fleet. For instance, AirAsia does not operate Boeing 737s but ADE has developed the 737 capabilities. We have a plan to develop our own in-house training school. It is still in the planning phase and we have not made any official announcement as of yet. We plan to announce our in-house training school toward the end of this year or hopefully toward the first quarter of 2025. We have already identified a place for the school and kickstarted the regulatory process with the local authorities.

How will the new facility help ADE tackle the rising aftermarket demand? 

We are blessed with a huge volume of work coming in from AirAsia, our sister company. AirAsia currently has 225 narrowbody aircraft and 25 widebody aircraft. That itself is a big volume to swallow. Even if we take about 10% of it, it comes to 25 aircraft at any point in time. I can safely say that there is no worry about demand at all. The demand is still way more than the supply for MRO, which is why if anyone asks how will you compete in this robust market, I always say the pie is too big for everyone to eat. Even after sharing the pie, there are some pieces left. That’s one of the positive aspects of MRO business.

Another perspective is that the MRO business is well-connected to supply chain issues, aircraft shortages, etc. as the demand is still way higher. For example, even before the inauguration of our new hangar, all our slots were fully booked until the end of 2025. Although the major chunk of our work comes from AirAsia, we also service a few non-AirAsia aircraft; it’s a small number, slightly less than 10%. It motivates our AMEs to see an aircraft from a different airline and they take pride in their job. We do service a lot of aircraft from Nepal. As far as India is concerned, we are still getting there. We do anticipate a huge demand from India in the future and hence, have just initiated our talks with the Directorate General of Civil Aviation to get our approvals.

AirAsia as an airline is also growing. Just recently the airline has started taking new deliveries. For the last four years, the airline did not induct any new aircraft, and now the airline has over 300 aircraft in their order book. If we want to cater to this volume and, at the same time, some of the third-part MRO work, we need more facilities. Aside from 16 hangars at the end of this year, we will start construction of another four-line hangar facility as a part of our short-term expansion plan. If we look at the long-term, we are thinking of building over 14-20 line hangars over the next five years. As far as competition is concerned, ADE is not worried as we are well-known in the market for cost-efficiency.

Given industry supply chain issues, do you plan to order more spare parts than usual? How do you plan to tackle the inventory challenge?

We have an online platform called AeroTrade that was completely developed by our in-house technical engineers and it is a 100% ADE-owned platform. AeroTrade is an online platform for two parties to buy and sell spares. Initially, we created this platform to sell our excess spares. We listed all our excess spares and contacted all third-party airlines with a deal: “You need spares, we need cash, we are growing.” And that’s how we took off. Gradually, we developed an algorithm to verify the parts certification. Later, we got a few requests from airlines with extra spares and they even wanted to put out their spares on the platform to sell. We are very transparent with the transactions as we charge a basic margin for every transaction.

Now we actually see two airlines buying and selling their spares using our platform. With this, we now have a wider pool of access to spares. The platform is free for all to use. We don’t charge anyone for putting their inventory on our platform, we only charge a base amount for the transaction. In a way, it is like a collaboration with all the airlines. Today, the value of non-ADE inventory is way higher than ours—we are probably third or fourth on the list. Other airlines have more inventories on the platform. This helps us in revenue and cash flow, plus it gives us an edge in terms of supply chain for wider access and we can dispose of the excess spares on hand.

We even have certain MROs—our direct competitors—buying from the platform. It’s a perfect platform to share the pool of inventories. Everyone is facing supply chain issues with inflation taking an upward tilt and the manufacturers scaling up the price of spares.

If I tell you about the revenue that we make from Aerotrade, you will be surprised. It’s a significant number. Interestingly, in the time of COVID-19 when everyone was shutting down, we opened up a new business which is thriving quite well now.

We also created our own in-house aircraft health monitoring, which includes a bit of predictive and preventative maintenance. Today we are completely self-reliant in terms of aircraft health monitoring systems, thanks to our in-house tech guys. The best part is, we have now opened this up for third-party airlines, too. Currently, we have two big airline clients that are on a trial version of our system.

What MRO technologies is ADE looking at for the future?

Technology is something you have to keep adapting to and keep evolving. If we stall, we will be left behind. Technology is also expensive, so we have to be careful while implementing it in terms of increasing the revenue or reducing the cost. We are very cautious of our investments.

We have come up with our automated tooling system and all of our documentation is automated. We invested in automation not with the intention of reducing manpower, but to help us mitigate turnaround times (TAT). We are a low-cost MRO, and the less time the aircraft is on the ground, the better. About 80% of the ADE staff is from AirAsia. Every day we strive to find new ways to reduce the TATs, whether that is through simplifying processes or digitalization and bringing in new technologies.