LHT Philippines Waits For Vaccine Or Eased Border Restrictions

Lufthansa Technik Philippines was established in 2000 as a joint venture between Lufthansa Technik (51%) and the Philippine MacroAsia Corporation (49%). Based out of Manila, it covers a range of services for the Airbus A319, A320, A321, A330-200/-300, A340-200/-300/-600 and the A380 as well as Boeing 777 aircraft.
Credit: Lufthansa Technik Philippines

Although domestic traffic in China and some other Asia-Pacific nations is recovering, the market is still slim elsewhere in the region. And that has made things tough for MROs that support flying in Asia-Pacific and international service to the region.

Lufthansa Technik Philippines does base maintenance for the A320 family, A330s, A340s, A380s and Boeing 777s as well as line maintenance for many types. Its base maintenance market is concentrated in the widebodies used for long-haul flights, hardest hit by the virus crisis. 

“It is too early to say that the recovery in Asia has started already,” argues Rainer Janke, LHP’s VP for marketing and sales. “While there are some domestic markets that are slowly coming back, the overall situation is still uncertain.”

Indeed, Asian airlines carried just 724,000 international passengers in June, a 98% decline compared to the 31.8 million recorded in the same month last year. The average passenger load factor was 36.3% in June 2020.

Asia-Pacific’s regional and long-haul traffic is still down due to various government restrictions that make it difficult for MROs to plan for when and how the MRO market will recover. “Obviously, the availability of a vaccine to fight Covid-19 will play a key element in the comeback of regional and intercontinental flight,” Janke says.

The Association of Asia-Pacific Airlines does not want to wait for a vaccine, but has urged Asian governments to replace unduly onerous restrictions on international air travel with evidence-based measures to safeguard public health. “Good progress is being made on widespread testing and contact tracing, wearing of masks and social distancing,” AAPA says.

But blanket quarantines for inbound passengers make international travel “extremely daunting.” The Association questions the need for quarantines once adequate testing and contact tracing are in place. 

When either vaccines or eased restriction do allow traffic to accelerate, reactivation of parked aircraft that require deferred aircraft maintenance will have to be performed prior to reentry to service. Janke expects this deferred maintenance to increase demand for base work. And regular operations will prompt rapid demand for line and component maintenance.

Meanwhile, LTP has been offering aircraft preservation and parking for its main customers.
Employee retention is a priority at LHT Philippines, but the MRO has been unable to offer regular employment to its probationary employees. One reason: the company has not received any government aid.

Ranke says his main challenge is retaining capacity, capabilities and current qualifications as LTP bridges the time until there is an increasing requirement for aircraft maintenance. “Still, it remains uncertain when and how such demand will come back.”