Middle East MROs Invest To Keep Up With Fleet Growth

Credit: Etihad Airways Engineering

The $7 billion aftermarket in the Middle East is seeing high growth levels and ambitious investments by its dominant players. MRO in the region is expanding at a compound annual growth rate of 8.2%, outstripping the global MRO growth rate of 2.9%, according to Aviation Week Fleet & MRO Forecast data. By 2029, the same analysis estimates total MRO spending of $105.4 billion in the region.

While Saudi Arabia and Qatar are seeing high levels of investment in their MRO industries, it is the United Arab Emirates (UAE) that easily dominates MRO spending in the region. The country’s aftermarket is expected to reach $45 billion over the next 10 years, according to Aviation Week data. This is more than double that of the projected MRO total from Qatar, which stands at $20.6 billion, and the ambitious Saudi Arabia, which is forecast to generate $13.5 billion in 2020-29.

Much of the UAE’s MRO growth stems from locally based airlines Emirates and Etihad, which operate more than 350 aircraft combined. Both carriers also have growing in-house MRO operations. Etihad Airways Engineering, the airline’s MRO arm, is particularly ambitious in targeting third-party work. In the past year, it also added new repair services for aircraft such as the Airbus A350, adding to existing capabilities in A380 and Boeing 787 repairs while potentially looking to expand beyond Abu Dhabi. Emirates has more than 30 contracts in place with third-party customers.

Given projected fleet growth not just in the Middle East but also in Asia, North Africa, CIS and Eastern Europe, the Gulf state has also attracted OEMs and MRO shops to set up in the region.

 The Dubai South aviation hub has served as a hive of aftermarket activity, as home to several engine and parts OEMs, MROs and independent repair specialists. GE Aviation and Boeing have set up regional headquarters in the economic zone since its inception.

The graph below is interactive. Hover over the circles to see the amounts.

 

Dubai South is also home to Lufthansa Technik (LHT) Middle East, the German MRO giant’s regional business set up in early 2017 to service components. Ziad Al-Hazmi, CEO of LHT Middle East, says the company has doubled in size since it was established, with hangar capacity going from around 27,000 ft.2 to 54,000 ft.2 in three years while its staff has increased tenfold, from around 10 to 100 as of early this year.

Likening the growth of the MRO as playing catch-up to the expansion of the region’s airlines, Al-Hazmi says new capabilities have also been added. “When we started, we were looking at nacelles made up of composite materials. Composite reversers, flaps, inlet and cowls and fan cowls—all those large items when transported out of here meant a significant cost was attached,” he says. “Our initial driver to be here was to reduce turnaround times on those products before this developed into other areas.” Given the growing fleet, Al-Hazmi believes there is a more solid case for carrying out certain types of maintenance locally, and LHT Middle East is looking to expand locally. “We’re investing more into local material supply and assets,” he says, with a greater focus on on-wing services anticipated.

As in most global regions, capacity has been problematic and has led to several solutions aimed at addressing constraints, perhaps more urgently given the rapid growth in Middle Eastern fleets. Regional players such as Abu Dhabi-based engine MRO Sanad Aerotech are seeking to rectify this by ramping up capacity to be able to overhaul 315 GEnx engines by 2035 and provide 237 quick turns on Leap engines by 2030 in Abu Dhabi. It plans to add around 200 employees across its aerospace business and grow its staff to 550-600 over the next two years, while also furthering national efforts to boost its indigenous workforce.

Keeping up with the impressive regional fleet growth is a challenge for MROs, says Al-Hamzi. “This is a challenge not because of the experience and tooling we have but more about getting the right people in and trained as quickly as possible.” 

While assistance was sought from other Lufthansa Technik shops around the world, Al-Hazmi says that is not an economical long-term solution. Instead, like Sanad, it will be trying to recruit more technicians from the UAE. It has also actively recruited young talent, with around half of its 100-strong workforce under age 30. Local educational partnerships have been an effective means of recruitment.

In Jordan, several independent MRO providers are helping to address the growing regional workload. Adding capabilities for new aircraft types has been a common trend recently, with companies like Joramco gaining European Union Aviation Safety Agency Part 145 approval for Boeing 787, 737 MAX and A320neo aircraft in the past two years. The MRO has also taken on new work from Europe, including from low-cost carrier Ryanair, which has outsourced airframe maintenance of its Boeing 737NGs across two lines at Joramco’s facility for heavy checks between November 2019 and March 2020.

Jordan Aeronautical Systems Co. (JAC), which repairs a mix of commercial and military aircraft, is another Jordanian company looking to become more competitive. Repair capabilities for the Boeing 737NG were added in September of last year, while certification for Airbus A320 aircraft repairs is in process and anticipated by mid-year.

Ziad Abuain, CEO and general manager of JAC, believes regional demand for maintenance on these aircraft types will continue to grow, although demand for MRO services on widebody aircraft could be even more important. Other specialist services could also be in demand, he says. “The aircraft paint business for widebody aircraft is booming in the region, and this could be a good opportunity to develop the capabilities to grab it,” Abuain explains.

Capacity is limited at its site close to the Jordanian capital’s Amman Civil Airport, particularly during high seasons for base maintenance. This leads it to rent additional space at the airport on a temporary basis to alleviate capacity constraints. To remedy this, Abuain says 2020 will see the building of a new maintenance hangar, along with a paint shop and a composites repair workshop.

He also identifies other noncapacity-related issues, some in common with other regions while others are more unique to the Middle East. “There are a limited number of licensed engineers, and obsolescence on some systems of the 737 Classic, and civil aviation authorities are becoming more stringent on MROs,” he says. The growing prevalence of new-generation aircraft also presents challenges related to hiring skilled labor, Abuain says. “This is especially true for new-generation aircraft types in light of aviation authorities’ requirements,” he adds. 

James Pozzi

As Aviation Week's European MRO editor, James Pozzi covers the latest industry news from the European region and beyond. He also writes in-depth features on the commercial aftermarket for Inside MRO.