Ominous Rumblings From SE Asia

The novel coronavirus has hit many parts of Asia-Pacific's commercial aftermarket, including the cancellation of an Airbus-Thai Airways MRO joint venture.
Credit: Nigel Howarth / Aviation Week

Prior to the pandemic, Southeast Asia was one of aviation’s biggest growth markets and as a result the region saw the launch of numerous new MRO operations, often as joint ventures.

Examples included a plan between Airbus and Thai Airways to develop a major MRO hub at U-Tapao International near Pattaya; a deal between Malaysia Airport Holdings (MAHB) and South Korea’s Gyeongnam Techno Park (GNTP) to develop the Subang Aerotech Park near Kuala Lumpur; and, last year, a component support partnership between AFI KLM E&M in Indonesia.

Now, though, the flag carriers of Thailand, Malaysia and Indonesia are all in deep trouble, while the leading low-cost carriers in the region face huge challenges as well.

Thai Airways is currently under administration while fellow flag carrier Malaysia Airlines has threatened to ram through a restructuring under UK law unless lessors agree to massive rent reductions.

Already, Air Asia is seeking to return as many leased aircraft as it can, while chief executive Tony Fernandes has indicated that it won’t place new aircraft orders for many years. 

Meanwhile, its almost-400-aircraft backlog with Airbus, which had the whiff of hubris even in better times, is currently under discussion. Affiliate Air Asia X has all but cancelled its orders for 10 Airbus A350s and 30 A321neos.

In Indonesia, Lion Air is asking for unprecedented concessions from its lessors for its fleet of more than 200 leased aircraft, and is threatening to return them if these are not met, while flag carrier Garuda is still awaiting a substantial state bailout, having posted a $700 million loss for the first six month of the year.

This will have serious implications for the number of aircraft operating in the region for years to come, and for the resulting demand for support services.

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.