Taiwan MRO Saved By Cargo Boom

Credit: Evergreen Aviation Technologies

Taiwan was one of those smart Asian democracies that shut down travel from China fast as word of COVID-19 spread. Travel restrictions into the island have held virus fatalities down to less than 40 per million, dramatically lower than the rate in most nations. But continuing restrictions on international travel, especially trans-Pacific and intra-Asia-Pacific passenger flights, have hit aircraft maintenance hard, with the damage partly relieved by the boom in cargo flights.

For example, Evergreen Aviation Technologies (EGAT), a joint venture between EVA Air and GE, normally does ramp maintenance, heavy airframe maintenance, modifications and component maintenance. Affiliate GE Evergreen Engine Services overhauls engines, while composite repairs are done at Spirit Evergreen Aftermarket Solutions.

“EGAT’s ramp-related maintenance services on the flight line experienced severe disruptions, followed by component maintenance, as passenger traffic and flight frequencies collapsed since the second quarter of 2020,” explains EGAT executive vice president Kin Chong. “Extremely tight border controls on non-resident travelers into Taiwan, accompanied by stringent quarantine measures on all resident and non-resident travelers, have strongly discouraged and restricted air travel.”

Thus, ramp maintenance by EGAT remains severely depressed at 35% of its pre-COVID levels. And even this level is made possible only by a significant increase in cargo flights, operated by both freighters and passenger aircraft temporarily converted to cargo carriage. “Without cargo flights, ramp activities would almost be non-existent,” Kin says.

And EGAT component repairs, which depend partly on flight cycles, are now at half pre-pandemic levels.

But with strong demand from cargo airlines, heavy airframe checks at EGAT remain relatively robust. The increase in demand for heavy checks from cargo carriers has offset the drop in demand for checks on passenger aircraft, including demand from EGAT’s parent, EVA Air. Thus, “There is negligible impact on heavy maintenance activities between COVID and pre-COVID periods, with cargo aircraft maintenance requirements compensating for the collapse in passenger aircraft requirements,” Kin notes.

EGAT’s engine joint venture with GE at GE-Evergreen has seen engine overhaul volumes remain modest. Kin cites current industry estimates that worldwide shop visits for GE and CFM International engines, excluding LEAP engines, will return to 2019 levels by about 2023.

The EGAT executive expects a strong recovery in heavy airframe checks at EGAT for several reasons. First, older parked cargo aircraft from the desert are being resurrected and made airworthy by deferred maintenance actions. Secondly, there will be more maintenance required by fleet expansion of cargo operators. Lastly, there will be return-to-service maintenance on temporarily parked passenger aircraft as these are prepared for the air travel recovery. Currently, EGAT is very busy with the first two activities and is preparing for the third, return-to-service, challenge.

Kin understands that the current cargo boom is partly a temporary reaction to the reduction in belly capacity from passenger flights and that this element will disappear as passenger flights recover. So, despite having extensive experience with cargo conversions, EGAT has not done conversions during the COVID crisis. “Commercial terms on cargo conversion activities remain relatively poor, compared with relatively attractive maintenance activities,” says Kin.

When the travel recovery comes, EGAT expects recovery in ramp services for Boeing 777s and 787s, and Airbus A320s and A330s. Heavy maintenance has so far been sustained by 747-400, 747-8, 767 and MD-11 freighters. With recovery, EGAT should see the return of airframes such as the A320 family, 737NG, 767, 777 and 787 passenger aircraft. “The relatively stronger passenger aircraft demand will be from widebodies such 767s, 777s and 787s,” Kin predicts.

As EGAT’s total business drop was limited, staff attrition, too, remained limited during COVID-19, with a reduction of 10-15% in staff. On a positive note, with full two-dose vaccination rates among EGAT’s mechanics, engineers and managers, not a single maintenance day was lost to the virus.

The MRO has not experienced any noticeable challenges in logistics or transportation of parts, since long-haul cargo operations in and out of Taiwan actually increased, unlike passenger flights. Part sourcing from the U.S. has seen longer turn-around times, but these have not been crippling.

EGAT is now planning improvements on the shop floor by incorporating lean practices, digitization, drone inspections, wireless task card sign-offs and positioning parts and tools near aircraft.

Kin acknowledges that recruiting new mechanics is challenging due to competition from more attractive industries in the semiconductor supply chain and emergence of local low-cost air carriers, which will seek mechanics, too. Moreover, “The attractiveness of the MRO market is dampened further by the perceived higher COVID risk in a front-line environment,” notes Kin.

Another major MRO in Taiwan is Taiwan Aircraft Maintenance and Engineering Company (Tameco), which is owned by China Airlines. Its maintenance hangar can accommodate two widebodies and three narrowbodies, and Tameco focuses on airframe maintenance, line maintenance, A-checks, base maintenance, scheduled heavy checks, lease returns, structural repairs, modifications and teardowns.

Tameco gets overflow business on China Airlines’ (CAL) fleet, most of which is maintained by CAL's own Engineering Maintenance Organization. Of CAL’s 83 aircraft, 21 are freighters, and these have done an increasingly booming business during the pandemic. By August 2021, CAL’s cargo revenue was running at $363 million a month, more than triple the $112 million monthly rate before the pandemic.

Chief marketing officer James Chen observes that CAL has outsourced some of its fleet maintenance activities to Tameco, but strict border controls have limited the ability of foreign aircraft operators and owners to send representatives to Taiwan. This has hurt their ability to assign maintenance work to Tameco.
For less-active passenger aircraft, Tameco is encountering more structural corrosion findings than it did pre-pandemic. The MRO has done heavy checks on CAL’s aircraft, but has not converted any of CAL’s passenger aircraft to cargo duties, either temporarily or permanently.

The MRO is still developing and continues to recruit new mechanics. Logistical challenges stem from limited cargo space and a surge in shipping costs. Chen says border controls are also restricting Tameco’s plan to receive more repair station certificates from foreign authorities.