The recent inauguration of Lufthansa Technik Philippines’ new facility close to Manila is set to remedy near-term capacity concerns, but the MRO provider says it will explore expanding in other locations outside of the capital city to further grow in Asia-Pacific.
The company is looking to capitalize on returning demand for widebody maintenance while also tapping into growing narrowbody MRO demand in the region through its new 97,000 ft.2 facility, located at the MacroAsia Special Economic Zone at Villamor Airbase in Pasay City—close to the capital city of Manila.
The hangar was inaugurated last month following a delay of nearly two years due to the COVID-19 influenced slump in global air travel. It will replicate another facility already operating at the site and will service Airbus A320, A330, A380 and Boeing 777 aircraft. The facility gives LHT Philippines around 20% extra hangar space in total.
Capacity around Manila is heavily congested, according to Rainer Janke, vice president of marketing and sales at Lufthansa Philippines. Janke says the company cannot grow the business any further in the city and its surrounding areas. “If we want to grow the business in the Philippines overall then we must go out [of Manila]," he says.
He cites two locations that could be ideal for growing its footprint: The first is possibly expanding at Clark, which Janke says benefits from being close to Manila and being well connected logistically. The second is in Cebu, where the company currently operates a small facility.
Janke says there has been a significant change in fortunes for the LHT Philippines business in the past few months. Following a challenging period that started last year and resulted in a sharp downturn, this was eventually eased by the re-emergence of work, mostly from European and Middle Eastern airline customers, with the A380 among the aircraft showing an unexpected upturn in demand.
Since June, however, shortly after the Philippines lifted COVID-19 restrictions within its borders, Janke notes an upturn in Asia-Pacific-based customers returning as other countries in the region gradually reopen their borders.
The new hangar will initially service narrowbody aircraft, despite also having capacity for widebodies. “The hangar is big enough to accommodate an A380 or four narrowbodies so we’ve started by servicing narrowbodies, but we will shift the business model if the demand is there. If that happens, the narrowbodies would have to look for a new home," he says.
The company has set its sights on growing its narrowbody MRO services within the Asia-Pacific region, where it has approval for A320 base maintenance. Janke envisages this expansion being mainly focused on a few customers, such as domestic and some regional airlines. He says LHT is also exploring the possibility of gaining approval for Boeing 737 aircraft maintenance for its Philippines operation.
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