JAKARTA (TheInsiderStories) – The country’s aircraft maintenance, repair and overhaul (MRO) business is projected to continue to expand in coming years, in line with the growth of the country’s aviation industry and the increasing number of aircraft operating in the country.
Unfortunately, domestic MRO providers are yet to fully accommodate the airline operators’ service needs. Some operators still send their aircraft overseas for complete overhauls. The government therefore needs to push the development of a domestic aircraft maintenance industry.
This could be done through creating affirmative policies, such as providing favorable incentives for domestically-made aircraft components as well as building a custom-designed aviation park.
Possessing an advanced and competitive domestic aircraft maintenance business would also tend to discourage the outflow of funds spent by domestic aircraft operators.
At the moment, the MRO business is dominated by Garuda Maintenance Facility Aero Asia (GMF Aero Asia), a subsidiary of Garuda Indonesia airline, capturing around 75 per cent of the MRO market (a figure claimed by GMF). The remaining market share is split among other providers.
According to the Industry Ministry, the aircraft maintenance industry has recorded an average growth of 9 per cent per annum over the past five years. Given that that is higher than overall economic growth, the aircraft maintenance industry looks promising.
The demand for MRO is expected to further increase around the Southeast Asian region, following the implementation of a so-called ‘Open Sky Policy’. This means that more and more airlines from abroad will be allowed to fly to various destinations within Indonesia. This would open up business opportunities for domestic MRO providers, as such airline operators would need various kinds of maintenance, from overnight service, light maintenance and a medium check to full overhauls.
According to Harjanto, the Director General for Industry, Metal, Machine, Transportation and Electronics at the Industry Ministry, the value of the domestic MRO business reached around US$2.2 billion in 2017, up significantly from US$ 970 million the previous year.
This increase was in line with the improved capacity and capability of domestic MRO providers to carry out maintenance, repair and overhaul of aircraft.
The increasing capability of domestic MRO providers can be confirmed by the willingness of international aircraft operators to have their aircraft repaired by domestic MRO providers, in particular by GMF Aero Asia. This is logical as GMF Aero Asia has secured international certificates from global aircraft producers such as Airbus and Boeing. GMF, as a case in point, has secured certificates from Airbus to maintain, repair and overhaul certain types of its aircraft.
Given the increased capability of domestic MRO providers, Indonesia could capture global MRO market by attracting international airline operators to have their aircraft repaired and overhauled in Indonesia.
At present, said Harjanto, global airliners spend around US$72.81 billion annually for MRO needs. Domestic MRO providers thus have an appealing opportunity to seize this market.
In order to further develop the MRO business, the government should also support the domestic aircraft component industry. This can be done through setting up a special aviation park to produce aircraft components, as is the case in other countries. At present, a large percentage of aircraft components are still imported.
The global MRO business is projected to continue to grow to US$106.54 billion by 2025, representing an annual expansion of 3.9 per cent per annum. Asia Pacific recorded the high percentage, at 5.8 per cent, compared to North America at 0.9 per cent and Europe at 2.35 percent, said Harjanto.
At present, there are 32 companies that provide MRO services, who are also members of the Indonesia Aircraft Maintenance Service Association (IAMSA). To stimulate domestic MRO business, there should closer collaboration between airline operators, the regulator and MRO providers.
All stakeholders need to sit down together to address the pressing issues encountered by MRO providers, such as a lack of skilled human resources, the need to create an integrated aviation park and the availability of aircraft components.
The government has identified a number of sites that could be developed into an aviation industrial park: Batam, Bintan, Sultan Hasanuddin Airport in Makassar and Frans Kaisiepo International Airport in Biak, West Papua.