Aviation industry eyes more MRO revenue

Economy September 14, 2018 01:00

By The Nation

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Thailand’s aviation industry is pushing a road map to raise maintenance-based income, while launching a plan to push for Don Mueang International Airport as a hub for maintenance, repair and overhaul (MRO) for aircraft engines and U-tapao Airport for integrated MRO service.



 

 According to the International Air Transport Association (IATA), the Asia-Pacific aviation industry is expected to grow about 5.8 per cent during the next 20 years, the same rate as Asean, while the Thai aviation industry is expected to expand the fastest and highest in the world at 8 per cent.

Transport Minister Arkhom Termpittayapaisith said that Thailand is developing its aviation industry, particularly the MRO centre for which Thai Airways International Plc (THAI) has signed an agreement with the Royal Thai Navy and the Eastern Economic Corridor (EEC) Committee for operation in the U-tapao Airport.

The centre aims to provide integrated repair services for aircraft at U-tapao Airport, while THAI’s existing aircraft repair centre at Don Mueang airport will be a hub for engine and parts repairs.

“Now, THAI and Rolls-Royce will collaborate for manufacturing in Thailand and the first phase will involve engine maintenance, repair and overhaul, and research and development of new engine models,” Arkhom said.

The Transport Ministry has asked THAI to conduct a feasibility study to expand the Don Mueang MRO hub as an MRO for global aircraft engines which will be linked to the MRO centre for large-sized aircraft at U-tapao.

Based on THAI’s MRO centre development plan, the first part will involve the MRO hub at Don Mueang International Airport. In collaboration with Rolls-Royce, the MRO service will be provided for Trent 700 engines of Airbus A330 and Trent 100 engines of Boeing 787, starting from the fourth quarter of this year. THAI’s aircraft engines will be repaired first and, then Rolls-Royce customers will be serviced early next year.

The second part will be the development of the TG MRO Campus at U-tapao Airport, with the aim to develop it as an integrated MRO hub on expectation of service commencement in 2022.

Surachai Piencharoensak, executive vice president for technical matters at THAI, said that given the collaboration with Rolls-Royce THAI will invest around Bt1 billion for equipment and human resources development. This year, investment used to finance equipment for the Trent 1000 engine of Boeing 787 is expected to be about Bt500 million to start the MRO service in the fourth quarter. The Don Mueang MRO hub has a capacity to repair 70-80 aircraft engines per year.

In the second phase, THAI is expected to invest another Bt500 million for servicing the popular Trent 700 engine of Airbus 330 in 2021. Next year, about 30 aircraft engines are expected at the MRO service. The centre is expected to generate slight income in the fourth quarter and the income will likely increase to Bt1 billion next year and to Bt4 billion to Bt5 billion in 2020 once the MRO service is fully opened for two aircraft engine models.

Surachai said that currently THAI earns about Bt3 billion in MRO services with an annual growth of 5 per cent. Combined with income from technical units and the MRO centre for Rolls-Royce, total MRO-based income will more than double to Bt7 billion to Bt8 billion in 2020.

He also expects to go ahead with the process to find a private enterprise to jointly invest in the U-tapao MRO hub by November. The signing is expected in December. The U-tapao MRO centre aims to commence service in 2022. The private winner will invest half the Bt4-billion required and THAI will invest the other half for MRO equipment, while the government will subsidise Bt6.3 billion for infrastructure.

The U-tapao MRO hub will handle 80-100 aircraft per year in the initial period with estimated annual income of Bt400 million to Bt500 million and expected annual growth at 2 per cent.