MIDA e-News - Malaysia’s MRO industry sets for 10% revenue growth

Malaysia’s MRO industry sets for 10% revenue growth

Malaysia, which is among the three leading countries for MRO services in the Asia Pacific, after Singapore and Hong Kong, particularly for engines and airframes, and modification of airframes, is expected to see a 10% revenue growth in the industry this year from some US$900 million (RM2.79 billion) last year, according to global business consulting firm, Frost & Sullivan.

Speaking at the Asean Commercial Aviation Conference held at the Langkawi International Maritime and Aerospace Exhibition (Lima) 2013, Frost & Sullivan (Asia Pacific) Director, Subhranshu Sekhar Das attributed Malaysia’s competitive advantage in MRO to the country’s lower cost workforce.

As fuel and maintenance cost account for some 50% of the operating cost of an airline and are difficult to control, expenditure on MRO would continue to rise, he said, adding that in the Asia Pacific, the demand for engine services posted an annual growth of 8.5%, while services for airframes and airframe modification recorded an increase of 5.5% and 6.6% a year respectively.

Frost & Sullivan Global Vice -President Chris De Lavigne said the growth of airline passengers in the Asia-Pacific region would also boost growth in the local MRO industry.

Meanwhile, Malaysian Investment Development Authority (MIDA) Deputy Chief Executive Officer, Datuk Phang Ah Tong said the local MRO industry had proven to be a reliable pillar of support for the domestic economy.

Among the major MRO service companies in Malaysia are Malaysia Aerospace Engineering (MAE), Airod (Aircraft Inspection, Repair, & Overhaul Depot), Sepang Aviation Engineering, GE Engine Services Malaysia, Eurocopter Malaysia , Honeywell Aerospace Services, Hamilton Sundstrand Malaysia, Agusta Westland, Airfoil Services, and AAR Landing Gear Services.

He said Malaysia is still attracting investments in the aerospace industry, despite the external challenges, as the aerospace products have a longer life cycle, unlike products in the consumer electronics sector where the life cycle gets increasingly shorter.

Meanwhile, Honeywell Aerospace (Asia Pacific) President, Briand Greersaid the company would be putting a business leader in Malaysia in the next quarter to handle aerospace military and defence business in the Asia-Pacific region, noting the 6% to 7% a year growth in the demand for aerospace military and defence products in the region.

Greersaid said Malaysia’s strategic location enable the company to use it as a base to access the regional aerospace industry.

Honeywell Aerospace operates a manufacturing plant on a 13-acre site in Seberang Prai, making control display system for the cockpit of aircraft.

Recently, home-grown UPECA Aerotech Sdn Bhd, which has been awarded a RM763 million contract from the US-based UTC Aerospace System, will invest over RM30million over the next three years and will increase its headcount to more than 100 at its Shah Alam plant.

The contract covers all aspects of manufacturing development, design and fabrication of all jigs and fixtures, procurement of raw material, machining, testing, treatment and assembly of the machined components.

Another local company, Jetline International (M) Sdn Bhd, a jet aircraft component maker, will invest RM1 billion in a manufacturing facility as the company expands its operations following the acquisition of a RM1.1 billion US-based jet manufacturing firm last year.

Adapted from StarBiz 1 April 2013 and MIDA