Aircraft maintenance companies and investors are banking on a major expansion in the Middle East in the next decade, amid forecasts that annual revenues could double to almost US$5 billion (Dh18.36bn) by 2020. Mubadala Development, one of Abu Dhabi's largest investment vehicles, is moving to capitalise on the expected growth, while smaller players from Dubai to Fujairah are setting up new facilities.
Mubadala believes the regional market will grow from $2.3bn to $4.8bn by the end of the decade, even as this year looks to be one of modest recovery from the recession. The growth in aircraft maintenance, repair and overhaul (MRO) is being driven by the expanding fleets of Middle East airlines, particularly the big three Gulf-based long-haul specialists Emirates Airline, Etihad Airways and Qatar Airways, which are expected to receive about 40 new aircraft a year over the coming decade.
"The number of aviation MRO firms is growing and this is not surprising, with new aircraft deliveries and record traffic figures at airports here," said Sheikh Ahmed bin Saeed Al Maktoum at the opening of the MRO Middle East 2010 exhibition and conference yesterday in Dubai. Sheikh Ahmed oversees Dubai's aviation sector including Emirates, Dubai Airports and the Department of Civil Aviation. Mubadala, through its maintenance companies Abu Dhabi Aircraft Technologies (ADAT) and the Swiss-based SR Technics, is expanding its capabilities in the Middle East and Europe to provide financing and supply-chain management for its components and engine maintenance businesses.
It is also considering adding new business lines such as an MRO unit for business jets, and a VIP interiors company. Mubadala's plans also extend beyond the region. It is embarking on expansion into the Americas and Asia-Pacific over the next two to five years, said Homaid al Shemmari, the executive director of aerospace at the company. It would do this by both acquiring existing MRO companies and establishing its subsidiary firms in new facilities, Mr al Shemmari said. "Each region has its own culture and business environment."
ADAT has been a prime beneficiary of the growth of Etihad, while Emirates has its own in-house engineering centre. Qatar Airways has outsourced its maintenance needs to the private sector, including Lufthansa Technik. But newcomers are expected soon. Europe Aviation, a maintenance firm based in Paris, plans to open its $25m maintenance centre at Fujairah International Airport by October, and will initially service planes such as the Boeing 737 and the Airbus A330.
The company will focus on cargo airlines in the region and also hopes to capitalise on a number of low-cost carriers rumoured to be setting up at airports such as Al Ain International Airport and Dubai International Airport. Nine business jet maintenance companies, including Livewel and Jet Aviation, are expected to start building facilities at the new Al Maktoum International Airport in Jebel Ali when it opens in June, officials said.
But the rosy long-term forecasts do mask a grim reality. Worldwide, airlines have grounded aircraft and cut flights to deal with a fall in air travel demand and the resulting financial losses. This has led them to defer aircraft maintenance, said John Byers, the chief executive of ADAT. "But the Middle East will be a key emerging market," Mr Byers said. The company has increased its revenues by 35 per cent in three years and is doubling its aircraft hangar space at Abu Dhabi International Airport after receiving a $500m maintenance contract with Etihad.
Its capital expansion projects include a new line maintenance centre, a paint hangar and an A380 superjumbo hangar. igale@thenational.ae