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MRO - Outside Help

MRO - special report

Becoming more efficient is just good business sense for an MRO company, says ST Aerospace President Tay Kok Khiang—especially as outsourcing is here to stay

Can costs be reduced while maintaining quality and safety?

Cutting costs is not new. We have to maintain a low-cost structure and operational efficiencies at all times—good or bad.

Airlines are perhaps more conscious of price right now and there may be suppliers competing on the basis of price, but our emphasis remains on value for money. Studies have shown that airlines look primarily for safety and quality in MRO work. Price even comes below turnaround times.

Can environmental performance be improved?

There are now strict guidelines on the environment and, as a minimum, we adhere to ISO 14000 standards. We also comply with all national regulations in the countries in which we operate.
Going beyond this, we have begun to undertake green measures within the ST Aerospace group. These include the use of a water-treatment system to reduce the level of hydrocarbons and metals during aircraft washing, and incorporating technology to reduce noise pollution during engine testing.

MRO is rife with regulatory oversight. Is there a need for harmonization?

Regulations are an inevitable part of MRO life. ST Aerospace is a global operator and, as such, is certified to several standards by various airworthiness authorities. Every country and every airline has its own unique requirements, and we work hard to ensure compliance.

But it is very complex. However, we have developed a company standard that satisfies and often exceeds the various requirements of the different markets. Because we train and develop from this base, we are finding it easier to be consistent in delivering a quality product.

Combining audits would certainly make the sector more efficient. We collaborated with the Federal Aviation Administration (FAA) when they developed their new system at our facilities in San Antonio and Singapore prior to its rollout.

There is a lot of fuss about US proposals on foreign repair stations and drug-testing, but whatever the outcome it is important to work with the FAA. We will continue to engage with them to develop standards that satisfy requirements.

Does training need to be improved?

There have been some challenges with recruitment. This changes over time and by region. For example, it was difficult to find good people in the US pre-2007. The economy was strong and the military were taking a lot of people. But that’s changed and we don’t have a problem now.

We have around 500 employees in training at any one time. In Singapore, we are fortunate that around 40% of our new recruits are engineering graduates. While all of our inspectors in China are engineering graduates.

The industry makes a huge commitment to training. It takes money and time—two years is our minimum. We believe in our training but having good people to start with is the critical factor.

What do you need to learn as a company?

New aircraft are not a challenge yet. The A380 is in service in small numbers, while the Boeing 787 and A350 have yet to be launched. These aircraft will not require heavy maintenance for a number of years.
Nonetheless, ST Aerospace will invest in our capabilities over time to prepare for growth. For example, a new hangar in Shanghai will be commissioned early next year, which will be A380-compliant. And we are training on GEnx on-wing support in preparation to support the GEnx engine entry into service. But really, the volume of work will continue to be in the mature aircraft types for a few years.

Will the trend for outsourcing MRO continue?

There have been tremendous cost pressures on airlines over the past few years and very few now run an exclusive MRO capability. From US airlines to Chinese carriers, the outsourcing trend is very evident.  Even Singapore Airlines is outsourcing its work on the A330.

In Europe, there are some major airline MRO concerns but these look for third-party work as well. Europe also has a very big low-cost carrier market and all of them outsource.

Outsourcing reduces cost. Over the long-term, we expect airline cost pressures to grow as a result of intensifying competition and so MRO outsourcing will grow too. Even legacy carriers with strong union involvement will eventually have to respond.

So the future is bright for MRO companies?

Well, certainly ST Aerospace is continuing to invest. Apart from the Shanghai facility, we have a new engine facility in Xiamen, new hangars in San Antonio and Panama, and have developed some landing gear capabilities for Airbus in Madrid.
We believe in civil aviation. The prediction is for an average growth of at least 3-4% over the next 20 years. There have been record orders for new aircraft. Yes, these will require less servicing and yes, new engines will be more reliable. But a look at the numbers makes it clear that an MRO company should be able to find business—as long as it remembers to be efficient at all times.

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