ADAT, Moving Forward or ...

In early May 2014, Etihad Airways acquired or took over Abu Dhabi Aircraft Technologies (ADAT), formerly Gulf Aircraft Maintenance Company (GAMCO), from Mubadala except for the Engine Shop.

GAMCO was founded in 1987 as a partnership between the Government of Abu Dhabi and Gulf Air who owned a 40% stake, primarily to undertake the existing wide body and new technology aircraft (L1011, B767, A320, A330 and A340) fleets of Gulf Air. As Gulf Air's financial situation deteriorated in 1997, GAMCO expanded its third party business and aircraft maintenance capabilities beyond the Gulf Air requirements. As a result GAMCO expanded to become one of the top 15 MROs globally and number 1 in MENA (between Europe and Singapore) with more than seventy (70) customers ranging from North America through Europe and MENA all the way to the Far East. In early 2006, Gulf Air pulled its maintenance from GAMCO following the 2005 withdrawal of the Abu Dhabi Government from Gulf Air. The relationship between Gulf Air and GAMCO was at best very uneasy.

As a result the Abu Dhabi Government acquired Gulf Air's 40% share in GAMCO and turned it over to Mubadala, a government investment arm in the aerospace and technology sector. In 2007 Mubadala rebranded GAMCO as ADAT.

When Etihad was formed in 2003, GAMCO was entrusted with the total maintenance and support of Etihad's expanding fleet. Fast forward to the present; a decade later Etihad has withdrawn and brought inhouse a substantial amount of services leaving ADAT to perform airframe heavy maintenance and components/engines repair and overhaul activities.

Beyond the press releases and the great sentiments of moving forward there is an underlying desire for Etihad to take total control of its total maintenance activities for several reasons (punctuality, quality etc..) and to improve the synergies with its airline equity partners. The next step will be to bring in maintenance from Airberlin, Jet Airways, Air Serbia, Air Seychelles and who knows Alitalia in the future in order to reduce cost and safeguard its investment. As Etihad tightens the reins and demands more and more attention to its fleet and its partners fleets, other customers will shy away. The region has never been known for balanced relationship.

Whether this is really moving forward or a case of Deja Vu, only time will tell

MRO AMERICAS 2013

Aviation Week and Space Technology (AWST) runs the MRO Conference and Exhibition annually at various regions (Americas, Asia, Middle East, Europe etc...). Having worked in the UAE for more than a decade and a half, I have attended several MRO Middle East including the last one in Dubai in January 2013.

The MRO Conference and Exhibition provides a venue for international and regional speakers from the industry to discuss the state of aviation in general and the MRO sector in particular. The exhibition usually includes regional and international MROs that have a presence in the region allowing them to bring their latest developments to their customers and potential customers.

On a personal note the MRO Middle East exhibition provided me with the opportunity to catch up with friends and colleagues to discuss events both professional and personal. An exchange of views that though informal was important to remain current of what is happening in the region. The last MRO Middle East 2013 was an opportunity to say good bye to friends and colleagues before leaving to relocate to the USA.

MRO Americas 2013 (MROAM) held in Atlanta (16 to 18 April 2013) was an opportunity for me to observe how things are in the USA and in a way to introduce myself to a new market where I will be working.

MROAM is much bigger in terms of exhibitors and attendees than its Middle East equivalent. The conference had several sessions running simultaneously over the three days. Aviation is a truly global business,  so one sees the familiar large international MROs exhibiting alongside the USA regional players. The exhibition was well planned and it was easy to locate stands and booths.
The Aviation Week EVENTS app is a great help in locating exhibitors and keeping track of the conference sessions.

I was not expecting to meet many familiar faces at MROAM. Surprisingly, I was wrong. The value of MROAM for me was the opportunity to visit, observe and meet professionals from MROs in the USA and get the feel of how things are done. Things are not that different here, aviation is a truly global industry.

MROs

In the UBM Aviation, Airline E&M: Middle East Conference held on 15 and 16 May 2012, the discussion centred on the future of the MROs, Engine/Component support and the impact of New Technology Aircraft on maintenance costs. Three topics that are interrelated and very relevant.

The new technology aircraft are increasing the involvement of OEMs in the MRO market, potentially squeezing out the medium and smaller MROs from the Global and MENA markets in particular. 

Why would OEMs get into the MRO business; their short answer is The Customers Wants Us to Provide Support.

Boeing has Gold Care which integrates support with designated MROs, Suppliers and Boeing services while Airbus has the Airbus MRO Network of leading MROs capable of supporting the Airbus fleet.  

While both major manufacturers rely on Independent MROs for the support, Engine and Component OEMs have a different view. Engine OEMs wanted the business and they had the means; they controlled data and supply of parts and hence who can and cannot maintain engines. Their approach varied from wholly owned MROs, Joint Ventures with MROs and Airlines to licensing arrangements. Component OEMs followed the same path. 


OEMs do not necessarily make good repairers, it is a different mind set.

The third element is Component Support. Operators are very reluctant to invest in components and parts inventories. The initial investment is high and with the current economic conditions financing is at best difficult. OEMs have provided operators with support plans for their specific components, how comprehensive these plans are, depends on the operator and the size of the fleet. Nevertheless, that means operators have to deal with multiple OEMs when they prefer dealing with a single entity that provides total support including components availability, repairs and warranty application in support of an agreed aircraft dispatch reliability and component availability. Such arrangements include Base Consignments, Pool Access, Repair Services and Line Support. 


The industry is looking at a concentration of work with a few "GLOBAL" MROs for airframe and engines squeezing out the smaller MROs specially those not affiliated with an airline. As for components OEMs need to look at how operators want to be supported and take steps towards meeting these requirements. 


The new technology aircraft promise a 25% reduction in maintenance costs due to new materials and better designs in the airframe and engines. However, the concentration of work and the involvement of OEMs is going to reduce competition resulting in higher rates and costs and lesser choices.

Airline E&M: Middle East Conference

UBM Aviation, Airline E&M: Middle East Conference was held at Yas Island, Abu Dhabi UAE from 14 through 16 May 2012. This year's conference is probably one of the most important because it brought together major players in the region to discuss the future of the industry in view of the ever changing threats both regionally and globally: from the ever rising price of oil, the Arab Spring and the situation in Syria, Iran and the West, Greece, Spain and the Euro Zone crisis.

This year UBM Aiation invited people from outside the industry to provide their analysis of the ever changing world scene; Richard Thompson, Editorial Director, MEED and Mr. Riad Kahwaji, CEO, INEGMA.
Mr. Thompson discussed the economic outlook and the challenges facing the region while Mr. Kahwaji discussed the security implications of regional and global threats. The final analysis was; economically optimistic about the economic environment and short term pessimism but long term optimism as far as security goes.

The conference as usual discussed the future of MROs regionally and globally and the prospects of the smaller MROs as OEMs expand into the Repair and Overhaul field (more in future blogs). It also discussed Component Support, Engine Support, Leasing and Airworthiness issues.

This year's discussions were relatively more important, not only because of the prevailing global economy but because of the introduction of new technology aircraft and their impact on costs, support and operation.

Overall, the conference was a success and the introduction of speakers who are not aviation professionals to discuss issues affecting aviation from their perspective, I think is a great idea and should be repeated at later conferences

Kudos UBM Aviation

Global MROs

A year ago I blogged about Hub MROs (click here for blog). ADAT was advocating this one stop shop as the wave of the future. One year later in the same venue, The Middle East Airlines Engineering and Maintenance conference, Mubadala Aerospace the parent company of ADAT and SRT put forward the concept of a Global MRO. Mr. Abdulla Shadid, Manager Business Development, Mubadala Aerospace said in the keynote address of the conference "The days of the independent non aligned MROs are over". These are powerful words and they were echoed by Turkish Technic.

So what is an aligned MRO, well it does not exist as one physical entity, but rather several MROs offering different services aligned together (not independent) as an example ADAT, SANAD, SRT and several Joint Ventures with OEMs (Landing gear, engines etc..) offering services jointly. Mubadala is trying to create a leading edge concept by aligning all its holdings and so is Turkish Technic. This is made possible through leveraging large aircraft orders by Etihad and deep pockets of Mubadala, and THY orders .

This alignment is not as easy as it sounds there are several challenges facing this and they have not changed from last year:
1 Human capital, there is a world shortage of technicians and releasing engineers and this has not been
   resolved in the UAE and many other countries in the region. Not enough trained Emaratis are available to
   run these JVs and will not be available for a long time;
2 There is a tremendous management challenge in aligning several JVs and entities to work together to
   provide a competitive single all encompassing quotation to an airline. The tendency is for each one to go its own way.

Is it impossible?  of course not; is it needed? we will have to see. In the mean time and I beg to differ, the Independent MROs will survive and thrive. Not every airline wants all the services or wants all the services from one entity and are happy to deal with an efficient independent MRO.

Will this concept catch up and become the norm of the industry, we will need to wait ad see.
The Independent MROs are here to stay.

HUB MROs..... Dinosaurs Or Wave Of The Future.

To start, what is a Hub MRO? basically a one stop shop. In the 1970s and 1980s up until the mid 1990s most major legacy carriers operated large Maintenance and Engineering departments which took care of all their fleet maintenance requirements.

In the USA, it was cyclic with legacy carriers outsourcing some of their maintenance and downsizing with every downturn. Maintenance work was brought back in when airlines discovered they had no control over their fleet disposition when it was down for maintenance.

Europe took a more collaborative approach, with the introduction of the B747 and the other wide body aircraft, European legacy airlines formed Maintenance Consortia. KSSU (KLM, SAS, Swiss Air and UTA) and ATLAS (Air France, Lufthansa, Iberia, Sabena and Alitalia) these airlines shared the work along aircraft types (B747, A300 and DC10 and their associated engines and components). However, when the fleets expanded the lines were duplicated and eventually each carrier went on its own.

In the 1990s and 200s the Component OEMs and Engine manufacturers discovered a new revenue stream, repair and overhaul, essentially they competed with their own customers. It was very easy to control the market because the controlled technical data. Of course if you were a big airline and put in mega orders you could dictate to the OEMs whatever you wanted.

There are a dozen or so Hub MROs, mostly major airlines and a few MROs affiliated with other major carriers. Will they edge out the smaller niche MROs? probably not. Will they survive?depends on a few important factors:

1. Ability to finance expansion

2.Technical Support from Manufacturers

3. and the most important factor is a sustainable supply of efficient, cost effective and trained work force.

The human capital issue is going to be the detrimental factor, with all the discussion about the shortage of skilled technicians and engineers.