Lion Air aims to stamp its mark on the region’s MRO sector - and ensure it can support its own ambitious expansion plans.
Lion Air’s ambitious plans in the MRO sector will have a significant impact on Indonesia’s and the wider ASEAN region’s MRO sector.
The Group is building four hangars, with accompanying workshops, on Batam Island near Singapore. The first two hangars at Batam Aero Technic are expected to open by the end of the year, each with capacity for three narrow bodies or one widebody. A further two hangars are due to be completed by next June, giving the facility a total capacity of 12 narrowbodies or four widebodies.
There will also be engine and component workshops nearby - construction will begin once the land has been prepared for development. The aim is to have the component workshops and engine overhaul facility completed and open by end of 2016. The overhaul facility will be able to handle 200 engines per year, while the component workshops will include landing gears, avionics and auxillary power units.
For engines and components, Romdani Adali Adang, president of Lion Technic, says that Lion is seeking joint ventures with OEMs, with the stipulation that a significant amount of the work should be undertaken by Lion Technic.
Lion Air is in the middle of a campaign for the engine selection on its Airbus A320neo order for 234 Airbus A320 family aircraft, comprising of 109 A320neo, 65 A321neo and 60 A320ceo. The engine selection for this is being hotly fought over by Pratt & Whitney, with its geared turbofan, and CFM, with its LEAP engine.
The joint venture covering the aftermarket support will be a key part of the engine choice, Romdani says. “CFM and P&W both have very competitive engines on offer but for us one thing that is crucial is who will support us with our engine overhaul facility,” says Lion Technik. The first A320 is due to arrive next summer, and an engine choice could come as soon as the end of this year.
“We want to be able to overhaul our own engines and also overhaul engines for third party customers,” says Lion Air. However, this doesn’t mean all the work will be carried out in-house. “Many of the engine components will still need to be sent overseas to places such as Singapore to be worked on by specialist component overhaul facilities.”
Lion believes the Indonesian market is large enough to have a second engine overhaul facility in addition to GMF. “The fact that Lion Group and its affiliates has over 100 aircraft already – plus we have over 200 737s on order and 234 A320-family aircraft on order - means Lion Group and its affiliates can provide a substantial amount of work to the engine MRO.”
At the moment, Lion has just a single facility in Surabaya, capable of handling two narrowbodies or one widebody (the carrier has two Boeing 747-400s in its fleet, used for pilgrimage travel). So the Batam facility would be a step change in its MRO capability.
Lion’s decision to build an MRO facility in Batam stems from a number of factors. One - there is no room to expand the Surabaya facility, which is actually located inside an Indonesian naval base.
On the other hand, there is plenty of room to expand in Batam and the facility has direct access to the runway at the island’s Hang Nadim International airport - which at 4,000metres is the longest in southeast Asia due to its designation as the main diversionchoice for Singapore Changi.
Two, the proximity to Singapore means they can tap into the city state’s logistics network and also ship over some of the more complex work which would need to go to Singapore, such as certain types of high-tech welding. Singapore is about an hour away by boat.
Three - Batam is in a free trade zone, which helps facilitate the import of spare parts. No aerospace OEMs are currently located in Batam, although Honeywell does have an avionics manufacturing facility in neighbouring Bintan.
Four, there is an acute shortgage of MRO capacity in Indonesia, which is in the middle of a huge fleet expansion. Romdani Adali Adang says that getting MRO slots is becoming difficult.
“There is a lack of capacity in south-east Asia as a whole,” he says, pointing out that a number of facilities in the region have told him there are no slots available until 2014.
Romdani says that once it is fully up and running, the Batam facility will aim for around 30% third party business, the equivalent of roughly one hangar at any one time.
Lion is working closely with the European Aviation Safety agency (EASA) and plans to become an EASAcertified MRO. It is planning to employ eight EASA certified maintenance personnel from Europe who will work with Lion Technic’s line maintenance personnel at Jakarta Soekarno-Hatta International Airport.
Once the Jakarta line maintenance operation is certified by EASA, Lion aims to then progressively get its other line maintenance stations EASA certified.
The ultimate goal is to eventually get Lion Technic EASA certified as a heavy maintenance organization for airframes, engines and components.
The Batam facility will first be approved by Indonesia’s Directorate General of Civil Aviation (DGCA), which will mean that Batam can serve other Indonesian airlines - of which there are plenty. EASA approval, meanwhile, will open up the door to foreign airlines.
Most analysts say that there is more than enough work from the Indon
esian airlines to keep the facility busy, but Romdani has set his sights on nabbing some business from Singapore. “Our labour rates are very competitive,” he notes.
Last year Lion launched its Malaysian offshoot Malindo with joint-venture partner Airod, a Malaysian MRO operator that caters mainly for the military but with aspirations to increase its civil presence. “Thiscould serve our Malaysian and Thai operations,” says Romdani.
Thai Lion Air hopes to launch next year (see News p9) with Boeing 737-900ERs, starting with flights to Kuala Lumpur and Jakarta from Bangok’s Don Mueang Airport.
Lion Technic is also planning a base in Mandano in eastern Indonesia. “We have got the approval from the airport operator as well as from the DGCA to build there but we are waiting because our focus right now is building the MRO in Batam. The MRO operation in Manado will have one hangar and it will be do narrowbody aircraft, such as ATRs and 737s, but not widebodies,” says Lion.