Malaysia expands aerospace capabilities

Malaysia is continuing to pursue its ambition to become an aerospace hub for the Asia-Pacific region

1st Oct 2010


Former Malaysian Prime Minister Mahathir Mohamad, who governed the country for 22 years until 2003, was a well-known advocate of the aerospace industry.

On a mission to turn Malaysia into a modern, high-tech society, his proposals included a plan to develop Sultan Abdul Aziz Shah Airport in Subang, 25km outside of the capital Kuala Lumpur, into a global aerospace hub by 2015.

Mahathir announced the plan to turn the city’s former main international airport into the Malaysia International Aerospace Centre (MIAC) as early as 1998. The project was eventually launched in August 2005, five months after winning Cabinet approval. Two government-backed agencies – Malaysia Airports Holdings Berhad (MAHB) and Malaysia Industry-Government for High Technology (MIGHT) – were appointed to oversee the development.

MIGHT is responsible for drawing up policies while MAHB implements and executes the programme. The MIAC initiative is divided into four sub-sectors: commercial aviation; maintenance, repair and overhaul (MRO); parts and components manufacturing; and education and training.

The development site covers 1,200 acres, about 65 percent of which is taken up by Subang airport’s runway and taxiways, leaving 400 acres for offices, hangars and other facilities. According to MIAC Senior General Manager Mahat Samah, about 35 companies are already in operation on the site, 15 of which are MRO service providers.

“There is still space available for companies wanting to set up operations in Subang,” Mahat said.

MIAC is planning to acquire more land adjacent to the current site. Meanwhile, MIGHT, together with the Malaysian Industrial Development Authority (MIDA), is continuing to encourage foreign and domestic direct investment, especially in the MRO sub-sector, in Subang as well as other aerospace parks such as Kuala Lumpur International Airport (KLIA), Senai Aviation Park in Johor and Composite Technology City in Malacca.

Aggressive promotion

Mahat said the project is being promoted aggressively in Europe and other parts of the world. A delegation including representatives of the Transport Division of MIDA, Composite Technology Resource Malaysia (CTRM) and MIGHT was sent to Austria, Germany and France to promote Malaysia as a preferred investment location for aerospace manufacturing and MRO.

Malaysia ultimately aims to capture at least 5 percent of the global MRO market by 2015, as well as positioning itself to capture substantial aerostructures work packages for next-generation aircraft programmes. With this in mind, the travelling delegation focused on bringing foreign companies specialising in aircraft general supplies and tooling to Malaysia, either through foreign direct investment or joint ventures with Malaysian companies.

Parts and component manufacturing is an area of growing importance in Malaysia. In October 2009 Spirit AeroSystems, the world’s largest independent aero-structure manufacturer started operations in the country with its wholly owned Spirit Malaysia subsidiary.

The company’s 242,000 square foot facility is located on a 75-acre site adjacent to the runway at Subang. The plant provides a variety of manufacturing, engineering and support functions, including the production of composite sub-assemblies for the Airbus A320 single-aisle jetliner family.

Plans have also been firmed up to produce such parts for the Airbus A350 XWB and A380. Supplier contracts for models from US manufacturer Boeing and possibly Canada’s Bombardier could also be realised in the near future.

Spirit Malaysia’s location at MIAC helps the company’s international operations, with the aerospace park acting as an Asia-Pacific industrial hub. The company, an anchor tenant at MIAC, accounts for a significant proportion of the Malaysian aerospace industry and is a major catalyst for the growth of its local supplier partners.

MRO operations

Malaysia Airlines’ (MAS) wholly owned subsidiary MAS Aerospace Engineering (MAE) is the biggest of the 15 MRO companies at the Subang site. The other major local MRO services provider is Airod, while foreign companies that have set up shop there include: GE Engine Services, Eurocopter Malaysia, AgustaWestland, Zetro Services, DNest Aviation Services, Honeywell Aerospace Services and Systematic Aviation Services.

Prior to 2002, MAE supported only the fleet of its parent airline with some ad-hoc third party work. Since then, the company has grown into a leading regional service provider capable of competing with the likes of Singapore Airlines’ SIA Engineering unit, Hong Kong Aircraft Engineering (HAECO) and Beijing-based Aircraft Maintenance Engineering (Ameco) for a slice of the growing global MRO market.

The company offers airframe heavy-maintenance capabilities covering aircraft types including: Boeing 747-400, 777 and 737 Next-Generation and Classic models; Airbus A330 and A320 jetliners; and ATR 72 turboprops. It also offers ageing-aircraft programmes, corrosion prevention, passenger-to-cargo conversion, blended-winglet installation, lap-joint modifications, cabin and cockpit upgrades and Section 41 modifications.

The company has a workshop offering components overhaul for 777, A330 and 737 models, while MAE’s avionics workshop has capabilities covering overhaul and testing for those same aircraft types alongside the single-aisle A320 family.

MASAE carries out work for more than 90 customers, including major global airlines such as Air France, KLM, Lufthansa, Qantas, Saudi Arabian Airlines and Gulf Air.

MAE is now setting up a 50-50 joint venture MRO company in India, together with locally based GMR Hyderabad International Airport. The facility is under construction, with completion scheduled for the end of September and operations set to begin a month later.

Subang-based Airod, which was set up in 1976 to support the Royal Malaysian Air Force has expanded its capabilities to offer maintenance services for civilian aircraft. Located on a 77.4-acre site, the company has one widebody hangar and one for narrowbody aircraft, as well as a paint shop, component workshop and engine test cell.

Airod is now building a new hangar designed to accommodate two 737-900s. Completion is slated for first quarter of 2011. Recent reports say that the company may have secured a maintenance contract from Jakarta-based LCC Lion Air to perform C- and D-checks for the Indonesian airline.

Airod recently received certification from United Technologies’ Hamilton Sundstrand unit to perform depot-level maintenance on 54H60 propeller systems installed on Lockheed Martin C-130 Hercules tactical transport aircraft. The company’s propeller shop was set up after an agreement was concluded with DERCO Aerospace, the prime contractor of the programme.

In 1985, Lockheed Aircraft Systems acquired a stake in Airod. The following year, the facility was made a heavy maintenance centre for C-130s, since when it has completed more than 230 heavy checks for Hercules operators around the world. Lockheed sold the stake back to Airod in the early 1990s.

Fixed-base operation

The setting up of the Skypark fixed-base operation (FBO) in Subang opened a new chapter for business aviation in Malaysia, attracting Switzerland-based ExecuJet Aviation Group and Australia’s Hawker Pacific to set up operations.

Skypark FBO Malaysia, which operates Terminal 3 at Subang Airport, provides aircraft operators, their passengers and crews with ground-handling services and a VIP Lounge for business-jet operations.

Malaysian composites specialist Composite Technology Research Malaysia (CTRM) has now firmed up plans to expand its research and development (R&D) activities in collaboration with various global technology partners. The work will cover testing, metal parts, tooling production, new production technologies and design capabilities as part of the company’s aim to enhance and remain competitive in the international market.

The company now has two R&D centres: one in Cyberjaya, 40km outside Kuala Lumpur and the other in Batu Berandam. It plans to invest substantially in the construction of more such facilities, acquire new high-end machinery and new manufacturing technology to cater to developing business needs and growing customer demand. The amount of investment required and details of how funding will be obtained are now being worked out.

CTRM declined to give details of the technology it uses for component production, citing competitive reasons. It is currently involved in both aerospace and non-aerospace industries. On the aerospace front, the company is focused on manufacturing composite components for Boeing and Airbus aircraft through its subsidiary CTRM Aero Composites, which is also located in Batu Berendam.

For Boeing aircraft, CTRM makes parts for the 737NG, 777 and 787 Dreamliner, while also producing components for Airbus’s A380-800, A350 XWB and A320 family aircraft and the Airbus Military A400M transport. For the A320 family, CTRM is the single-source component supplier for the aircraft wing, covering 20 percent of the wing surface.

A320 components

The composites specialist said almost half of the more than 5,000 A320s currently in service use its wing components. The company makes over-wing panels, movable fairings, fixed fairings and spoilers for the A320, and fixed fairings, under-wing panels and falsework for the A321.

For the International Aero Engines V2500 turbofan, which powers some A320s, CTRM produces the actuator cover blank cascade, blank cascade, cone torque box, torque ring fairing, outer panel, cone torque and torque ring.
CTRM also offers MRO services for small general aviation aircraft such as the two-seater Eagle Aircraft 150B, and the Cessna 300 and 400.

CTRM started composite components manufacturing for Airbus in 2000, for the company’s A300 model. Since then, the company has secured projects from its main customer BAE Systems (now Spirit AeroSystems) as a second-tier subcontractor for Airbus aircraft. Later, its customer base broadened with contracts from Airbus UK, EADS, CASA Spain, EADS Germany, Goodrich Aerostructures (US), GKN Aerospace UK and Korean Air, the company’s first customer in Asia.

CTRM has an all-Malaysian workforce of 1,300, with some additional expatriates on contract. The company started operations in November 1990, with the Ministry of Finance as its principle shareholder. Its first business technology partner was Eagle Aircraft of Australia.

CTRM Aviation, a wholly-owned subsidiary of CTRM, started producing the light Eagle 150B aircraft in 1990. The project was seen as the first major step taken by CTRM to position itself as one of the preferred composites aero component manufacturer globally.

After producing 22 Eagle 150Bs, CTRM Aviation stopped production in 2006 as there was insufficient demand. The company has leased 20 aircraft to Malaysian flying schools in Langkawi and Kota Baru.

CTRM Aviation is diversifying its operations to strengthen its position in the local and regional general aviation sector. One of its goals is to provide more MRO services for light aircraft in the GA industry. It has secured certification from the Department of Civil Aviation in Putrajaya to carry out maintenance for 37 light-aircraft types including the Eagle 150B, Cessna 300, Cessna 400, Diamond Aircraft DA42 and Cirrus SR20G3.

Last year, the CTRM Group reported a profit of RM33.6 million (US$10.5 million) on sales of RM268.2 million.

Tax incentives

The Malaysian government is offering financial and tax incentives to companies that invest in the country’s aerospace industry, as part of a plan to attract investment and boost the sector. The plan covers R&D, manufacturing and assembly, systems integration, aerospace training, general aviation and MRO.

The incentives would vary from company to company, depending on their involvement and what they offer. Companies offering MRO services will also receive import-duty and sales-tax exemption on raw materials, components, tooling, equipment and spares.

The Malaysian aerospace industry has recorded 11 percent growth each year from 2004 to 2008, expanding by as much as 14 percent in 2009, despite the global economic slowdown. However, the industry faces a shortage of skilled personnel, especially licensed aircraft-maintenance engineers. Malaysia would need another 16,000 such personnel by 2015.

The Economic Planning Unit in the Prime Minister’s department is coordinating with the various aviation companies and government agencies to help address the problem.

The industry now employs about 51,000 people nationwide.

 

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