The way airlines decide where to undertake key parts of an airline’s maintenance, repair and overhaul (MRO) changed during the height of the COVID-19 pandemic, and in many ways knock-on effects continue. We sat down at HAECO headquarters with chief commercial officer Gerald Steinhoff to learn how the company balances its operations in Hong Kong and elsewhere, as well as what airlines are looking for as they make offshoring — and other — decisions about their MRO.
The question of shoring comes in the context of numerous other dynamics within the world of MRO. Perhaps the most fundamental driver is that, by and large, MRO is settling down to a new normal state as all governments have now removed COVID-related travel restrictions, moving beyond the post-shutdown requirements and the spike of demand as airlines seek to bring stored aircraft back into service.
Another driver is the wider workforce shortage within aviation, and particularly within MRO, which constrains the capacity of MRO operators and poses complex issues around the quality of MRO operations.
“Maintaining that quality is a challenge,” Steinhoff says. “You have to have a training organisation that has to attain and to be open, and there is a certain movement of very highly qualified people from lower-cost countries to higher ones — from the Philippines to Hong Kong, for example.”
A further driver is the ongoing higher than expected level of repair and rework required for the new generation of narrowbody aircraft: the Boeing 737 MAX and the Airbus A220 and A320neo (for the latter, specifically those powered by Pratt & Whitney engines).
Sustainability is a growing driver, Steinhoff says, “especially for big airline groups. For one in the central part of Europe, for example, the country is very much looking at sustainability and thinking ‘why do I fly my planes so far?’ Obviously, they’re looking for regional solutions for their narrowbodies.”
Here, longer-term contracts can provide the demand certainty that MROs need to enable investment, particularly in regions that might otherwise be lower down the priority ladder due to their high local cost bases.
This sustainability-focussed shoring is “a discussion we find with certain airlines that we have at the moment, defined by location — not only because of whatever geopolitical up-and-down, but also price,” Steinhoff says. “Price is still an argument for Asia-Pacific. That’s why they fly their widebodies here: look at our hangars. We are preparing for more or less the western world.”
Indeed, HAECO’s hangars on the day we toured the facility were largely filled with widebodies from overseas carriers in North America and Europe.
Across the industry, “you have different tendencies. I would say the legacies are looking more for sustainability. The low-cost carriers still have interesting ideas to fly the narrowbodies far, far away because of seeing certain cost advantages,” Steinhoff says. “In this industry, you don’t choose too much difference in quality. If you’re one of the brands on the market, that should be the same globally. I would say if you enter a HAECO shop, globally, you will find the same quality more or less that we stand for with our name. But how do we guarantee that? There are different challenges.”
Resolving these challenges requires whole-business solutions, such as ensuring a different variety of work to add flexibility and enable the operation to smooth out demand spikes.
Here, Steinhoff says, “you start to manage workforce, between line maintenance and base maintenance. Operationally, if you have a customer that understands that, while you are supposed to prioritise line maintenance work for a certain period of time, in order to simply have the operation running, and [for] base maintenance, then you sometimes find a compromise — extending, let’s say, slots they need. That runs quite well: that is really a give and take between an airline and MRO, when we are working together.”
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