Japan Airlines - Orient Aviation

By Charles AndersonAmeco also has Pratt and Whitney (P&W)and RB211 capabilities.GE Engines Services (Xiamen) insouthern China overhauls GE and CFMengines with the help of TAECO and SnecmaServices is looking to handle CFM56-5Bsand -7Bs at its facility in Chengdu by early2008. Outside China, General Electric hasengine overhaul facilities for the CFM familythrough GE Malaysia, a joint venture withMalaysia Airlines.Then, late last year, P&W partnered withChina Eastern Airlines to form a CFM56repair company in Shanghai, adding anothercompetitor for business within the country.While the number of CFM56s in usedomestically gives these companies plentyto aim for, the problems of customs delaysand turnaround times, added to the 17%taxation imposed on imported materials, aredrawbacks when trying to capture businessbeyond China’s borders. Operating in aspecial economic zone helps, as is the casewith MTU Zhuhai, but does not eliminate theproblems altogether. “Unless there are somestructural changes in China, a lot of thesefacilities are not going to be competitiveoutside the country,” said Michaels.Addressing a regional imbalance is notthe prime purpose of these companies,however. Their first aim is to meet theneeds of their owners’ narrowbody fleets.“The Chinese airlines want to have enginecapability in-house,” said Stewart. “Clearly,the volumes are going to be in narrowbodiesin China.“Inevitably, within China, there’s goingto be a lot of growth and some of that willgo into those facilities, but a lot will also beoutsourced.“Volumes are going to go up and they aregoing to see increased revenues, either frominternal business or from outsourcing in theexternal market. But they will take some timeto become competitive.”P&W’s Jim Keenan believes there ispotential within his company’s joint venturewith China Eastern that goes beyond cateringfor the carrier’s fleet alone, even though thecarrier is the largest operator of CFM56s inthe region, with 200 on its books, a numberwhich will grow with fleet expansion.Keenan is senior vice-president andgeneral manager for P&W’s GlobalService Partners initiative which includesa concerted push into the aftermarket forparts and servicing for the CFM56 family,made by rivals Snecma and General ElectricP&W attacks aftermarket(see separate story). He uses the success ofEagles Services Asia – P&W’s joint venturewith Singapore Airlines which handles P&Wand CFM56-5Cs – as a pointer to how itsShanghai company could develop.“Virtually all of the load in that shopwas once made up of engines operated bySIA,” he said.“As we have grown the business and aswe have achieved operational efficiencies,we have attracted a great deal of third-partydemand. Today, nearly 80% of the volumegoing through that shop is third party.”The Shanghai joint venture, set up for aninitial 15 years, will be housed in a newlybuiltfacility on a greenfield site which hadnot been identified at press time. It will acceptits first engine in 2008.“In building this facility, going beyondhaving actual overhaul, disassembly andassembly of the engine performed in country,we are including a very extensive part repaircapability in the shop itself,” said Keenan.“The fundamental principle is to drive asmuch volume into this joint venture and keepas much in China as possible. As the facilitygrows, we anticipate attracting customersnot only from China, but also across theAsia-Pacific region.”Engine manufacturer Pratt and Whitney (P&W) ismaking a determined move into the aftermarket, notjust for its own engines, but also to handle the CFM56family manufactured by its rivals, Snecma andGeneral Electric. And, with 14,000 of those installedon narrowbody aircraft around the world, it has plenty of businessto target.MRO now accounts for more than 50% of the U.S. company’sbusiness. This is underpinned by the kind of strategy that has seenP&W provide service centres that can handle the CFM56 range, aswell as breaking with tradition and making a range of replacementparts to rival the original equipment manufacturer’s (OEM) own,counting on its expertise as an engine-maker itself to convincepotential customers it can do the job properly.It has 18 repair and logistic centres globally and six enginerepair centres, two of which are in Singapore and Christchurch,New Zealand. A seventh is to open in Shanghai in 2008 througha joint venture with China Eastern Airlines, specifically to handleCMF56-3s. Some 40% of the 24 P&W facilities currently operatingare in the Asia-Pacific. A stand-alone division was created for MROwork last year, branded as Global Service Partners (GSP).Pratt & Whitney is servicing the CFM56 family ofengines in addition to its own models as it builds up itsaftermarket businessFebruary 2007 ORIENT AVIATION 41