Hampered by lack of management depth

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Sepang Aircraft Engineering CEO concerned that growth prospects for MRO sector affected by insufficient leaders.

Desages (second from left) at the EASA handover ceremony in KL.

Desages (second from left) at the EASA handover ceremony in KL.

Being home to two strong airlines, national carrier Malaysia Airlines Bhd and low cost champion AirAsia Bhd has also provided Malaysia with a strong base in which to become a key player in the Maintenance, Repair and Overhaul (MRO) services industry.

All those aircraft flying people around the world need to be in tip-top condition at all times and this is where the MRO industry comes into play. It is a growing industry forecasted to be worth US$65 billion in 2020. The good news for Malaysia is that growth potential is highest in Asia-Pacific region and Malaysia has existing capabilities and is well-positioned to capture this growth.

While they were previously working in silos, the creation of an Industry Working Group in 2011 brought together MRO players in the country to speak in one voice to improve the regulatory conditions and business environment in order to attract more potential clients around the region.

One of the key players poised to benefit from the greater opportunities is Sepang Aircraft Engineering Sdn Bhd (SAE) an Airbus SAS subsidiary company and part of the EADS group.

SAE is an EASA approved, MRO service provider for commercial aircraft, engines and components since 2006 dedicated to provide Airbus aircraft support services in Southeast Asia.
Based out of the Kuala Lumpur International Airport, its 17,000 square meter purpose built hangar is able to accommodate up to four Airbus A320 series aircraft or two A330/340 series aircraft.

With the MRO sector coming under the radar of the Economic Transformation Program with a specific Entry Point Project targeted at creating 20,720 jobs with a GNI of RM13.3 billion by 2020, SAE’s chief executive officer Christophe Desages is optimistic about the future but has a key concern that may hamper the growth of the sector – the lack of management skills.

“The education system provides satisfactory technical trained personnel in quality and quantity. However management skills leading to company organization and efficiency is below industry standards,” he says. “The issue for Malaysia is not to produce more certified personnel but more people with management skills to structure and organize the workload upstream.”

Desages feels the need to develop this layer of management skills is critical as there is a looming opportunity arising from the fact that the Singapore MRO industry, which has set the standards in Asia over the last 10 years, is facing challenges to remain competitive in the single aisle MRO market. “There is an opportunity for Malaysia to take the lead.”

To do this a critical component will be the capacity of the Malaysian MRO industry to work together and target the international market.

The need for managers and leaders by SAE is obvious. With the growth of no-frills low cost carrier airlines in the region, the base-load of planes is expected to surpass 500 in the country by 2020. Just this domestic growth will fuel the growth of the MRO market what more when taking into consideration the regional growth.

“As a strategy, SAE is focused on Airbus aircraft. The MRO market requires more and more approvals, agreements and authorizations, each applying to a type of aircraft and specific to a country. We want to specialize on Airbus narrow body aircraft to take advantage of our low cost structure.”

SAE received a boost to its business when it received the European Aviation Safety Agency or EASA certification which opens the door open to foreign business and international recognition. “It is a mandatory certification for us to capture the international market,” says Desages.

And that means SAE will need more managers to manage its growth. Can it and the greater MRO industry in Malaysia fill this gap fast enough to capture the opportunities that the market presents?

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