Russian MRO market reality

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www.engineering-ru.com Ready to serve the world Russian MRO market reality Speaker: Vladimir Perekrestov CEO [email protected] Aircraft Maintenance Russia and CIS 8th international conference Moscow, Russia, 20-21 February 2013

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Russian MRO market reality. Speaker: Vladimir Perekrestov CEO [email protected]. Aircraft Maintenance Russia and CIS 8 th international conference Moscow, Russia , 20-21 February 201 3. Content. Development of Western-built aircraft MRO market in Russia Russia&CIS MRO market - PowerPoint PPT Presentation

Transcript of Russian MRO market reality

Page 1: Russian MRO market reality

www.engineering-ru.com Ready to serve the world

Russian MRO market reality

Speaker:

Vladimir Perekrestov

CEO

[email protected]

Aircraft Maintenance Russia and CIS

8th international conference

Moscow, Russia, 20-21 February 2013

Page 2: Russian MRO market reality

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Content

• Development of Western-built aircraft MRO market in Russia

• Russia&CIS MRO market

• Advanced market segments

• Competition in market of core products and services

• Characteristics of Russian MRO market

• Conclusion

Page 3: Russian MRO market reality

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Development of Western-built aircraft MRO market

1992 – Airbus A 310 was the first western-built aircraft to be operated in Russia

1996 – First time when Russian company gained EASA Part 145 approval

2004 – First С-Check maintenance on Airbus A 320 Family was implemented in Russia

2005 – 2006 –Soviet-built to Western-built large-scale fleet replacement in Russia

2005 – 2008 – High demand for engineering and technical personnel to perform maintenance on aircraft and parts

2006 – Establishing the first EASA Part-147 approved training center to provide engineering and technical personnel training services

2011 – Cancellation of customs duties on western-built aircraft spare parts

2011 – First D-Check maintenance implemented on Airbus A 320 Family in Russia

2012 – First Redelivery Check performed on Boeing 737 CL in Russia

2012 – Establishing the consignment stock of commercial western-built aircraft spare parts in Russia

Page 4: Russian MRO market reality

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Number of western aircraft in Russia/Other CIS fleets

CIS Russian Federation

*Source AeroTransport Data Bank, October 2012

  Wide-body aircraft Narrow-body aircraft Regional aircraft Total

RF 89 387 78 554

CIS 25 156 57 238

Total 114 543 135 792

Page 5: Russian MRO market reality

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MRO market Russia and CIS, USD M*

* 2012, estimate made by Engineering Holding

Wide body A/C

Regional A/C

Narrow body A/C

Base Line Modifications Components Engine Total

Market volume Russia and CIS, USD M 232 357 161 393 644 1 787

Page 6: Russian MRO market reality

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The World’s MRO providers:

MRO providers in Russia and CIS market: competition

MRO providers in Russia and CIS:

Analysts are forecasting competition increase among organizations which provide MRO services on the territory of Russia

Vostok Technical Service

Page 7: Russian MRO market reality

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MRO market in Russia and CIS, capability

High

Low HighUp-front capital investments required

Labor share of total cost

Cabin interiors

Evacuation Equipment

Wheels & brakes

Fire protection & Oxygen

Batteries

Landing Gear

Thrust Reverser

APU

Hydraulics Electric Power

Fuel Cabin Systems

Air system

Avionics

Current market Potential market

?

Source: ICF SH&E Analysis

Line

Base Maintenance

Engineering

Engine

Page 8: Russian MRO market reality

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Breakdown of Total Airline Costs – From World Experience

Typical Airline Cost Breakdown Typical Airline’s MRO Cost Breakdown

Annual airline maintenance spend as a % of total cost will fluctuate year-to-year based on timing of major visits (e.g. D-checks & engine overhauls), fleet age, size, mix and the price of fuel

Maintenance costs typically range between 7%-14% of an airline’s operating budget

Source: Form 41 & ICF SH&E Analysis

Maintenance9%

Page 9: Russian MRO market reality

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Characteristics of Russian MRO market: Planning & IT

Airlines’ insufficient maintenance planning horizon and insufficient IT support:•Failure to plan preparation for maintenance checks (aircraft spare parts and labour resources)

•Increasing maintenance TAT

• Maintenance costs increase

Only 5 customers of Engineering Holding develop and provide long-term (1-2 years) maintenance plans

Page 10: Russian MRO market reality

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Characteristics of Russian MRO market: spare parts stocks & supply chain management

Absence of market players who own large aircraft spare parts stocks on the territory of Russian Federation and insufficient supply chain management:

•Minimum spare parts stocks for the most demanded aircraft types

•Poorly developed aircraft parts-out business

A J Walter Aviation&

Page 11: Russian MRO market reality

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Characteristics of Russian MRO market: additional services

Insufficient Airlines’ attention to the technical aspects such as:

•Aircraft interior and cabin equipment repair

•AC delivery/redelivery

•AC documentation and records keeping

Page 12: Russian MRO market reality

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Characteristics of Russian MRO market: changing aircraft fleet structure

Airlines fleet renewal:

•Russian operators reduce their Boeing 737 CL fleet

•Reducing average age of aircraft

•Reducing maintenance checks man-hours

•Demand for modern aircraft maintenance

Page 13: Russian MRO market reality

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Conclusion: Opportunities to reduce airlines’ maintenance expenditures

• Improvement of maintenance planning horizon

• Implementation of proper IT solutions

• Increase of aircraft maintenance outsourcing share in segments where in-house maintenance is not cost effective

• Growth of aircraft spare parts stocks in Russia

• Improvement of supply chain management efficiency

Page 14: Russian MRO market reality

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Thank you for your attention!