Regional Aircraft MRO Dynamics

Airlines E&M, Asia pacific

Frost & Sullivan
Aerospace & Defense Practice
Asia Pacific

Agenda of Presentation

Asia Pacific Fleet Dynamics

3

MRO Dynamics

14

Frost & Sullivan Value Proposition

20

2

Global Aircraft Fleet Dynamics Special focus on Asia Pacific and North Asia .

770 New Aircraft deliveries expected globally between 2014-2034 Source : Frost & Sullivan 4 . and (b) New airlines expected to be certified in China.950 Latin America Africa Asia Pacific 13.330 7.550 Middle East 2.950 36.070 2.460 1. including LCCs in all North Asia markets (c) Primary and secondary airports being built and upgraded CIS & Russia Europe North America 1.450 7.Global Aircraft Fleet Dynamics (a) Open Skies agreements.

Global Market Share of Aircraft Deliveries by Region (2014-2034) Nearly half of the world's air traffic growth will be driven by travel to. or within the AsiaPacific region in the next 20 years Global Market Share of Aircraft Deliveries by Region (2014-2034) Latin America Middle East 9% CIS 8% 4% Africa 3% Europe 18% 6% 6% 6% 3% 2033 21% 2014 26% Region with 2nd largest fleet Region with largest fleet 32% North America 22% Source : Frost & Sullivan Asia Pacific 36% APAC share of world GDP will expand from its current 28% to 36% by 2032 5 . from.

Manufacturing Market Forecast The narrow and wide body aircraft market is large but the supply chain is set and entry is challenging owing to certifications Regional Turboprops $ 74 Billion in next 20 years CAGR 4% Regional Jets $ 80 Billion in next 20 years CAGR (1)% UAV $ 100 Billion in next 20 years CAGR 5% General Aviation Aircraft $ 360 Billion in next 20 years CAGR 2% Narrow Body $ 2.3 Trillion in next 20 years CAGR 5% Wide Body $ 2.5 Trillion in next 20 years CAGR 4% Source : Frost & Sullivan 6 .

Asia Pacific in greater detail Asia Pacific fleet of commercial airliner aircraft is expected to grow 3 times by 2034 Asia Pacific Commercial Aircraft Share of Fleet (2014-2034) 2014 2034 12000 10850 10000 8000 6000 3X 3820 4000 2250 2000 1500 290 270 520 710 0 Large Wide Body Medium Wide Body Small Wide Body Single Aisle Regional Jets Source : Frost & Sullivan 7 .

00% 14.81 B India $17.00% 10. 2015-2024 300 MRO Market Size in $US million North America $209.00% 2.00% Growth rate (CAGR) % 12.00% 18.97B Eastern Europe $41.6 B Africa $26. By Region.00% 16.63 B Asia Pacific $167.4% CAGR  The current MRO market size is forecasted at $US 12.5 billion for 2015  The Asia Pacific region is ripe for investment into MRO business as it has the optimum market size with strong growth rate as compared to Western Europe and North America  The Asia Pacific MRO market is forecasted to grow at 6.07 B Latin America $51.2 B 200 150 100 50 China $78.92 B 250 Western Europe $191.00% 8.00% 4.Global MRO Market  The total global MRO market is estimated to be close to $US 68.3 billion Global MRO Spending Forecast Comparison.00% 6.00% 8 .9 B 0 0.9 B Middle East $77.

2015-2024 1600 1400 2.Asia Pacific Aircraft Orders  Asia Pacific region will receive a total of 2276 firm commercial aircraft orders from 2015-2024 which hold potential for strong growth potential for MRO in the region  Majority of the orders are for single aisle aircraft. Asia Pacific (ex-China. India). followed by twin-aisle long range Aircraft Firm Orders.276 Aircraft Orders 1200 Aircraft deliveries 1000 800 600 400 200 0 2015-2024 Regional Single Aisle Twin Aisle Long Range 148 1510 519 Twin Aisle Medium Range 67 Twin Aisle Short Range Twin Aisle Ultra Large 0 32 9 .

03% CAGR Growth (493) 7793 Total Operating Fleet (2024) 10 .New Generation aircraft orders in Asia Pacific  The current generation fleet will be quickly replaced over next 10 years by new generation aircraft . MRO strategy needs to plan for future rather than present  Choice of MRO capacity to be developed should be A320neo & B737 MAX looking at large orders and fleet commonality amongst operators A320/321 neo (2) (1172) Next Generation Most Promising Opportunities (Main Fleet Types Only) B737MAX (0) (597) ATR72-600 (88) (502) Asia Pacific B787-8/9/10 (110) A350-900/1000 (0) (383) B777-300ER (179) (304) B777-8/9 (0) (96) 4341 Total Operating Fleet (2015) 6.

1% 7376/7/8/900.Distribution between Airbus & Boeing in Asia Pacific  Single aisle aircraft are going to dominate the Asian skies with massive orders of close to 1510 aircraft to be delivered in next 10 years (approx ~ 150 aircraft a year) followed by 519 units of twin aisle long range aircraft (approx ~ 50 aircraft a year) Aircraft Firm Orders. Airbus Boeing   Airbus A350 will constitute 47. Asia Pacific (ex-China. Boeing 737 new generation aircraft such as B7378/9 and B737MAX are going to hold 30. 792. 6. 242. 52% A350900/1000. Twin Aisle Long Range. 250.0% of the total wide body long range aircraft orders. India). Single Aisle 2015-2024 Aircraft Firm Orders. Asia Pacific (ex-China. 56. 11% 737-MAX. 11. India). 284. 2015-2024 Others.0% of the market share. Boeing 787 new generation aircraft such as B7878/9/10 and B777-30ER are going to hold 52. 41% Airbus Boeing   Airbus A320 and A320neo will together constitute 69. 1% 777-300ER. 11 .0% of the market share. 11% A320/321NEO . 215. 172. 17% 787-8/9/10. 19% A320/321.0% of the total orders. 47% Others.

7%) 6930 2000 NE Asia includes Japan.25% Oceania (3.0%) 1440 South Asia (7.470 540 1190 470 960 2070 South East Asia (6.340 new aircraft deliveries by 2034 Asia Pacific Commercial Aircraft Share of Fleet (2014-2034) 16000 Total:15.1%) 1340 New Planes by 2033 China (5. South Korea and Taiwan 2310 0 Current Fleet (2014) Future Fleet (2034) Source : Frost & Sullivan 12 .2%) 10000 8000 6000 4000 Total: 5.7%) North East Asia (2.Zooming into North East Asia (Fleet Growth) North East Asia is expected to take 1.220 1010 14000 3770 12000 Fleet (Units) Total CAGR = 5.

70 0 100 200 300 400 500 600 Source : Frost & Sullivan 13 . 560 1340 New Aircraft Fleet (Units) New Planes by 2033 Small Wide Body.Zooming into North East Asia (Type of Aircraft) More concentration of wide body aircraft is expected as routes in North Asia will get thicker Asia Pacific Commercial Aircraft Share of Fleet (2014-2034) Regional Jet. 320 Large Wide Body. 50 Single Aisle. 340 Large concentration of Wide Body Aircraft Medium Wide Body.

MRO Dynamics How MRO is changing around the world .

SAESL etc. HAESL though a major Rolls Royce facility has not been considered in APAC region and has been included in China region.Regional MRO Portfolio The Asia Pacific MRO suppliers have historically concentrated more on Boeing aircraft however Airbus capacity is increasing rapidly. In terms of engine or power plant MRO capacity the focus has been on GE. A small portion of Rolls Royce engine MRO is done at Thai Airways as well. 15 . Major Rolls Royce facilities are SIA Engineering Company.

China. However.Regional MRO Portfolio Asia Pacific MRO suppliers provide airframe MRO services to other regions as well beyond Asia Pacific mainly North America. Middle East do get their MRO services done in this part of the world. 16 . apart from North America other operating regions such as India. Latin America.

Middle East based carriers 22.8%. In conclusion.7% of the total capacity.3%. ERO services provided by Asia Pacific suppliers to APAC based airline carriers constitute only 53. Asia Pacific based ERO services have well established customers beyond the region.Regional MRO Portfolio Asia Pacific MRO suppliers provide a larger portion of engine repair and overhaul services beyond Asia Pacific region. India 3. 17 .9%.7% and Western Europe 4. They also serve China based airline operators constituting 11.

20% In-house.MRO Dynamics .Standalone maintenance firms are under the greatest pressure because they are increasingly squeezed between the OEMs and airline-affiliated MRO companies OEM Presence in MRO Airlines 100% 90% In-house. 50% services – growing aftermarket influence  Relatively smaller presence in APAC but 10% growing rapidly 0% 2014 2020 Source : Frost & Sullivan 18 . 33%  Seeking partnerships with OEMs for newgeneration aircraft  Long history of cooperation but increasing competition with OEMs now 50% 40% OEMs 30% 20%  Aggressive vertical integration in to MRO OEM. 40% 70% 60%  Lack of economies of scale Independent. 42% OEM. 10% 80%  Need to squeeze out cost savings Independent MROs Independent.

4% Latin America ̶ E.67 16..0%  MRO suppliers have been signing JVs with APAC airlines Middle East APAC Europe 0.04 15 13. Chinese airlines prefer to have components repaired in China 5. 2023 18.g.26 10 5.20 14. driven by an increasing share of the global airframe heavy maintenance market Global MRO Revenue by region ($ Billions) 2014 and 10 years CAGR 30 25.91  Also setting up distribution and repair centers in these growth markets to be closer to customers 10.9% 2.7% 5.3% Africa CIS & Russia 1.61 2.85 20 20.14 4.APAC MRO market is projected to grow at 5.32 2.97 3.86 MRO Revenue. 2014 25 MRO Revenue.01 0 Africa CIS & Russia Latin America Middle East APAC Europe North America 8.51 5 2.8% North America Source : Frost & Sullivan 19 .7% CAGR till 2023.MRO Dynamics .3% 5.12 3.

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