Demand for Aircraft MRO Growing Rapidly
Korea Aviation Engineering & Maintenance Service (KAEMS) has started providing aircraft maintenance service.
KAEMS was established by Korea Aerospace Industries (KAI) in 2017 for aircraft maintenance, repair, and overhaul (MRO).
The company held a ceremony on Feb. 21 at its headquarters in Sacheon, South Gyeongsang Province, to celebrate the launch of its MRO service.
The first aircraft entrusted to it for MRO service was a Boeing 737 of Jeju Air. The jet liner will go through “C-check,” which involves inspection of the fuselage, wings, wiring and cabin, and will be returned to the low-cost carrier (LCC) on March 4. KAEMS also signed a contract with Eastar Jet, securing its second customer. Eastar Jet’s B737 will be in on March 19.
KAEMS was launched in December of 2017, when Korea Aerospace Industries (KAI) was selected as a government-supported aircraft maintenance, repair and operations (MRO) service provider. Seven companies hold a stake in KAEMS, including KAI (66 percent) and Korea Airports Corp. (20 percent), Jeju Air and Eastar Jet. KAEMS is equipped with gas repair and maintenance facilities and special equipment and additionally hired 60 employees last year. The company aims to earn 9 billion won this year by providing MRO service to 19 domestic LCC jets and military aircraft
Currently, the demand for civil aircraft maintenance in Korea is worth about 2.3 trillion won a year, with more than half of the MRO services provided by overseas companies. "KAEMS can create 20,000 jobs and 5.4 trillion won in production inducement effect by 2026," said Kim Hyun-mi, minister of land, infrastructure and transport, in a congratulatory speech.
In consideration of the growth of domestic LCCs, demand for KAEMS services is likely to continue to grow. Last year, 30 percent of all passengers at Incheon International Airport, which was 20.77 million, used jets operated by LCCs. In order to meet this demand, introduction of new aircraft is necessary, which, of course, is followed by demand for maintenance. Last year alone, LCCs bought 19 new aircraft, which accounted for 66 percent of 29 new commercial aircraft introduced in Korea. Currently, six LCCs own 140 airplanes, which amount to 56 percent of the fleets operated by the two full-service carriers (FSCs). Recently, carriers has accelerated the introduction of new airplanes with the opening of new routes to Mongolia and Singapore.
However, KAEMS’ vision is not limited to meeting the demand of domestic LCCs. The company’s CEO announced a plan to acquire an aircraft repair business license from the U.S. Federal Aviation Administration in July to enter the overseas market. MRO demand is rapidly growing due to the increase in the number of domestic and Asia-Pacific airliners.
In fact, demand for MRO in the Asia-Pacific region increased by 40 percent from 3,910 units in 2008 to 5,470 units in 2014. Singapore has built an MRO complex around Changi Airport, making US$6 billion a year.