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Southeast Asia Air Transport MRO Market

Southeast Asia Air Transport MRO Market Size, Share, Competitive Landscape and Trend Analysis Report by Aircraft Type, End-Use, Organization Type, Service Type : Southeast Asia Opportunity Analysis and Industry Forecast, 2021-2032

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Author's: Ashish Tripathi | Lalit Janardhan Katare
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The southeast Asia air transport MRO market was valued at $5,259.1 million in 2021, and is projected to reach $13,481.3 million by 2032, registering a CAGR of 7.8% during the forecast period 2022-2032.    

The Southeast Asia Air Transport MRO market refers to the industry that encompasses maintenance, repair, and operations services for aircraft in the Southeast Asian region. It involves activities such as routine inspections, scheduled maintenance, repairs, and the management of spare parts and logistics. This market is driven by the surge in air travel demand, fleet expansion, and modernization efforts in the region. MRO companies provide essential services to ensure the safety, reliability, and airworthiness of aircraft, contributing to the efficient operation of the air transport sector in Southeast Asia. 

In addition, increase in air traffic & demand for new aircrafts, rise in investment in the MRO industry by market players, greater penetration in the commercial sector, and surge in maintenance, repair, and operations (MRO) activities accelerate the growth of the ASEAN air transport MRO market. However, shortage in skilled workforce and lack of efficient supply chain hamper the growth of the southeast Asia air transportation MRO market. Conversely, supportive government policies by the government of the Southeast Asian countries and technological advancement by the market players are expected to provide lucrative opportunities for the expansion of the industry.

The Southeast Asia air transport MRO market is segmented into aircraft type, end-use, organization type, service type, and country. By aircraft type, it is bifurcated into narrow body aircraft, propeller aircraft, rotary aircraft, private jet, and wide body aircraft. In southeast Asia air transport MRO market, the end-use segment is categorized into commercial aviation, business and general aviation, and military. By organization type, the market is classified into airline, independent MRO, and OEM MRO. By service type, the market is categorized into engine overhaul, airframe maintenance, line maintenance, modifications, and components. Country-wise, the market is analyzed across Singapore, Malaysia, Indonesia, Vietnam, Thailand, and Rest of Southeast Asia.   

The key players operating in the southeast Asia air transport MRO market include AIROD SDN BHD, Asia Aerotechnics Sdn Bhd, FL Technics, UAB, PT. Dirgantara Indonesia (Persero), PT GMF AeroAsia Tbk. (Garuda Maintenance Facility AeroAsia), PT. Kalimasada Pusaka, Sepang Aircraft Engineering Sdn. Bhd. (SAE), ST Engineering (Singapore Technologies Engineering Ltd), VAECO (Vietnam Airlines Engineering Company Limited), Vietstar Airlines, Lion Air (Batam Aero Technic), and Malaysian Airline Berhad.

Rise in air traffic and demand for new aircrafts

The aviation industry of South-East Asia has been witnessing robust growth of 10% each year causing development in connectivity and transportation. The rise in global population and the surge in disposable income of the middle class have caused a surge in demand for passenger travel. Southeast Asia with discontinuous landmass and remote islands has a weak railway and internet connectivity, which is why they are highly dependent on air transport. The ASEAN region has a population of around 665 million people with 370 airports as of 2019. The demand for aircraft is expected to positively impact the growth of the MRO industry to ensure the safety and availability of aircrafts. 

Furthermore, rise in air traffic owing to traveling from one country to another country is anticipated to increase the demand for new aircrafts during the forecast period, which supports the growth of the MRO market in the Southeast Asia countries. For instance, in July 2021, The International Air Transport Association (IATA) announced that international and domestic travel demand showed significant momentum compared to June, even though the demand remained well below pre-pandemic levels. 

According to the latest data from the Civil Aviation Administration (DGCA), domestic passenger traffic in September 2021 increased by 5.45%, with about 7.07 million passengers flying in a month, compared to 6.7 million in August 2021. Domestic air passenger numbers have increased by about 67% year-on-year and 24% quarter-on-quarter to about 8.8 million, followed by improved travel sentiment during the festival season and a steady decline in new COVID-19 cases.

Rise in investment in the MRO industry by market players

The MRO industry consists of software components for maintenance monitoring, maintenance scheduling, logbook tracking, budget forecasting, manuals, flying time tracking, electronic task card management, service bulletin management, and work order administration. 

Southeast Asia Air Transport MRO Market
By Aircraft Type
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Narrow Body Aircraft is projected as the most lucrative segments

The growth in the aviation sector of South-East Asia with underlying huge business prospects entices investments from foreign and domestic investors in MRO software. Investments have been witnessed in the form of alliance and collaboration as well. For instance, in May 2022, construction on ADE's new MRO facility is scheduled to begin in the middle of this year and be finished in two years. According to ADE, the 380,000 square foot (35,300 square meter) facility would be able to offer complete MRO services for up to 14 commercial aircraft at once, making it one of the largest MRO providers in the Association of Southeast Asian Nations. Airbus A320, A321, and A330-specific services provided by ADE include line maintenance, warehouse management, and engineering support services. 

However, the company has begun maintaining other Airbus and Boeing aircraft models. These developments create a more competitive MRO market providing a strong operational ecosystem. MRO providers hence target the South-East Asia market as it provides more clients with attractive investment opportunities.

Southeast Asia Air Transport MRO Market
By End-use
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Business and general aviation is projected as the most lucrative segments

Shortage in skilled workforce

A major supply chain shortage has been witnessed, which is causing the market players to worry. With an increase in demand for maintenance, labor shortage has been a restricting factor in boosting production. Supply being unable to meet the excess demand has influenced prices, making maintenance more expensive as reported by AAR Corporation and other MROs. The individuals are leaving this industry for a more lucrative industry, causing a supply chain gap. The COVID-19 pandemic stagnated aviation growth with global lockdowns, leading to labor displacement to other industries. The Southeast Asia region requires 268,000 employees, which is expected to be the largest market for skilled technicians, however, it takes many years to get the experience and certifications to qualify as inspectors and quality control technicians. Thus, such factors are anticipated to hamper ASEAN Air Transport Maintenance, Repair, and Overhaul (MRO) market growth during the forecast period.

Supportive government policies by the government of the Southeast Asian countries

The government support in South-East Asian companies gives huge opportunity for growth. The growth of Southeast Asia Air MRO market is linked with country specific policies that stimulate innovation and provide incentives along with advancement of worker's skills. Non-supportive policy framework can be a major determinant for stagnant growth. For instance, Singapore's Economic Development Board has planned to ease local as well as global companies by providing incentives, subsidies, and grants to companies investing in Singapore. Initiative to provide funding, human resource development programs have been underway in Malaysia and Thailand. The Philippines Investment priority plans and labor law reform provides higher business prospects in Air Transport Maintenance, Repair, and Overhaul (MRO) industry. 

Southeast Asia Air Transport MRO Market
By Organization Type
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Airline is projected as the most lucrative segments

Supportive tax regimes providing tax and duty exemptions on spares and machinery provide opportunities for this market to spread its roots and grow. Higher tax makes it less profitable for market players, hindering market growth. The reason why tax regimes are a major factor is that south-east Asian countries do not produce all the machineries as machineries, production equipment, spare parts are imported from other countries. 

Therefore, imposing non-favorable tax regimes are projected to negatively impact the MRO industry. The South-East Asian countries provide tax incentives. For instance, Singapore's Development and Expansion Incentive (DEI) includes a concessionary tax rate of 5% or 10% to incentivize market players to expand their operations. Tax free and duty-free imports in countries boost Southeast Asia Air Transport MRO industry growth.

Southeast Asia Air Transport MRO Market
By Service Type
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Engine Overhaul is projected as the most lucrative segments

COVID-19 Impact Analysis

The COVID-19 pandemic has had a significant impact on the ASEAN Air Transport Maintenance, Repair, and Overhaul (MRO) market. The region's aviation industry, like many others worldwide, has experienced unprecedented challenges and disruptions, leading to a downturn in the MRO sector.

One of the most noticeable effects of the pandemic has been the severe decline in air travel demand. Countries implemented travel restrictions, lockdowns, and border closures to contain the spread of the virus, resulting in a significant decrease in passenger flights. Airlines were forced to ground their fleets and cancel numerous routes, leading to a reduced need for MRO services. This drop in demand for maintenance and repair work has had a substantial impact on MRO providers in Southeast Asia.

With fewer aircraft flying, MRO companies faced a considerable decrease in revenue. Maintenance schedules were disrupted, and planned inspections, repairs, and overhauls were postponed or canceled. The financial strain on MRO providers was exacerbated by ongoing fixed costs such as facility maintenance, equipment upkeep, and workforce salaries. Many companies had to downsize their workforce, implement cost-cutting measures, or even face closures.

The impact of the pandemic was particularly felt in major aviation hubs like Singapore, Malaysia, and Thailand. These countries have traditionally been important players in the MRO market, attracting regional and international airlines for maintenance and repair services. However, the decline in air travel and the subsequent reduction in MRO demand had a cascading effect on the entire aviation ecosystem in the region.

Therefore, the Southeast Asia Air Transport MRO market has been severely impacted by the COVID-19 pandemic. The significant decrease in air travel demand, supply chain disruptions, and logistical challenges have led to a decline in revenue and operational difficulties for MRO providers. As the industry slowly recovers, MRO companies are adapting their strategies, exploring new avenues, and focusing on digitalization to mitigate the impact and position themselves for future growth.

Southeast Asia Air Transport MRO Market
By Country
Rest of Southeast Asia

Thailand would exhibit the highest CAGR of 10.9% during 2022-2032.

Key Benefits For Stakeholders

  • This study presents the analytical depiction of the Southeast Asia air transport MRO market analysis along with the current trends and future estimations to depict imminent investment pockets.
  • The overall Southeast Asia air transport MRO market opportunity is determined by understanding profitable trends to gain a stronger foothold.
  • The report presents information related to the key drivers, restraints, and opportunities of the Southeast Asia air transport MRO market with a detailed impact analysis.
  • The current Southeast Asia air transport MRO market is quantitatively analyzed from 2021 to 2032 to benchmark financial competency.
  • Porter’s five forces analysis illustrates the potency of the buyers and suppliers in the industry.

Analyst Review

The region's exponential growth and escalating air travel demand present a favorable environment for MRO companies. With rise in tourism sector and the burgeoning middle class, the need for reliable maintenance and repair services to ensure the safety and operational readiness of aircraft is on the rise. In addition, competition among MRO providers is intense, necessitating a strategic approach to stand out from the crowd. By offering superior quality, cost-effective solutions, and innovative services, companies can differentiate themselves and establish a competitive edge. Adhering to stringent regulatory standards and certifications is imperative to instill confidence and earn the trust of customers and stakeholders.

Furthermore, comprehending the unique requirements and intricacies of each Southeast Asian country is vital for sustainable growth. The diverse cultural nuances, regulatory frameworks, and local business practices necessitate a localized approach. Developing strong relationships with local authorities and establishing a robust network of trusted local partners facilitates navigating these complexities that foster mutually beneficial collaborations.

Furthermore, the partnership between PT Garuda Maintenance Facility AeroAsia (GMF) and Lufthansa Technik, established in November 2022, and the collaboration between AirAsia Group and SATS Ltd in October 2022 to form the joint venture company "AirAsia SATS Aero Services" is expected to increase the demand for air transport MRO services in the Southeast Asia countries during the forecast period. These instances underscore the recognition of the surge in demand for MRO services in the region and highlight the significance of strategic alliances to cater to market needs.

Moreover, in the Southeast Asia Air Transport MRO market, companies must leverage the region's immense growth potential. By differentiating through quality, innovation, technological advancements, and by fostering strong partnerships and relationships, companies can position themselves for long-term success in this dynamic and competitive market.

Author Name(s) : Ashish Tripathi | Lalit Janardhan Katare

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Southeast Asia Air Transport MRO Market