Unscathed by Covid-19, ExecuJet sees continued strong demand for business aviation MRO services
08 May 2024
THE Covid-19 pandemic that upended commercial aviation two years ago left one segment largely untouched — the business aviation maintenance, repair and overhaul (MRO) industry.
In 2020 and 2021, airlines were forced to ground their fleets amid lockdowns in many countries. In contrast, ExecuJet MRO Services Malaysia Sdn Bhd reported an increase in MRO spending as owners continued to service their business jets bought for personal use or for charter.
“The demand for business aviation has been growing since our inception in 2009 [in Malaysia]. Then Covid-19 came in 2020. In the business aviation market, we noticed that aircraft ownership didn’t get impacted as much. Aircraft owners were still holding on to their assets, and we were still seeing business aircraft being delivered in the region, such as Singapore, Indonesia and Vietnam,” Ivan Lim Wah Teik, 41, regional vice-president for Asia at ExecuJet MRO Services Malaysia, tells The Edge in an interview.
“But because aircraft owners couldn’t fly as borders were closed [during the pandemic], they took the opportunity to send their aeroplanes for maintenance to prepare their aircraft to fly again when borders reopened,” he says.
This boded well for business aviation MRO providers such as ExecuJet MRO Services Malaysia. The company, a wholly-owned subsidiary of France’s aircraft maker Dassault Aviation, saw its revenue surge during Covid-19. Companies Commission of Malaysia data shows its net profit rising 20% year on year to RM4.74 million in the financial year ended Dec 31, 2022 (FY2022), while revenue increased 33% y-o-y to RM68.97 million.
The Malaysian unit is one of the 14 ExecuJet MRO facilities across five continents acquired by Dassault Aviation in 2019. Dassault Aviation also has its own MRO service centres that only provide services for its range of aircraft.
“Our business has been pretty resilient. We didn’t have to resort to any retrenchments or salary cuts during the pandemic. We were in a much more fortunate situation compared to our counterparts in the commercial aviation industry,” says Lim.
“Post-pandemic, business aviation has rebounded sharply due to pent-up demand for air travel after two years of lockdowns. Asia was one of the last regions to reopen its borders. So we are now seeing a boom in aircraft demand. We benefit from this situation because in every sale of an aircraft, a pre-purchase inspection is performed. This has partly driven our revenue.
“Business aviation is also tied to the wealth of the region. When the pandemic came, what we saw was that there were certain people who could afford to fly private. Trying to get on a plane during that time was difficult. Many airlines cut routes and business aviation became one of the options because it has always been an effective tool in running a business, especially if you have multi-locations. That realisation came during Covid-19, especially.”
Recently released figures by Hong Kong-based consulting firm Asian Sky Group underline this performance, with the number of business jet departures in Asia-Pacific in 2023 increasing by over 43% compared with 2019. The most popular business jet routes in Asia-Pacific were concentrated in two areas: Southeast Asia and India, including Singapore to Jakarta and Kuala Lumpur.
While most MRO companies provide maintenance services dedicated to supporting a business jet manufacturer’s clients, ExecuJet MRO Services Malaysia supports aircraft from a number of different manufacturers.
“Our business model is [to handle] multi-brand original engine manufacturers (OEMs). While we provide factory-owned maintenance services for the Falcon family of business jets manufactured by Dassault Aviation, we also support Bombardier and Gulfstream business aircraft models. In other regions, ExecuJet MRO Services facilities also handle maintenance services for Embraer and Textron Aviation business jets,” says Lim.
“For us here, we started off back in those days — before our acquisition by Dassault Aviation in 2019 — servicing the MRO business of Bombardier and Gulfstream. Following the acquisition by Dassault Aviation, we added Falcons to our list of supported models. We have built strong capabilities and service levels over the years, so it made sense that we just continued on [this business] in parallel.”
As Malaysia’s SKS Airways Sdn Bhd and Singapore’s low-cost carrier Scoot take delivery of their Embraer jets, does ExecuJet MRO Services Malaysia plan to handle this aircraft type? “We don’t do commercial MRO services. We are specific to business or corporate jets. Of course in business, you never say no to any opportunity, but it is very unlikely. That is not our forte. That is not where we are heading to as a strategy,” says Lim.
What about Embraer business jets? “We are driven by the market, competition and market size. That is something that we are always on the lookout for. If it makes sense, we will invest. If it doesn’t, then we won’t. Because to add a new product line into your service offering, you have to invest in tooling, send your engineers for aircraft type training and so on. It is quite a commitment financially. Like any investment consideration, you have to look at the financial revenue,” he says.
Lim points out that today, Falcon work accounts for 55% to 60% of ExecuJet MRO Services Malaysia’s revenue, with the rest coming from Bombardier and Gulfstream business jets. “Falcon aircraft has driven our growth because all this work prior to 2019 was going to our competitors in other parts of the region. Following the acquisition by Dassault Aviation, ExecuJet MRO Services Malaysia’s facility at Subang Airport (Sultan Abdul Aziz Shah Airport) is the only factory-owned service centre in Asia.”
Steady growth in the Malaysian unit is poised to accelerate as its new facility at Subang Airport kicks off. Commencing in early March, the 105,000 sq ft hangar can accommodate up to 15 medium and large business jets at any one time.
Lim says already the company is utilising up to 80% of the capacity at its facility, catering to its growth needs for at least five years.
He notes that Subang Airport was picked as a regional centre for Dassault Aviation’s MRO business as ExecuJet MRO Services Malaysia already has an established presence here. “Subang Airport has many advantages. One is that it is located close to Kuala Lumpur International Airport and financial hubs in the region. It is just that over the years, its potential hasn’t been fully tapped. Furthermore, the Malaysian government has been supportive of this investment and our operations here.”
He also commends airport operator Malaysia Airports Holdings Bhd (MAHB) for seeing the potential of business aviation early, which has led to the presence of several major players in Subang Airport, including Dassault Aviation, Collins Aerospace, Senior Aerospace, Spirit Aerosystems and Airbus Helicopters that serve the sector. According to MAHB, Subang Airport currently hosts over 60 aviation players.
“We welcome the Subang Airport Regeneration Plan (SARP). Under the plan, business aviation is one of MAHB’s key focuses, which is music to our ears. In fact, this [105,000 sq ft hangar] facility is one of the initiatives under the SARP. We are fully supportive of it. It will drive further growth.”
The SARP will see the return of single-aisle commercial jet services from June this year. To this, Lim says: “The challenge is to try to find the balance to serve both commercial aviation and business aviation. Commercial aviation in many parts of the world always takes precedence over business aviation because as commercial aviation grows, passenger numbers also grow. But it comes at the expense of business aviation where landing slots become limited. That could be something to watch out for.”
Changes in consumer behaviour brought on by Covid-19
Today, ExecuJet MRO Services Malaysia is the only business aviation MRO service provider in the country. “We don’t have competitors here. Our competitors are based in other airports in the region such as Singapore, the Philippines and Hong Kong,” says Lim.
“There are multi-OEM MRO service providers in other parts of Asia who compete with us, but we have always been able to defend our market share. It is becoming increasingly harder to run a third-party MRO outfit without the support of the OEMs themselves.
“Commercial MRO is different because the commercial aircraft manufacturers themselves don’t run a factory-owned service centre in competition with the airlines. In commercial aviation, it is common to see the airlines setting up their own MRO unit to service the fleet of aircraft they bought from the manufacturers. At the same time, these airline MROs will then start providing third-party services as well. That is the trend we have been seeing.”
Lim says that while the business aviation MRO market in Malaysia is sizeable, it is not big. “Aircraft owners can fly their planes anywhere in the world to get their maintenance done. You are not confined to where you are located. For example, about 90% of our revenue comes from overseas.”
The Malaysian Aerospace Industry Blueprint 2030 reveals that the country’s commercial and business aircraft MRO was worth RM5.3 billion in 2014, accounting for 20% of the Southeast Asian market.
Lim is optimistic ExecuJet MRO Services Malaysia will continue to achieve consistent levels of annual growth.
“We try to achieve 10% to 15% growth in revenue every year. The market [for business aviation MRO] is big and we haven’t tapped all the markets yet. For one, we haven’t started supporting the Chinese operators on a grander scale because while we have been approved by the Civil Aviation Administration of China (CAAC) for Bombardier and Gulfstream business aircraft models, we haven’t managed to get the certification for the Falcon models of aircraft. The delay in the ratification was due to Covid-19 and China shutting its borders.
“Hopefully, the CAAC will approve our facility for the Falcon business aircraft models by the middle of this year. Then it will allow us to tap into the Chinese market where there are many Falcon business jets that are registered in the Chinese registry. In the meantime, they are sending their aircraft to other MRO facilities worldwide within the group,” says Lim.
Another thing going for ExecuJet MRO Services Malaysia is that the pandemic has resulted in changes in consumer behaviour.
“Ten to 15 years ago, North America and Europe were popular choices for many customers when it came to maintenance checks of their aircraft because they are mature markets, with all service providers there offering a lot of options.
“In the case of the Falcon family of business jets, before the acquisition by Dassault Aviation of the worldwide maintenance activities of ExecuJet, customers would send their aircraft to its service centres in France. But with the Subang facility, there is now an option for aircraft owners in Asia,” says Lim.
“Additionally, because of the border closures during Covid-19, there were stringent requirements if one were to move their aircraft from one country to another and so, aircraft owners wanted something that was nearby and convenient in the region, offering similar high levels of service.
“We have observed that more clients are now more inclined to send their aircraft for maintenance services within the region, and we expect this trend to continue. We haven’t reached any point of saturation yet and we don’t foresee that happening anytime soon. That’s part of the reason why we are so confident to build such a big facility at Subang Airport,” says Lim.
“As long as the aircraft is in circulation, it still needs maintenance whether it is flown or not flown. If the utilisation of the aircraft is high, it means it would need more maintenance.”
A challenge ExecuJet MRO Services Malaysia is facing these days is the shortage of skilled workers, especially aircraft engineers. Like the rest of the aviation industry, the MRO sector saw many workers leave during the pandemic after airlines drastically cut costs. In the years that followed, many of them joined other industries and did not return to aviation.
“Already, the pool [of engineers] is getting smaller, and now commercial aviation has recovered and is also dipping in and taking everyone that they can. The airline business is a much bigger business. It will take time to replenish the labour force again. For us, we have been able to hire experienced people from neighbouring countries who want to relocate to Asia and this is one part of the world that they are keen on. Additionally, being part of the ExecuJet MRO Services group and the larger Dassault Aviation MRO network helps. We do have resources that we can share across the networks,” says Lim.
Source: The Edge Malaysia
