Victoria's MRO sector packs a punch

Just think: Victoria not only has a Minister specifically responsible for the State’s aviation industry, but he has actually worked as a refueller, holds a commercial pilot’s licence and flies a Cessna 172.

Gordon Rich-Phillips, who also has the Assistant Treasurer and Technology portfolios, is Australia’s only State Minister with a direct aviation responsibility.

Victoria, which has the greatest Australian State share of the national MRO business, has long shown the clearest determination to not only hold its share of the lucrative high skills industry, but to expand it against domestic and international encroachments.

The Liberal and National Parties’ Coalition policy on the Victorian aviation industry described it as an important sector of the State economy, both in its own right in the manufacturing, maintenance and training spheres, and in underpinning Victoria’s tourism and inbound investment performance.

It valued it as contributing more than $600 million annually to the Victorian economy, generating more than $230 million in exports and employing more than 20,000 people across airports and aerospace facilities.

Now the Coalition is in government, has responsibility for realising the policy’s specific promises, which includes a promise vitally important to the MRO and other aerospace sectors, to protect the “important competitive advantage” of Melbourne and Avalon airports over Sydney and Adelaide – their 24 hour a day curfew-free status.

The promise has been made to “prevent inappropriate and incompatible development, such as high density residential or other inappropriate development” around Victoria’s airports to ensure their operational capacity and viability is not undermined.

In addition to Rich-Phillips’ senior ministries, at bureaucratic level Victoria’s Department of Business and Innovation has established an Aviation and Commercial Aerospace group to give the industry a direct channel to government.

Further to the government commitments, the Australian aerospace sector’s first united voice has been launched operationally – and it should be a powerful one indeed.

Last August the previous Victorian Government saw its investment of $500,000 initiate the Australian Association of Aviation and Aerospace Industries, or A4I, “to provide a strong unified national voice for the aviation and aerospace sectors to drive exports and jobs growth.”

A4I was established after the Victorian Government identified that no similar national body existed and that a lack of clear communication between industry and government had hampered efforts to promote the Victorian aviation and aerospace sectors in the global market.

A4I chairman Mark Ross, managing director of Boeing Aerostructures Australia, said while the nascent organisation had yet to devote a great deal of time to examining individual aerospace sectors, skilling came immediately to mind.

“Education and training in aerospace manufacturing and MRO is needed to produce the required common skills and to meet common standards,” he said.

Former Qantas senior executive Geoffrey Bowmaker was named A4I’s first CEO late in January. (See story page #).

The biggest MRO entities in the Victoria are the major maintenance headquarters for both Qantas and its sibling Jetstar, and John Holland Aviation Services, which continues what was Ansett’s maintenance base, which supports the Virgin stable.

Qantas Engineering’s MRO activities in Victoria and its alliance with Lufthansa Technik – LTQ – employ a total of more than 1500 people.

The direct Qantas trades employed within its Victorian heavy maintenance facilities include mechanical, avionics, structures, trim, paint, non-destructive inspections, fitting shop, utilities and fibreglass.  Some 30 per cent of the heavy maintenance workforce is licenced aircraft mechanical engineers.

Qantas Engineering’s Melbourne Jet Base at Tullamarine provides narrow body B737-400 and -800 engineering and heavy maintenance and aircraft component overhaul and maintenance of the Federal Government’s Boeing Business Jets (for Qantas Defence Services).

Some 300 people are employed there in heavy maintenance. It also supports Australian Air Express’s B737 freighters and Air Vanuatu’s B737s.

The base completed 19 heavy checks in 2010.

At Avalon, Qantas’s B747 heavy maintenance base employs about 650 people.

Avalon began as a modification facility for Qantas' B747 fleet cabin refresh program in 1998 and subsequently included the Skybed international Business sleeper seat upgrade in 2003. Since then, Avalon has developed into a comprehensive B747 heavy maintenance facility.

Other recent additional projects there have included Qantas B737 and QantasLink Dash 8 repaints, Australian Air Express B737 freighter conversion and heavy maintenance and Qantas B747 Premium Economy modification.

During 2010 a total of 44 heavy checks, including 5 D checks, were completed at Avalon.

Qantas’s LTQ joint venture adjacent to Melbourne airport with the world’s largest MRO business, Lufthansa Technik, has more than 200 specialists.

Originally set up as Jet Turbine Services in 2004, LTQ’s capabilities include high speed grinding, balancing machines, heat treatment and non-destructive testing.

Engine testing equipment has fully integrated control, instrumentation, data acquisition and analysis systems.

In addition to major engine overhauls, LTQ performs work such as variable bleed valve bushing replacement, borescope inspection, module changes, hot section inspections, trouble shooting and non-destructive testing and repair of parts.

It can also overhaul flap tracks and carriages for the Boeing 747 and provide electroplating.

LTQ’s engine test facility supports CFM56-3 and CFM56-7, CF6-80C2 and CF6-80E1 engines. It is equipped with the latest integrated control, instrumentation, data acquisition and analysis system.

Australia’s biggest independent MRO, John Holland Aviation Services, is setting off in new strategic directions which it believes closely mirror international trends in the industry.

Andrew Henderson, who had led the company since the John Holland Group took over the maintenance capabilities of the former Ansett empire, is taking up a position with the parent company.

Until a replacement is found, JHAS has for four months an interim general manager, Ian Wolf, most recently chief commercial officer with the fast growing MRO Abu Dhabi Aircraft Technologies, and who has also managed Qantas’ maintenance planning.

The foundation of JHAS operations is its support of Virgin Blue’s Boeing 737 and EMBRAER operations.

In 2009 it won a 10 year contract for all heavy maintenance on Virgin Blue’s fleet of EMBRAER jets, which is expected to number 23 by the end of this year.

The multi-million agreement was estimated to generate more than 200,000 man hours of maintenance activity at JHAS.

In the latest John Holland Group annual report, JHAS said increases in aircraft numbers and the maturing of the base of Australian aircraft was providing strong demand for overnight maintenance. It said additional services were being provided to Virgin Blue, Jetstar and Tiger.

The business was also looking to opportunities that could come from the addition of a new paint facility, repair and overhaul of high turnover aircraft components and Airbus A330 accreditation.

JHAS’ main announcement of new business in the past year was a five year deal for comprehensive management of Menzies Aviation’s 1200-unit fleet of ground support equipment at airports throughout Australia and New Zealand.

Wolf sees JHAS growing to a “somewhere north of $100 million” annual business in the next five years – up from $53 million last year – due to two influences: a concentration on line maintenance and light C checks, and development of specific support partnerships with OEMs.

“Globally, the operators are chasing the low labour cost markets for heavy maintenance, especially for widebodies, where the logistics for getting to the bases is pretty simple,” he said.

Wolf said despite the 25,000-30,000 man hours D checks becoming more the province of low cost overseas providers, the costs of getting aircraft overseas for 300 hour C checks meant JHAS was still in that game.

“Line maintenance is more predictable and we can resource that more efficiently,” he said.

“We think that because of Australia’s regional position we have to concentrate on fast track work and components where there is no benefit to the customer in freighting work to lower cost countries. We do the work well, fast and it should be a good result for us as an MRO.”

As part of business development, and again consistent with where MRO is going, Wolf says, is the need to develop key partnerships with OEMs to increase work volumes by access to intellectual property and data.

“JHAS has been doing some testing of the market place for its approach, and we have had some good feedback,” he said.

“Some OEMs want to replace the MRO business by getting the work in house. Some are interested in working as partners, some are more bloody-minded.”

The change of direction by JHAS is requiring a review of skills bases in the business.

“Moving to a line concentration means a need for more LAMES, possibly 50:50 to mechanics, and LAMES are very hard to get globally,” he said.

“The market is not producing enough skilled people. We are establishing our own training programs and we are in the market globally, trying to get people with experience.

“Then you must deal with retention: most people want to work for an airline, where you get the staff benefits.

“So you have to become an employer of choice, where there is investment in training and in being a successful company.”

JHAS is, for example, interested in entering partnership with, for example, Boeing, on an aspect of B787 MRO.

“We would be interested in say, partnering with Boeing on composite repairs on the 787 for the region that might include Qantas, Jetstar and JAL,” Wolf said.

Boeing is Victoria’s most important link to the OEM side of the sector, but it has an important support enterprise.

Boeing Australia Component Repairs provides MRO and overhaul of structural aircraft components for commercial and military customers.

These include regional airlines, aircraft OEMs, the Royal Australian Air Force and other regional maintenance providers.

Capabilities include MRO of advanced composite and conventional metallic components, machined and metal bond structures, sandwich structures, autoclave repair and on-aircraft and quick composite repair.

Preventative MRO services range across non-destructive testing using x-ray, thermography, ultrasonic and shearography.

The business backs this up with short run manufacture offerings for components that typically include thrust reversers, flight controls, high lift devices, stabilisers, winglets, nacelles, pylons, doors, panels, covers, fairings and interiors.

As indicated by JHAS’s Ian Wolf, Victoria’s attractiveness as a base for aircraft maintenance as well as continued growth in aerospace manufacturing requires a workforce well equipped with aviation technical and trade skills.

The State boasts an impressive alliance between government, industry, and academia to ensure that there is a flow of people skilled for careers in the MRO and other aerospace sectors, with a focus on skills that will be required for emerging technologies.

The Australian Advanced Manufacturing Research Centre, collaboration between Boeing and Swinburne University, develops technology-driven solutions to ensure Australian suppliers are among the most innovative, competitive and capable in the world.

The Co-operative Research Centre for Advanced Composite Structures at Monash University has built a global reputation for composites research – in close collaboration with industry – over the last 20 years.

The Advanced Manufacturing Cooperative Research Centre at Swinburne University develops next-generation technology platforms across numerous manufacturing sectors.

The Sir Lawrence Wackett Aerospace Centre at RMIT University works towards the development of next-generation aerospace technologies.

The Department of Business and Innovation’s Aviation and Commercial Aerospace group has also become involved in husbanding scarce skills that could be lost as changing technology places different demands on MRO businesses.

It has become involved in ensuring specialists, many with decades of experience, can transition through training to new disciplines aligned to contemporary needs without undue financial pressures on them or their employers.

More than $300 million is available through Skills Victoria’s Victorian Training Guarantee to fund skills change or enhancement across State industry.