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Indonesian Aviation Industry Readiness Toward ASEAN Single Aviation Market (ASAM) 2015
Global and Indonesian MRO Industry Analysis

21
st
November 2012, Pullman Hotel, Jakarta, IAMSA Seminar
Indonesian Aviation Industry Readiness Toward ASEAN Single Aviation Market (ASAM) 2015
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Global MRO Trends
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MRO activities are migrating to Asia Pacific, Middle East and Latin America
Global MRO Key Trends (1)
Emerging Clusters
Eastern China
Singapore
Malaysia
UAE
Eastern Europe
Germany
UK
France
North Africa
Brazil
Mexico
Central America
South Florida
Southern
California
Central US
Quebec
Established Clusters
Hong Kong
With increasing labour costs, MRO activities are moving towards low cost nations like Mexico, Brazil, Malaysia, and North Africa.
This is particularly seen in labor intensive heavy maintenance checks.
Most low labor cost nations are improving support for MRO services and providing infrastructure in the newly build airports.
Source: Frost & Sullivan Analysis
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Source: Frost & Sullivan
Africa
Asia
Pacific
Europe
Latin
America
Middle
East
North
America
Africa 76% 14% 8% 2%
Asia Pacific 100%
Europe 3% 9% 84% 4%
Latin America 5% 92% 3%
Middle East 1% 16% 83%
North America 35% 4% 3% 58%
Total 3% 44% 24% 4% 9% 16%
Supply
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Migration of Airframe Heavy Maintenance Man-hours
Increasing fuel costs and retirement of
maintenance intensive aircraft will hinder migration
New generation aircrafts will affect man-hours per
maintenance visit
North America outsources HMV the most amongst
all regions
Middle East, Latin America, Eastern Europe and Africa
are amongst the regions which have least ERO
capabilities
Europe
North
America
Middle
East
Latin
America
Eastern
Europe
Asia
Pacific
Africa
Europe 74% 11% 1% 5% 0% 9% 0%
North America 16% 65% 1% 3% 0% 14% 0%
Middle East 45% 22% 4% 0% 0% 30% 0%
Latin America 29% 43% 19% 5% 0% 5% 0%
Eastern Europe 44% 15% 8% 0% 3% 30% 0%
Asia Pacific 18% 14% 2% 1% 0% 65% 0%
Africa 57% 8% 15% 0% 0% 21% 0%
Total 33% 34% 3% 3% 1% 26% 1%
Supply
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Migration of Engine Maintenance
Global MRO Key Trends (2)
6.5% of the global MRO spend is expected to migrate to Asia Pacific
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Engine MRO market shares of OEMs and Independent MRO Providers are on the
rise
OEM
42%
OEM
50%
Independent
33%
Independent
40%
In-house
25%
In-house
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2020
OEM are aggressively looking for vertical
integration into MRO services.
In-house decreasing significantly
Airlines are reluctant to share the inventory
investment risks
OEM presence in Asia Pacific is lower than the
world but is growing rapidly
3873
5279
1102
938
655
3768
546
Europe North
America
Middle
East
Latin
America
Eastern
Europe
Asia
Pacific
Africa
ERO Demand and Supply
($ Millions), 2011
+44% +1% -61% -51% -98% +15% -100%
Excess supply as a percentage of demand
Europe is the major net exporter of engine
MRO while Middle East, Africa, Latin America
are net importers

The net importer regions are expected to
provide more incentives and infrastructure to
improve services of local companies
Global MRO Key Trends (3)
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Global MRO Analysis
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B737 will remain the biggest aircraft family by 2020. A320NEO has the highest
CAGR in the timeframe.
Global Commercial Fleet (1) - by Aircraft Family
Aircraft Family 2011 2020 CAGR
737-6/7/8/900 3775 7201 7.4%
A320 2804 4610 5.7%
737-3/4/500 1614 828 -7.1%
A319 1250 1624 3.0%
EMB-135/140/145 1035 901 -1.5%
CRJ-100/200 966 817 -1.8%
757 951 603 -4.9%
767 719 298 -9.3%
MD-80 670 60 -23.5%
A321 664 1005 4.7%
Aircraft Family 2011 2020 CAGR
737-6/7/8/900 3775 7201 7%
A320 2804 4610 6%
A319 1250 1624 3%
A320NEO 0 1422 124%
787-8/9 36 1171 47%
A321 664 1005 5%
EMB-190/195 464 972 9%
EMB-135/140/145 1035 901 -2%
CRJ-700/900/1000 635 869 4%
737-3/4/500 1614 828 -7%
Aircraft Family 2011 2020 CAGR
A320NEO 0 1422 124%
A350-900 0 402 95%
CS100 0 255 85%
A350-800 0 218 82%
MRJ 0 190 79%
C919 0 127 71%
A350-1000 0 82 63%
MS-21 0 57 57%
ARJ21 6 230 50%
787-8/9 36 1171 47%
Aircraft Family 2011 2020 CAGR
FK100 204 5 -34%
DC-8-60/70 43 2 -29%
DC-9 136 8 -27%
MD-80 670 60 -24%
L-1011 22 2 -23%
FK70 46 5 -22%
737-200 291 36 -21%
DC-10 35 5 -19%
A300 61 9 -19%
F-28 43 9 -16%
Top 10 aircraft families by numbers, 2011 Top 10 aircraft families by numbers, 2020
Bottom 10 aircraft families by CAGR Top 10 aircraft families by CAGR
MD, DC and FK fleets will be the major aircraft fleets to be retired in the next 10 years
Source: Frost & Sullivan Analysis
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Important to manage a balance between narrow body and wide body hangar space
in Asia Pacific.
Global Commercial Fleet (2) - by Aircraft Category
6,163 3,806 1,545 1,546 1,324 655 984 800 355
1,226
991
1,278
218
142
566 119
196
67
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Worldwide Fleet, 2011
Wide Body
83%
90%
79%
89%
80%
54%
88%
55%
84%
17%
10%
21%
11%
20%
46%
12%
45%
16%
Worldwide Fleet - Narrow body and Wide
body, 2011
Narrow body Wide body
Source: Frost & Sullivan Analysis
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Whilst new aircraft will grow rapidly compared to older aircraft, the older aircraft
will nonetheless achieve higher earnings per annum
Global Commercial Fleet (3) - by Age of Fleet
The families which entered service
before 2004 are considered old.

A380-800, 787-8/9, A320NEO, A350-
800/900 are some of the new families.
Source: Frost & Sullivan Analysis
$2.54
$2.18
$1.74
Old New Others
Average Earning per Aircraft
in a year (US$ Millions), 2011 Fleet Families
Others
92
41%
New
18
10%
Old
76
49%
Old
$52,204
Old
$63,139
New
$1,115
New
$11,584
Others
$1,690
Others
$2,975
2011 MRO Revenue 2020 MRO Revenue
2%
CAGR
30%
CAGR
Others include DC-9-50 STAGE 3, 747-200F,BAE 146-300, MD-87 (DC-9-87), 767-400ER
737-200C/F, 747-400 SCD, 727-200, EMB-170/175, A310-200F, 707-320C, 737-200C/F STAGE 3
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Although western nations command high market revenues, high growth markets
lie in emerging market in the east
Global MRO Revenues - by Region
18.55
North
America
2.83
Latin
America
1.92
Africa
13.53
Europe
2.22
CIS &
Russia
3.38
Middle
East
8.9
5.7
5.3
5.0
2.3
1.4
0.8
Middle
East
APAC Latin
America
Africa CIS &
Russia
Europe North
America
2011-2020 Growth
(CAGR %)
1.92
2.22
2.83
3.38
12.57
13.53
18.55
Africa CIS &
Russia
Latin
America
Middle
East
APAC Europe North
America
2011 MRO Revenue
($ Billion)
North
America
34%
Europe
25%
APAC
23%
Middle
East
6%
Latin
America
5%
CIS &
Russia
4%
Africa
3%
2011 MRO Revenue
share
12.57
Asia
Pacific
Source: Frost & Sullivan Analysis
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South East Asia along with India and China present very promising opportunities
APAC MRO Revenues - by Country
3.10
China
1.45
Japan
0.94
Hong
Kong
1.13
South
Korea
0.76
Singapore
0.95
Australia
CHINA
24%
JAPAN
11%
SOUTH
KOREA
9%
AUSTRALIA
7%
HONG
KONG
7%
SINGAPORE
6%
TAIWAN
5%
INDIA
5%
Thailand
4%
INDONESIA
4%
Others
18%
2011 MRO Revenue share
0.70
Taiwan
0.54 0.57
0.67 0.70 0.76
0.94 0.95
1.13
1.45
3.10
2011 MRO Revenue
(US$ Billion)
0.67
India
0.54
Indonesia
11.7
10.0
7.4
6.6
6.2
5.7
5.4
5.0
4.5
3.5
2.3
2011-2020 Growth
(CAGR %)
Source: Frost & Sullivan Analysis
0.57
Thailand
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Indonesia MRO Analysis
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Engine and component maintenance are growing at a significant pace in Indonesia
MRO Market Analysis Indonesia MRO Revenues (by Segment and Aircraft Type)
Source: Frost & Sullivan Analysis
Compone
nts
40%
Engine
24%
Line
20%
Base
12%
Modificati
ons
4%
MRO spending in Indonesia
(US$ Millions), 2011
$23
$216
$111
$64
$130
11.1%
6.4%
2.2%
-0.2%
8.2%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
$-
$50
$100
$150
$200
$250
Modifications Components Line
Maintenance
Airframe
Heavy
Maintenance
Engine
Maintenance
C
A
G
R

(
2
0
1
1
-
2
0
2
0
)

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Indonesia MRO spending, 2011
Indonesia Spending, 2011 CAGR (2011-2020)
US $0.54 Billion
Indonesia
Narrow
$433
Narrow
$697
Wide
$111
Wide
$201
2011 2020
MRO Spending by Aircraft Type
(US$ Million)
CAGR 5.7% (2011-2020)
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737-800/900 will have the highest increase in spending while 737-200/300/400 will
see significant decrease in spending by 2020
MRO Market Analysis Indonesia MRO Revenues (by Aircraft Family and Airlines)
Source: Frost & Sullivan Analysis
$86
$2
$-
$8
$-
$1
$-
$-
$31
$101
$139
$340
$138
$5
$38
$44
$9
$9
$9
$10
$10
$14
$23
$38
$38
$46
$49
$53
$59
$134
Others
BAE 146-200
BAE 146-100
MD-90
MD-83 (DC-9-83)
FOKKER 100
737-200
747-400
A330-300
A330-200
737-800
737-900BBJ3/-900ER
A320-200
737-400
737-300
MRO Revenues by Aircraft Family (US$ Million)
2011
2020
$49
$46
$29
$15
24%
13% 13%
15%
0%
5%
10%
15%
20%
25%
30%
$-
$10
$20
$30
$40
$50
$60
LION AIR, 737-900 GARUDA, 737-800 GARUDA, A330-200 INDONESIA AIRASIA,
A320-200
MRO Revenues for selected Airlines and Aircraft
Families (US$ Million), 2011
MRO revenue, 2011 CAGR (2011-2020)
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Lion Air is forecasted to have the highest increase in MRO spending by 2020.
Garuda will, however, remain the biggest spender but only narrowly so.
MRO Market Analysis Indonesia MRO Revenues and Fleet Composition
Source: Frost & Sullivan Analysis
$135
$1
$51
$1
$348
$364
$152
$20
$24
$38
$77
$234
OTHERS
MERPATI
INDONESIA
AIRASIA
SRIWIJAYA
LION AIR
GARUDA
Airline MRO Spending (US$ Million), 2011 and 2020
2011
2020
102
100
29
24
14
62
236
37
41
1
21
44
737-6/7/8/900 737-3/4/500 A320 737-200 A330-200/300 Others
Indonesia Aircraft Fleet, 2011 - 2020
2011
2020
Others include Batavia, Mandala related aircrafts
and other airlines
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CFM56-3 engines will be retired rapidly by 2020
MRO Market Analysis Indonesia Engine MRO revenues
Source: Frost & Sullivan Analysis
$-
$10
$20
$30
$40
$50
$60
$70
Engine MRO Revenues (US$ Million),
2010
CFM56-3 TRENT700 CF6-80C2
V2500-A1 V2500-A5 Others
$-
$20
$40
$60
$80
$100
$120
GARUDA BATAVIA AIRASIA LION AIR MANDALA
Engine MRO Revenues (US$ Million),
2020
CFM56-3 TRENT700 V2500-A5 CFM56-5B
CFM56-7 GE90-115B Others
Overall CAGR 8%
CFM56-3 CAGR (27%)
CFM56-7 CAGR 68%
-27%
9%
-100% -100%
27%
44%
68%
48%
C
F
M
5
6
-
3
T
R
E
N
T
7
0
0
C
F
6
-
8
0
C
2
V
2
5
0
0
-
A
1
V
2
5
0
0
-
A
5
C
F
M
5
6
-
5
B
C
F
M
5
6
-
7
G
E
9
0
-
1
1
5
B
CAGR 2011-2020
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Spending is highest for CFM56-7 on 737-900ER by 2020
MRO Market Analysis Indonesia Engine MRO revenues
Source: Frost & Sullivan Analysis
$-
$10
$20
$30
$40
$50
$60
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Engine MRO by Engine type
($ millions), Indonesia, 2011
747-400 A330-200 737-300 737-400
A320-200 A330-300 OTHERS
$-
$20
$40
$60
$80
$100
$120
Engine MRO by Engine type
($ millions), Indonesia, 2020
A330-200 A320-200 737-800
737-900BBJ3/-900ER 777-300ER OTHERS
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Component MRO market will grow by 6% and each individual component is
projected to grow
MRO Market Analysis Indonesia Component MRO revenues
Source: Frost & Sullivan Analysis
$39
$38
$16
$13
$12
$11
$11
$10
$9
$8
$8 $7 $7
$6
$4
$4 $3
$3 $2
$1 $1
$1
$0
8%
2%
8%
5%
7%
8%
7%
10%
7%
7%
6%
7%
9%
5%
7%
1%
7%
8%
7%
5%
3%
6%
6%
0%
2%
4%
6%
8%
10%
12%
$-
$5
$10
$15
$20
$25
$30
$35
$40
$45
R
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U
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Indonesia Component MRO Revenues, 2011
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MRO Cluster Development
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Source Frost & Sullivan
1. European Union (EU) and
the Unites States (US) 2008
2. European Union (EU) and
Israel (2012)
3. Japan and US (2010)
4. Japan and Australia (2011)
5. Japan and China 2012
6. China and US (planned)
7. China and Japan (2010)
8. South Korea and Canada
(2009)
9. South Korea and
Vladivostok (2012)
10. South Korea and Canada
(2009)
Regulatory Global Open Skies Policies
Key Open Skies Policies are paving the way for global footprint of regional airline
by entering into bilateral and multilateral agreements
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Source Frost & Sullivan
Bilateral and multilateral agreements between countries
Key reform of existing aviation rules and regulations are being undertaken in Asia
Pacific mainly as efforts to open up the commercial aviation market
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Developing MRO industry
In order to compete in different market dynamics which are likely to be more
competitive from 2015 onwards, several key areas need to be addressed
Critical to continue to grow and grab opportunities will be :


Development as a key destination for airlines to come to/ connect

Development as an MRO Hub for Commercial & Business Aviation MRO,

Development of MRO Cluster Across Value Chain (Logistics, FBO, Parts,
R&D, etc.)

Continuous capability development for next generation aircraft and engines,

Leveraging on high end integrated MRO service offerings,

Increase value-add modification and upgrades work,

Adopt lean MRO management to increase margin and efficiency.
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Improving Supply Chain Government Incentives Enhancing workforce
Having a holistic approach to
supply chain

Developing a overall support
for suppliers in the country
Provide incentives to MRO
suppliers to set-up services in
Indonesia. Offsets?

The incentives include direct
government support, labour
regulation, tax structure and
infrastructure, fuel price.
High Manpower requirement in
Indonesia due to growing
fleets of each airline

Manpower shortage in the
region and is also a global
challenge
MRO Supply Chain
MRO company
Concession
Rates
Subsidized
infrastructure
support
Land
availability
Labour
Regulation
2010 2015
14% CAGR
MRO growth
Developing MRO industry
Govt. incentives like concession rates, subsidies play a large role in attracting
foreign investment, but workforce capabilities, and supply chain are also critical
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Source: Frost & Sullivan Analysis,2011
Global MRO cluster benchmarking
Credibility can only be achieved if capabilities are developed across the value
chain backed and developed with the aid of industry and the Government
The chart shows the general gap
area on aerospace MRO service-
process capability, which 23% of
total key service-processes are
either with limited capability or not
available in the Country.

The chart also shows the gap area
in each MRO segment with
percentage value on top of each bar
to indicate the ratio of total limited
and not available service-processes
in each segment.
Assessment of Leading MRO Country Provider in s.e. Asia
75
123
202
78
83
66
17
14
13
60
Airframe MRO Avionics Systems
MRO
Components MRO Engine MRO MRO Support
FULL CAPABILITY STRONG CAPABILITY
FULL CAPABILITY: MRO processes commonly available amongst suppliers.
STRONG CAPABILITY: MRO process exist, however with limited processes in certain areas
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Australia Mexico Singapore Middle East China
Cluster Spread Regional
Scattered across
Mexico
Regional Regional Regional
Cluster Focus MRO Manufacturing MRO MRO
MRO /
Manufacturing
Development Stage Mature Developing Mature Developing Mature
Cluster Size
More than 500
businesses
Close to 200
businesses
Close to 180
businesses
Close to 200
businesses
Close to 350
businesses
Source: Frost & Sullivan Analysis,2011
Global MRO cluster benchmarking
Different countries have adopted different models with regards to developing MRO
Clusters examples on a global basis of approaches taken
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Source: Frost & Sullivan Analysis,2011
Global MRO cluster benchmarking
Strategy for Indonesian MRO cluster : will need to bring different parts of the value
chain to be successful all parties in value chain need to work together
Manufacturing
Capabilities/ R&D
MRO Capabilities/
R&D
Supply Chain/
Logistics Capabilities
Physical Faciltiies
Commercial/ Business
Flights
Human Resource
Training
Government lncentives, coupled with Industry Participation and Investment are required to build an
MRO Park and make it a Success
1 2 3
4 5 6
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Now is the time to act!

Thank you