The Middle East, which has witnessed a flurry of aircraft purchases in recent years and is expecting a travel boom in the next decade once the impact of the recession wears out, could be the next big hub for the maintenance, repair and overhaul (MRO) business.

There are forecasts that annual revenues from the aircraft MRO sector could double to $5 billion by 2020. Yet this could be a conservative estimate considering that big-ticket investors like Mubadala Development are in the field.

While Mubadala, one of Abu Dhabi’s largest investment vehicles, is a prominent player, several smaller players from Dubai to Fujairah are setting up new facilities.

Mubadala expects the Middle East market to grow from $2.4 billion to close to $5 billion by the end of the decade notwithstanding that the current months are a period of modest recovery.

The MRO sector is being driven by expanding fleets of Middle East airlines with long-haul carriers Emirates, Etihad and Qatar Airways ahead of the pack and expected to receive 40 new aircraft per year over the next decade.

“The number of aviation MRO firms is growing and this is not surprising, with new aircraft deliveries and record traffic figures at airports here,” said Sheikh Ahmed bin Saeed Al Maktoum at the opening of the MRO Middle East 2010 exhibition and conference in Dubai.

Sheikh Ahmed oversees Dubai’s aviation sector including Emirates, Dubai Airports and the Department of Civil Aviation.

Mubadala, through its maintenance companies Abu Dhabi Aircraft Technologies (ADAT) and the Swiss-based SR Technics, is expanding its capabilities in the Middle East and Europe to provide financing and supply-chain management for its components and engine maintenance businesses.

It is also considering adding new business lines such as an MRO unit for business jets, and a VIP interiors company.

Expansion ahead

Beyond the region, Mubadala is embarking on expansion into the Americas and Asia-Pacific over the next two to five years, said Homaid al Shemmari, the executive director of aerospace at the company.

This can happen through acquisitions of existing MRO firms and establishing subsidiary firms in new facilities, Al Shemmari said, adding that each region had its own culure and business environment.

ADAT has benefited from Etihad’s growth, while Emirates has its own in-house engineering centre. Qatar Airways has outsourced its maintenance needs to the private sector, including Lufthansa Technik.

But newcomers are expected soon. Europe Aviation, a maintenance firm based in Paris, plans to open its $25 million maintenance centre at Fujairah International Airport by October, and will initially service planes such as the Boeing 737 and the Airbus A330.

The company will focus on cargo airlines in the region and hopes to capitalise on a number of low-cost carriers rumoured to be setting up at airports such as Al Ain International Airport and Dubai International Airport.

Nine business jet maintenance companies, including Livewel and Jet Aviation, are expected to start building facilities at the new Al Maktoum International Airport in Jebel Ali when it opens in June.

The optimistic talk about the Middle East hub for MRO comes in the midst of a less-than-rosy global scene when airlines are grounding aircraft, cutting flights and deferring maintenance.

“But the Middle East will be a key emerging market,” says John Byers, the CEO of ADAT, which increased its revenues by 35 per cent in three years and is doubling its aircraft hangar space at Abu Dhabi International Airport after receiving a $500 million maintenance contract with Etihad.