Maintaining excellence

The number of airlines outsourcing their maintenance, repair and overhaul (MRO) operations is constantly increasing throughout the world. This has created a series of lucrative opportunities to MRO service providers in the Middle East, such as the Jordan Aircraft Maintenance Company (JorAMCo), which is planning an aggresive growth policy to reinforce its position in the market, complete with bigger facilities, more employees and an innovative academy in the pipeline.

JorAMCo started operations as Royal Jordanian's maintenance and engineering department in 1963. However, following the government's decision to privatise and restructure the airline, JorAMCo faced new opportunities to establish itself independently.

"The process of privatising Royal Jordanian in the mid-1990s involved the identification of non-core functions, which were later separated from the airline. This included the maintenance and repair operations, in addition to areas such as duty free, catering and training," says Bashir Abdel Hadi, JorAMCo's chief executive officer.

JorAMCo was officially launched as an independent company in October 2000, offering a range of MRO services for aircraft manufactured by the likes of Airbus, Boeing and Lockheed. These activities were conducted from a flagship facility located in Amman, the Jordanian capital city.

For the next five years after gaining its independence, the JorAMCo management team embraced a period of massive change, aimed at increasing efficiencies and making the company a more attractive proposition for potential investors. It also gained the approval of several international authorities, including the European Aviation Safety Agency, US Federal Aviation Authority and the Jordanian Civil Aviation Authority.

"At the time of seperation from the airline in 2000, Royal Jordanian accounted for 90% of our business. As JorAMCo was preparing for its own privatisation, it was important to normalise its relationship with the airline and attract a reasonable share of third party business. We could not survive with business only from Royal Jordanian, we needed to establish ourselves as a major third party player in the market," says Hadi.

JorAMCo was successful in winning a number of contracts with airlines around the world, leading to the company eventually being offered for privatisation in 2005, through an international tender. Abraaj Capital, the Dubai-based private equity company, won the tender and purchased 80% of shares from Royal Jordanian Investment Limited for a reported US$55.1 million, with the remaining shares being acquired by Royal Jordanian.

The company now services a number of airlines in the Middle East, Europe and Asia, with the capacity to perform light and heavy maintenance on aircrafts including the Boeing B727 and 737, most Airbus fleet, Embraer 195 and Bombardier Q400.

"We're now attracting a wide selection of customers and while Royal Jordanian still accounts for 40% of our business, we also have a number of customers with long term agreements, such as National Air Services (NAS), and we also have loyal customers such as Air India and Siberia Airlines. In addition, Europe has emerged as a large market for JorAMCo, accounting for roughly 30% of business. We recently signed a long-term agreement with Vueling Airlines, a low cost carrier based in Spain," says Hadi.

Based in Barcelona, Vueling Airlines began operations in 2004 and currently serves several destinations in Spain, Portugal, France, Italy, Belgium and the Netherlands. Under the new agreement, JorAMCo will provide the Vueling fleet of 18 Airbus A320s with all airframe heavy maintenance requirements from its Amman headquarters.

As business continues to boom, JorAMCo is looking ahead to a major expansion, including an increase in size of the Amman facility. Scheduled for completion in May 2007, the expansion will result in 17.000m2 of wide body hangar space being added on a leased land of 70,000m2, located adjacent to the existing hangar.

Once operational, JorAMCo will double its capability. The company is also building a new cabin maintenance complex, which will specialise in aircraft interior cabin refurbishment.

"The trend towards outsourcing MRO services continued to pick up pace and specialised companies such as JorAMCo are reaping the benefits. In addition, the Middle East aviation industry continues to defy global industry trends, high growth and profitability. We have particularly felt this impact and we have been focusing efforts into maximising on this new reality," says Hadi.

"Construction of the new hangar is already well underway and should be completed in the summer. It will double the size of our present facility, with the capacity to handle one large wide body and up to four narrow body aircraft at the same time, or alternatively eight narrow bodies," he adds.

JorAMCo, which currently employs around 800 people, also expects to increase the size of its workforce by approximately 60% during the next two years. "All JorAMCo employees are Jordanian. We have a well-regarded education system in this country and a number of schools are graduating high quality aircraft technicians. This means the supply of qualified employees is huge and that's a massive advantage for us," says Hadi.

The aircraft maintenance business is well known for being labour intensive, which increases the importance of efficient employees. To maintain the skills of JorAMCo's workforce and encourage their development, the company is planning to establish its own academy in the summer. "People are the most important asset to the aircraft maintenance business," says Hadi. "This is the reason behind JorAMCo's decision to establish an academy, in association with the air service training department at Perth College in Scotland. We have an agreement in place to run the school in partnership with them and the objective is developing the highest possible standards of graduates, who can fit within our system as quickly as possible. It will be one of the very few schools in the world to graduate European qualified aircraft maintenance engineers outside of Europe."

The academy will offer a four year programme, mixing both academic and practical experience at the same time. This will allow the students to meet JorAMCo's complete criteria requirements by the time of graduation. "The academy will create a certain level of control for the company. We want to ensure the training will create the exact skills we require to offer customers an exceptional service. Once the students graduate and start working for JorAMCo, they should become productive almost immediately," says Hadi.

With the hanger expansion and the forthcoming academy, JorAMCo looks set to enter an exciting phase of development, with hopes of capitalising on the lucrative MRO market. "The engineering and maintenance market is growing, especially in the Middle East. This is because of the growth of aviation in general and also because airlines are moving more towards outsourcing," says Hadi. "At the same time, airlines are becoming very careful with costs because aviation is a very competitive business and everyone working in this industry is looking at the bottom line.

Demand is high and the market will continue to grow, but at the same time the competition, especially in terms of price, is very strong. I am confident that JorAMCo will continue to build its reputation as a centre of excellence. We will not compromise on quality, although we will continue to provide services as a competitive price, with the right mix of value added services. It's the complete package."

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