Just Enough MRO Demand to Go Around

The worlds of executive travel and commercial aviation, while distinct, both enjoy a 30-40 percent cheaper workforce in Mexican aircraft maintenance. Strangely, high demand and low supply have not seen economic forces at work to send salaries skyrocketing, although scarcity of technicians means there’s plenty of work to go around, according to Guillermo Heredia Cabarga, Chairman of Qet Tech Aerospace.

“Those who study the sector, graduate straight into a job,” Cabarga said, during a panel at the Mexico Aerospace Forum 2016 on Wednesday.

César Fragozo, Chief of Unit for Sectorial Development at ProMéxico, led the discussion on MROs in exploring possibilities for Mexico to become a world-class hub for these activities.

The potential is “continentally enormous,” according to Guillermo Heredia Cabarga, Chairman of Qet Tech Aerospace, “but it could be just as influential in the local market.” In a market of US$62.1 billion globally, Mexico’s cut could easily be US$30 million per year, considering US$10,000 per aircraft per year, he said.

The panelists were also keen to contest US certifications, which are hard to get. Monterrey Jet Center has been operating a location for nine years and only obtained FAA approval a year ago. This limits entrants to the sector, according to Roberto Marcos, Vice President of Monterrey Jet Center.

Marcos Rosales, Director General of Mexicana MRO, also cited the regulatory hoops businesses must jump through to gain certification. “Managing 18 different certifications is incredibly complex,” he said. Rosales would like the DGAC to do everything in its power to simplify red tape.

Cabarga was in agreement and also cited the investment required to keep certifications up to date. The long-term expenses seem to be a breaking point for smaller companies without large funds behind them to begin with.

The authorities should help support companies to obtain certifications while also simplifying the process, the panelists said. Jess Losada, COO & Senior VP of Maintenance at TechOps, also said that laws in Mexico were even stricter than in the US and harder for MROs to comply with.

Human capital scarcity remains a constant across many industries and aerospace is not immune. In Queretaro, Losada cited the UNAQ’s presence training human capital, which is one of TechOps’ main identified challenges. Knowing the government is happy to invest in young people who will be the future of the industry is a consolation to companies that see a limited supply of engineers at present.

A key impediment to the industry’s competitiveness is the expensive need to import parts and textiles to Mexico. This need also results in another significant problem: delays at customs.

“The efficiency of our processes is tied to customs processes,” Rosales said, adding that the level of efficiency is not high enough. “We must reorganize customs at a public policy level to avoid losing clients to long waits that are hard to defend to a client.”

Marcos agreed. “We avoid importing anything that could delay our services,” he said. Customs inefficiencies also prevent private aviation companies from offering an optimum service. Being able to carry out legal and immigration paperwork wherever suitable on airport property should be enough, he added.

Technology is another factor the industry must come to grips with. “There is just enough business to go around,” said Losada, but if companies want to attack Asia for example, they must re-evaluate data management and technology. Today, 100,000 parameters of maintenance are evaluated. “While we have the capacity to develop this, it will require huge investments and governmental support.”

The panelists were of the opinion that independent MROs could absorb much more business, despite signs of saturation. “The appetite for business leads MROs to try and attract clients from new markets,” such as Europe and what is left of North American operators, said Rosales.