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aruda Maintenance Facility AeroAsia (PT GMF AeroAsia) has officially signed an agreement with the Batam authorities to build a 48-hectare maintenance, repair and overhaul (MRO) facility in Hang Nadim International Airport on the island.

PT GMF AeroAsia president director Richard Budihadianto said the subsidiary of the national flag carrier planned to invest between US$70 million and $100 million in the MRO facility.

According to Richard, Batam, Riau islands, about 30 minutes by ferry from Singapore, was chosen as a GMF location because of its strategic location as well as sound airport infrastructure, in addition to its Free Trade Zone status. In the initial phase, the company will develop 15 hectares.

He said the MRO area in Batam would receive two wide-body aircraft and 10 narrow-body aircraft.

GMF MRO in Batam is the fourth of its sort, after building MRO'€™s in Jakarta, Makassar in South Sulawesi and Medan in North Sumatra.

Batam Free Trade Zone Authority chief Mustofa Widjaja said that his office would give tax incentives to GMF for its investment in Batam. '€œWe are optimistic that Hang Nadim in the future can compete with Singapore'€™s Changi International Airport in its capacity as an aircraft maintenance center of Asia,'€ said Mustofa after the signing of the cooperation agreement on Friday.

GMF will be the third MRO firm to operate at the airport after Lion Air and PT Indonesia Aero Maintenance (IAM).

Lion Air, the low cost carrier, is currently developing a 6-hectare site for its MRO unit with an investment of $100 million.

IAM, a consortium between Ilthabi Rekatama, a company owned by the son of former president BJ Habibie, Ilham Habibie, and PT Arzaq Power Indonesia, is scheduled to start the infrastructure development at the beginning of September.

In total, the Batam authority has prepared 150 hectares of land for the MRO industry.

Hang Nadim International Airport commercial head Dendi Gustinandar said Indonesia spent up to $900 million each year on aircraft repair and maintenance work.

However, the domestic capacity can only absorb 30 percent or $270 million each year, while aircraft maintenance expenditure is expected to rise to $2 billion each year in 2015.

GMF'€™s customers include carriers based in Southeast Asia, Eastern Europe, the Middle East and Africa. The company'€™s African customers include Nigerian airlines '€” HAK Air, Kabo Air and a Lagos-based charter airline MaxAir. (asw)