When Lithuania-based maintenance, repair and overhaul (MRO) company, FL Technics, stepped foot in Indonesia in 2015, it started its business by taking over former airline Batavia Air’s unused hangar in Tangerang, Banten.

Four years after transforming the unused hangar into a modern MRO facility, the company announced on Tuesday that it had reached a break-even point with total revenue of US$11 million year-to-date.

With this success, the company has laid down a long-term business plan for the next 20 years.

FL Technics Indonesia chief executive officer Martynas Grigalavicius said one of the company’s short-term plans would be to build a new hangar worth of US$20 million at Soekarno-Hatta International Airport, next to the existing hangar.

“We need to double or even triple our maintenance capacity. At present, our hangar is capable of receiving just three aircraft. However, sometimes we have to work with 12 aircraft,” Martynas said.

The 10,000-square-meter hangar would be able to accommodate five to six aircraft. Martynas said if the permit and contract were all settled, the construction of the new hangar could start in April next year, with the commercial operation set to begin in April 2021. With the new facility, the company expects to receive $40 million in revenue a year.

“Aside from the hangar, we also plan to increase our bonded logistics zone [PLB] business, and then we also want to increase our technical training business here, so we can expand, train more and more local people,” said Martynas.

In addition to developing its MRO facility at Soekarno-Hatta Airport, FL Technics also plans to provide maintenance at other Indonesian airports, start component trading, ground handling and engine stand renting.

Since it started operating in 2015, FL Technics has been the only foreign direct investment company in the MRO business. The company formed a joint venture with state-owned airport operator Angkasa Pura (AP) II to run the business. The joint venture, called FL Technics Indonesia or PT Avia Technics Dirgantara, has spent a total of $10 million during the last four years for hangar facility improvement, skills training and obtaining certifications. As of today, the company employs 260 workers, mostly Indonesians.

FL Technics Indonesia focuses its services on base maintenance and line maintenance for narrow-body planes, the Airbus 320 and Boeing 737. Their clients include Sriwijaya Air, Air Asia, Nam Air, Qatar Airways, Emirates and Thai Airways.

“Basically, 85 to 90 percent of the revenue is from abroad, so it means we bring foreign exchange for Indonesia,” he said.

Ferry Utameyasa, AP II’s aeronautical senior manager said the presence of FL Technics had triggered more competition in the MRO business as airline companies had more alternatives to maintain their aircraft.

The head of investment facilities at the Investment Coordinating Board (BKPM), Andi Bardiansyah, said MRO was one of the priority sectors in investment programs as it had a multiplier effect on the economy. The BKPM is committed to facilitating the establishment of new MRO business investment in Indonesia, he added.

“As MRO is a priority business sector, investors involved in this business can apply for a tax holiday from the government,” he said.

MRO business is promising amid the trend of air travel and increasing needs of aircraft today. Martynas said Indonesia was the biggest market in Southeast Asia. Besides Indonesia, FL Technics has also opened MRO business in Thailand and Vietnam.

Global consulting firm ICF International estimates the global MRO market will grow 4.6 percent per annum to $118 billion by 2027 and $140 billion by 2037. In 2017, the Asia Pacific market share stood at 30 percent, larger than that of North America (27 percent) and Europe (26 percent). By 2037, Asia Pacific is projected to generate 38 percent of total MRO demand.

In Indonesia, there are only two big players in MRO business, namely Garuda Indonesia's subsidiary GMF Aero Asia and Lion Air Group’s Batam Aero Technic. The two companies are only able to handle about 30 percent of the aircraft maintenance in the country.

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