Russian MRO sector benefits from weak ruble
The 2015 developments in the Russian economy had a noticeable effect on domestic MRO providers. The ruble’s depreciation prompted airlines to turn to the local market for their maintenance and repair needs. However, Russian specialists have yet to improve on their quality and customer service if they want to capitalize on this positive trend.
In Russia, the would-be positive effect of around a third of the entire commercial fleet having been withdrawn from operation since early 2014 has been offset by the severe depreciation of the national currency in 2015. As a result of the depreciation, a number of the country’s airlines have brought previously outsourced MRO work to domestic providers—Ural Aviation Services (part of UTair Group), Rossiya – Russian Airlines, and Orenair provide heavy maintenance services; Saratov Airlines, Azur Air, and others specialize in line maintenance.
The fate of MRO providers has a direct correlation to the state of civil aviation. Last year’s folding of Transaero Airlines, for example, impacted a number of Eastern European MRO providers, much of whose business depended on orders from Russia’s then-second-largest carrier. These companies were additionally affected by the virtual cessation of air services operated by a number of charter airlines such as NordWind and IFly to Egypt and Turkey.
Despite the onset of hard times for the sector, several Russian independent MRO providers have managed to use the current situation to their advantage.
Engineering Holding, one of Russia’s leading MRO specialists, has started offering heavy maintenance work to Aeroflot and its sister carriers at its facilities in Novosibirsk, Moscow, and Mineralnye Vody.
The company says the fall in the ruble’s exchange rate has had a stimulating effect on the domestic MRO sector, which is now capable of offering some of the most appealing prices in the industry.
“At the same time, [Russian] airlines should realize that switching to domestic MRO providers is only justified if they end up paying less for appropriate quality and speed,” says Roman Fedorov, Engineering deputy general director finance. “If this is not the case, carriers should keep looking for alternative solutions, because in the current situation—which is not going to change any time soon—only those who count their money are going to survive. Those who do not understand this may find themselves driven out of the marketplace.”
Fedorov says Engineering’s solutions help airlines cut maintenance costs as compared to the competition.
“Despite all the outward change, part of which has facilitated the sector’s development, we proceed from the premise that our success depends on what we are capable of doing ourselves,” Fedorov says. “If our own [market] environment does not stay strong, if we do not improve from year to year in terms of the range of services we provide, in convenience and quality, our turnaround times, and so on, the development rate of the Russian MRO sector may slow down.”
Igor Panshin, Engineering’s deputy general director of planning and sales, says that Eastern European MRO providers that used to work with Russian carriers are now offering added-value services in exchange for an opportunity to return to the local market. “We do realize that relying on the favorable currency exchange rates alone is not a good long-term strategy. This is why, in addition to our turnaround times, prices, and quality, we are constantly seeking new competitive advantages that would convince carriers that working with us is convenient and comfortable,” he notes.
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