The leasing move could potentially cannibalise local MRO players

by AZREEN HANI / pic by TMR FILE

INDUSTRY experts have proposed for Khazanah Nasional Bhd to establish a strategic partnership with Singapore’s SIA Engineering Co Ltd (SIAEC) rather than just leasing off two hangars at the Sultan Abdul Aziz Shah Airport or commonly known as Subang Airport.

Former Malaysian Aviation Commission executive chairman Dr Nungsari Radhi said the partnership will boost and complement Malaysia Aviation Group’s subsidiary’s, MAB Engineering Services Sdn Bhd, presence in the region.

“My only thought is maybe Khazanah could have arranged for some local presence to grow and develop with SIA. This (leasing) seems like an outright lease of an asset as they don’t know what to do considering MH operations are all in the Kuala Lumpur International Airport,” he told The Malaysian Reserve (TMR) yesterday.

Read more: SIAEC enters MOU with IVP on lease of Subang Airport hangars

“SIA certainly would welcome an MRO site outside Singapore as space is very expensive there, and this is less than an hour away,” he said.

Nungsari also noted that there has been no latest development on Subang Airport redevelopment so far.

On Tuesday, SIAEC announced that it has signed a non-binding memorandum of understanding (MoU) with Impeccable Vintage Properties Sdn Bhd (IVP), a wholly owned subsidiary of Khazanah, to potentially lease two hangars located at Complex A of Subang Airport.

Through this MoU, the parties will now work on the next phase of hangar technical assessment to ensure that the refurbished hangars will be future-ready to support the maintenance, repair and overhaul (MRO) of current and next generation aircraft.

“These hangars will strengthen our network of base maintenance facilities in the region, enabling us to cater to the varying needs and capabilities required by our customers. Along with our recently announced plans to acquire SR Technics Malaysia Sdn Bhd and POS Aviation Engineering Services Sdn Bhd, our growth in Malaysia will complement the capabilities of our Singapore hub,” SIAEC CEO Ng Chin Hwee said in a statement.

An industry insider told TMR that this move could potentially cannibalise MAB Engineering as well as other local players in the MRO activity.

“MAB Engineering is doing well, why bring in SIAEC to our shores? Unless MAB Engineering plans to partner with SIAEC and expand beyond our shores then of course that would be a viable proposition.

“As it stands, there is no strategic benefit to Malaysia. Why does Khazanah seem to be willing to give others a leg up rather than protecting our homegrown firm?” he said.

Meanwhile, a regional aviation analyst said SIAEC’s presence is a welcome move to boost Malaysia’s position in the aviation and aerospace sector.

“It is actually a good move as it will boost Malaysia Airports Holdings Bhd’s rental income and the landbank usage.

“The competition will always be there but SIAEC is a strong player and it may attract other players to Malaysia too,” the analyst said.