Aircraft Maitenance El Salvador

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This a presentation of El Salvador's aviation cluster. I hope you like it!

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Aircraft Maitenance El Salvador

  1. 1. Aircraft Maintenance El Salvador Sergio Castro, Fernando Haeussler, Augusto Martinez, Carlos Carranza, Mario Arteaga and Carlos Montoya.
  2. 2. Agenda 1. El Salvador profile 2. TACA & Comalapa’s Airport 3. AEROMAN 4. Aircraft maintenance cluster 5. Diamond analysis 6. Conclusions
  3. 3. El Salvador Profile • Land area: Total: 20,742 km2 • Population: 5,744,113 (June 2007 Census) • GDP (2007): Nominal Total: 20,372.6 USD Million • Nominal Per capita: 3,546.7 USD • Real Growth: 4.7% • Economically Active Population: 2.3 million PROESA Information Kit El Salvador 2008
  4. 4. Agenda 1. El Salvador profile 2. TACA & Comalapa’s Airport 3. AEROMAN 4. Aircraft maintenance cluster 5. Diamond analysis 6. Conclusions
  5. 5. TACA • TACA is an international airline carrier headquartered in El Salvador. • Fleet Size: 40 jets nearly all of which are Airbus models. • Cities they serve: 40 destinations 10 in North America, 15 in South America and the rest in Central America and the Caribbean. • Hubs: San Salvador, San Jose and Lima www.answers.com/topic/grupo-taca and ww.taca.com
  6. 6. San Salvador Hub The hub at Comalapa International Airport makes connections between all of Central America and North America (Los Angeles, San Francisco, Washington, New York, Miami, Dallas, Toronto, Houston, Mexico City, Oakland) as well as Lima, Peru. www.answers.com/topic/grupo-taca and ww.taca.com
  7. 7. Airport Connectivity PROESA Information Kit El Salvador 2008
  8. 8. El Salvador International Airport • Distance 50 kilometers from San Salvador, about 40 minutes. • 17 gates and more than 2 million passengers per year. • With space for 17 airplanes on the main terminal, 3 on the cargo terminal, 6 in Aeroman, and around 20 in the quot;Long Term Parking”. 94.5% of the airport's flights are on time. ww.cepa.com
  9. 9. Modernization Project & Expansion • The expansion of the airport will start in 2009. • By the end of that year, the airport will handle 4 million passengers • And will expand from 17 gates to 30 gates. Airport Expansion ww.cepa.com
  10. 10. Agenda 1. El Salvador profile 2. TACA & Comalapa’s Airport 3. AEROMAN 4. Aircraft maintenance cluster 5. Diamond analysis 6. Conclusions
  11. 11. Aeroman • Certified maintenance, repair and overhaul facility (MRO) • Provides heavy maintenance services • Located at El Salvador International Airport, at an economic free trade zone
  12. 12. History • 1983: established as a Maintenance and Engineering Division of TACA • 1992: became an FAA 145 Repair Station, providing service to third party companies • 2006: Aveos Group bought 80% of shares – Canadian firm with 4 facilities at Canada – Leading MRO provider in the Americas
  13. 13. Present • Airframe capabilities: – Airbus A318, A319, A320 and A321 – Boeing 737 and 757 • Clients: – TACA, Jet Blue, US Airways, Donbassaero (from Ukraine), Air Tanzania, and others • Services: – Airframe Heavy Maintenance – Engine on-wing – Component shops – Other specialized services
  14. 14. • Staff of more than 1500 people – Technicians in avionics, systems, structures and composites – Engineers – Support departments and administration • Operations: – 6 state-of-the-art bay hangars, providing service to 6 aircrafts simultaneously – 100 aircraft visits annually
  15. 15. Future • 2012 – 16 bay hangars – Staff over 5000 people – Total investment of US$120 millions
  16. 16. Agenda 1. El Salvador profile 2. TACA & Comalapa’s Airport 3. AEROMAN 4. Aircraft maintenance cluster 5. Diamond analysis 6. Conclusions
  17. 17. Direct world competition • This kind of clusters (aviation) are now the majority on develop countries • On Europe, the Hamburg aviation cluster, on the USA, the Florida cluster, and in Asia Singapore, are the most important ones in the industry • The El Salvador cluster is now emergent and attracting clients worldwide (First cluster in Latin America)
  18. 18. Pros and Cons of El Salvador Pros Cons • Low cost rent of facilities • Technology • Low cost labor • Hi training labor • Flexibility on tax payment • Political instability • Increasing institutions of • Low R&D training • Low capital • Location • Low development of • Actually has a industry financial markets hub
  19. 19. Strategic Partners • This year (2009) the first free zone called San José Aviation is emerging in El Salvador with FDI from Costa Rica. • With 69 acres, equivalent to 50 football fields • On march (the first stage), they started with 3 new companies Will do maintenance to airplanes Storage Aviotrade Aviotechnology Company
  20. 20. San José Aviation Free Zone • This free zone is considered more like an strategy partner than a direct competition to the companies already established on the cluster • We consider that it will help the cluster to develop and to be more attractive to the world aviation industry Repairing, warehouses, international maintaining maintaining companies and companies and Airlines airlines airlines
  21. 21. San José Aviation Free Zone • Those companies are going to work in two ways: Distribution Repairing of parts • In the future they want to establish the third way: Making parts in the country • This free zone believes that right now 40% of its production will be going to Aeroman http://www.laprensagrafica.com/index.php/economia/nacional/13999.html
  22. 22. San José Aviation Free Zone • Also 30 companies have been chosen to be invited to come to the free zone • On the positive points that this free zone offer: Low cost Lots of workers Training institutions Attractive
  23. 23. Leading MRO to attract Lufthansa Technicks vrs. ST Aerospace • Lufthansa facts: – Six divisions: Maintenance, overhaul, engines, components, landing gear, VIP aircraft completion – 19,199 employees worldwide – 32 technical maintenance facilities around the world – Market share of 15 percent – 660 customers worldwide – 2007 sales of $5.175B and EBIT of $452M (8.74%) http://www.laprensagrafica.com/index.php/economia/nacional/13999.html
  24. 24. Leading MRO to attract Lufthansa Technicks vrs. ST Aerospace • ST Aerospace facts: – Two divisions: Aircraft maintenance & Modifications and Component & Engine Total Support – 7000 employees worldwide – Facilities in the Americas, Asia Pacific and Europe. – Market share of 4% percent – Main clients: All Nippon Airways, FedEx Express, Japan Airlines International, Republic of Singapore Air Force, Royal Air Force of Oman, UPS, Venezuelan Air Force, Northwest Airlines – 2007 sales of $3.48B and EBIT of $440M (12.6%) Source: http://www.staero.aero
  25. 25. Leading MRO to attract Lufthansa Technicks • The world’s leading provider for maintenance, repair and overhaul (MRO) of airplanes, components and engine • Specialized in Airbus A320, Boeing 737 (Classic and Next Generation) • 2007, Investment in new facilities located at Shamshabad, the site of the upcoming Gandhi Hyderabad International Airport • $20Million in a two-bay hangars and its state-of-the- art workshop. • 20,000 square meters facility •Specially designed training program to develop qualified technicians and aircraft engineers • Lufthansa needs for this facilities 400 highly qualified personal Source: http://machinist.in/index.php?option=com_content&task=view&id=1332&Itemid=2
  26. 26. B/E Aerospace: • It is the worldwide leading manufacturer of aircraft passenger cabin interior • Business Segment – Consumables -- distributor of aerospace fastener and consumables, and stocks in 40 locations world wide – Commercial aircraft – Seating manufacturer – Galley insert equipment – Offers a broad range of interior reconfiguration – Business jet
  27. 27. B/E Aerospace: • Other products: – Oxygen system, Lighting system, Structures • Presence: – Florida´s aviation cluster • Location products: – EUA, Canada and West Europe • Location customer support: – Latin America, Middle East, Asia, Australia • Awards: – Crystal Cabin Award 2009 Hamburg
  28. 28. Harris • Communication and information technology sector • Presence in 150 countries and 16,000 employees • Provides customized critical components for air traffic control system – i.e. communications and weather system
  29. 29. Agenda 1. El Salvador profile 2. TACA & Comalapa’s Airport 3. AEROMAN 4. Aircraft maintenance cluster 5. Diamond analysis 6. Conclusions
  30. 30. Context for Firm Strategy and Rivalry Factor (input) Demand Conditions Conditions Related and Supporting Industries Government
  31. 31. Factor Conditions • Labor low cost: Entry-level mechanic at Aeroman earns $4,500 a year vs. $44,000 a year in Canada and veterans earn $15,000 vs. $52,000 • Universidad Don Bosco launched in 2005 a two year mechanics course • Location (between North-America and South- America). Fuente: http://www2.canada.com/montrealgazette/news/business/story.html?id=ebb07a17-0e73-42ba-9892-a36c52b8b7f5
  32. 32. Factor Conditions Fuente: El Salvador 2008, Kit Investor Information Kit, PROESA
  33. 33. Context for Firm Strategy and Rivalry Factor (input) Demand Conditions Conditions Related and Supporting Industries Government
  34. 34. Demand Conditions • U.S. main carriers outsource about 68% of their MRO (Maintenance, Repair and Overhaul). With 80% for low-cost carriers. • quot;I do think we are going to see more North American work being done in Asia, Eastern Europe and Latin America, particularly with the wide-body aircraft,quot; said Derek Nice, CEO of ExelTech Aerospace Inc. Fuente: http://www2.canada.com/montrealgazette/news/business/story.html?id=ebb07a17-0e73-42ba-9892-a36c52b8b7f5
  35. 35. Demand Conditions • Customers: Iberia, LAPA, Aerolíneas Argentinas, America West and JetBlue. • Boeing (727, 737, 757 y 767), Airbus (319, 320, 321 y 300). • Good service, low cost and delivery time. • Southwest airlines planned to outsource to Aeroman. Fuente: http://exploretacaairline.com/esp/article.html?pagesrc=archives&id=456 and http://travel.latimes.com/articles/la-trw-fixplanes30apr30
  36. 36. Context for Firm Strategy and Rivalry Factor (input) Demand Conditions Conditions Related and Supporting Industries Government
  37. 37. Context Firm Strategy and Rivalry Fuente: http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm
  38. 38. Context Firm Strategy and Rivalry Fuente: http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm
  39. 39. Context for Firm Strategy and Rivalry Factor (input) Demand Conditions Conditions Related and Supporting Industries Government
  40. 40. Related Industries • Universities • Airlines • Tourism • Airport Facilities • Free Zones Fuente: http://www.elsalvador.travel/
  41. 41. Context for Firm Strategy and Rivalry Factor (input) Demand Conditions Conditions Related and Supporting Industries Government
  42. 42. Government • Investment Law to encourage specially FDI. • Benefits: – Include friendly procedures. – Equal treatment for all investors. – Liberty to make investment. – Transference of founds abroad. – Access to local financing. – Property protection and security. – Creation of the National Office of Investment (ONI) as a dependency of the Ministry of Economy. Fuente: El Salvador 2008, Kit Investor Information Kit, PROESA
  43. 43. Government • International Services Law. • Benefits: – Exemption of tariffs and duties in the introduction of machinery. – Income tax exemption. – Exemption of municipal taxes on the company. – Exemption of VAT for the purchase of goods and services. Fuente: El Salvador 2008, Kit Investor Information Kit, PROESA
  44. 44. Government • Free Zones Law. • Benefits: – Income tax exemption. – Municipal tax exemption on the assets. – Tax exemption on real estate transfer. – Tax exemption on imports of machinery, lubricant and fuel not produced in the country. – Free admision of raw materials. – No limits on foreign capital. Fuente: El Salvador 2008, Kit Investor Information Kit, PROESA
  45. 45. Agenda 1. El Salvador profile 2. TACA & Comalapa’s Airport 3. AEROMAN 4. Aircraft maintenance cluster 5. Diamond analysis 6. Recommendations & Conclusions
  46. 46. Recommendations • PROESA has to play an important role attracting more companies related to the cluster • Plan to develop a new engineer career focus on aircraft technical maintenance • Incentives to locate new companies closer to the airport • Incentives to generate more competition between airlines to increase the demand for services to the cluster
  47. 47. Recommendations • Keep Attracting important world aviation institutions to train local universities in aviation knowledge • Implement English programs since first school years • Promote exchange programs with other prestige institutions with MRO knowledge • The government has to make a better effort to improve security to promote FDI
  48. 48. Conclusions • The country has comparative advantages like geographic location • Competitive advantages like the experience curve of more than 20 years • The cluster must continue to attract companies that can add more value

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