But Will The Boom Turn Bust?

The United Arab Emirates and India have combined for hundreds upon hundreds of commercial aircraft orders over the past few years, with more on the way... and now, the race is on to build facilities to maintain and repair all those jets.

Dubai -- which rivals the state of Texas for bragging rights to the "bigger is better" philosophy -- plans a 56-square-mile aerospace complex dubbed "Aviation City," complete with mega-airport and a $1.5 billion maintenance facility capable of handling up to 400 planes at once. A similar boom is also underway in India... where no fewer than nine brand-new, and massive, complexes are in the works, for such companies as Boeing, EADS, and Lufthansa Technik AG.

That's fine now, as times are good... but as many airline insiders know, things can (and inevitably will) turn in a heartbeat. The Wall Street Journal reports the current boom could turn bust if predictions of a global economic collapse come to fruition. A drop in the airline industry throughout the Middle East and southwest Asia could mean dozens of brand new, high-tech... and empty... buildings.

"If all the proposed... facilities are built, then there will be a global glut, let alone regional," says Bharat Malkani, chairman of Mumbai-based maintenance provider Max Aerospace and Aviation Ltd. To be truly successful, he adds, companies will need "the ability to sustain lean periods when the industry goes through a downturn."

Both countries are banking heavily on maintenance contracts to fuel their already-booming economies. The Confederation of Indian Industry predicts revenue of $4 billion annually by 2012 in MRO work -- and to do it, Indian maintenance facilities will need to duke it out with their rivals in Dubai, less than a three-hour flight away.

In the short term, that also means competition for skilled technicians, maintenance engineers... and, for that matter, crews to build the facilities. Each is taking a different approach to filling the ranks, with India's efforts focused on training the local population, while Dubai -- flush with oil revenues -- is attracting personnel from around the world.

"If there aren't enough skilled engineers at the right price, some facilities will have to adjust supply accordingly," said Asia Pacific Aviation executive Peter Harbison.

India is also handicapped by its own bureaucracy, and a lack of available infrastructure... whereas the UAE has a friendlier business climate, and plenty of space. The difference has already cost one Indian maintenance provider to set its sights on Dubai: Livewel Aviation Services, based in Mumbai, altered its original plans to open an $80 million MRO facility in India, and now plans to build in Dubai instead.

"Dubai is also close to all countries including India and our target customers will be not only from India, but also from Middle Eastern and European markets," said Livewel Chief Executive Burzin Daver.

In addition to local contracts, MRO operations in Dubai also hope to lure European, and even American, carriers to send business their way. Rob Mionis, chief executive of Dubai Aerospace Enterprise's engineering and manufacturing unit, says most facilities in Europe and the US are "older operations with inherent limitations in terms of technology and capabilities," whereas "Dubai's center will remove such limitations."

Time will tell whether that business plan will bear fruit... or, survive an industry-wide downturn. Stay tuned.

FMI: www.dubaiaerospace.com, www.ciionline.org