apac aerospace human resource industry - emerging training opportunities

APAC Aerospace Human Resource Industry - Emerging Training Opportunities

Kunal Sinha, ConsultantAerospace & Defense

12th May 2010

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Market Coverage and Definitions

Aerospace Human Resource Training

Segments covered in this research service

1. Air traffic Control Training : Aerodrome, Area and Approach

2. Pilot Training: PPL (Private Pilot License), CPL (Commercial Pilot License), ATPL (Air Transport Pilot License), MPL (Multi-Crew Pilot License)

3. Aircraft Maintenance Technicians / Engineers : Mechanics. Technicians, Engineers (LAME) (Avionics, Mechanical)

Base Year for Calculation - 2009Period for Forecast - 2010-2020

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Focus Points

Frost & Sullivan Value Proposition

Dynamics of the Aviation Education and Training Industry

Market Forecast - Outlook for Pilots, Engineers, ATCs in Asia Pacific by 2020

Growth Opportunities and Strategies

4

Frost & Sullivan Value Proposition

5

About Us

Founded in 1961

10,000+ clients worldwide

including emerging companies,

the global 1000, and the

investment community

Over 1,700 Consultants /

Analysts across 37 global

locations in 21 Countries

Offer the exclusive Growth

System including: Growth

Partnership Services,

Growth Consulting and Growth

Team Membership

On-going involvement in

International Research

Initiatives in Commercial

Aerospace, Defense &

Homeland Security

Helping clients create and

Sustain Competitive

Advantage across Military,

Civil and Commercial markets

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Aerospace and Defense Focus Areas

Airborne Platforms & Avionics

Homeland Security

Training & Simulation

UAVs & Autonomous Systems

Remote Sensing & Satellites

Commercial Aviation & MRO

ATM & Airports

Defense & C4ISR

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Our Offices around the globe

BangkokKuala Lumpur

SingaporeJakarta

Mumbai

BeijingTokyo

Toronto Frankfurt

New York

San AntonioShanghai

Sao Paulo

Buenos Aires

Sydney

ParisLondon

Milan

Warsaw

Dubai

Mexico City

Cape Town

Bangalore

Seoul

Delhi

Chennai

Tel Aviv

Bogota

Calcutta

Mebourne

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Spread of Consulting Offerings S

trat

egic

Tac

tical

GreenfieldGreenfieldBrownfield

Brownfield

Product/Service Re-Launch

Product/Service Re-Launch

Marketing Strategy Rationalization

Marketing Strategy Rationalization

Customer Perception

Study

Customer Perception

Study

Product Benchmarking

Product Benchmarking

Research Validation

Research Validation

IPO ValidationIPO Validation

New Product/ Service Launch

New Product/ Service Launch

Market EntryMarket Entry

Marketing Plan Formulation

Marketing Plan Formulation

Customer Behavior Study

Customer Behavior Study

Opportunity AnalysisOpportunity Analysis

New Geographic Market Study

New Geographic Market Study

New Technology/ Product Study

New Technology/ Product Study

Competitive Benchmarking

Competitive Benchmarking

Ana

lytic

al

Sco

pe

Nature of Work

BPRBPR

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Dynamics of the Aviation Education and Training Industry

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Dynamics of the Aviation Industry

The strong growth of aviation activity is the biggest driver of aerospace human resource requirementThe strong growth of aviation activity is the biggest driver of aerospace human resource requirement

Asia Pacific becoming the global hub of Aerospace Activities

Source: Frost & Sullivan Source: Frost & Sullivan


Global Number of Aircrafts

Increase in Demand for : - Pilots- Cabin Crew

Increase in Demand for :- Air Traffic Controllers- Aviation Management

40% of all aircrafts to be

in Asia by 2029

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• The Asia Pacific region including Malaysia is going to have high growth in the MRO sector

• The MRO Industry is expected to get more high tech in the next decade. This will require more skilled

manpower to fuel the growth

• The Asia Pacific region including Malaysia is going to have high growth in the MRO sector

• The MRO Industry is expected to get more high tech in the next decade. This will require more skilled

manpower to fuel the growth

For the Asia Pacific region to maintain its competitive advantage in the MRO space, the training should be

revamped and be made more skill based

For the Asia Pacific region to maintain its competitive advantage in the MRO space, the training should be

revamped and be made more skill based


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CNN (news):

A shortage of experienced air traffic controllers has resulted in a "staffing emergency" that is jeopardizing safety in the sky and on runways

MSNBC.com (Worldwide Pilot Shortage affects flight

safety)

As the Garuda Indonesia Boeing 737 approached Jakarta's main airport, veteran Capt. Marwoto Komar instructed his rookie co-pilot to extend the flaps to slow the plane for landing.Seconds later, the Boeing slammed into the runway at double the normal landing speed, careened into a rice paddy and caught fire — killing 21 people.

The Hindu (news)

Airframe inspections are labour intensive (70 per cent labour and 30 per cent materials) and constitute about 13 per cent of operating costs. At present, this 13 per cent reflects an annual spend of $70 million. The success of any MRO is fully dependent on its human resource, which determines the efficiencies in output. Skill shortages continue to plague the global industry in spite of recession and this trend is set to continue through the next 5-10 years.

• The rising shortage of human resource is

both a threat to the aviation industry & also

an opportunity for investment

• APAC countries can become the global

aviation training hub, attracting students

around the globe, and also cater to

domestic needs

• The rising shortage of human resource is

both a threat to the aviation industry & also

an opportunity for investment

• APAC countries can become the global

aviation training hub, attracting students

around the globe, and also cater to

domestic needs

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Drivers & Restraints

Reduced interest in the new generation in choosing an aviation career

Declining air traffic and freight movement due to the global recession

Allied Industry Growth e.g. Aerospace and defense

Changing Aviation Structure – GDP growth, Removal of Infrastructure Constraints, Deregulation, Liberalization, LCC’s Changing Business Model

Aging working population leading to a large number of open positions

Industry DriversIndustry Drivers

Industry RestraintsIndustry Restraints

Increasing Operational Cost

Regulatory Changes

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Gaps & Challenges

Gap Between Tertiary Education & Aviation

Industry

Aviation not an attractive

sector compared to other

industries

Lack of simulators and training

equipment and facilities in

Asia Pacific to meet rising

demands

Training of qualified personnel

takes time, causing a gap

between retiring and new

aviation personnel

Lack of Qualified Instructors

Training centers and

universities are expanding

aviation courses to meet

demand

Nurture interest in the aviation

industry to younger

generations

Standardization in training

syllabus due to the diverse

countries in Asia Pacific

Integrated training solutions

offered by some

manufacturers

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License & Skill Requirement : ATC (Air Traffic Control)

Typical Training Structure Typical Training Structure

Theory & Simulator Training (One Year)

Training on assigned sector

On the Job TrainingDiploma of Aviation

(ATS)

Licensing ProcedureLicensing Procedure

Diploma of Aviation(ATS)

Journeyman Controller (licensed)

Full Performance Controller

Training with an ATC group

Expertise on all the sectors

Group Support Specialist

Team Leader

Safety Specialist

Operations Manager

Civilian Air Traffic Controllers licensing is standardizedby ICAO.There are five ratings which are provided as sub-qualification:

• Area (Procedural)• Area Radar• Approach (Procedural),• Approach Radar• Aerodrome

Most ab initio is training is towards licensing for the job of area-en-route controller.Recruitment for tower & airport is done from experienced

controllers after proper on the job training.

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License & Skill Requirement : Pilot Training

ATPL

Current Industry StructureCurrent Industry Structure

Ab Initio

Transition Course

PPL CPLMulti

EngineIFR MCC

Type Rating

RecurrentTraining

Instructor

PF PF/PNF PF PF/PNF

MPL

IFR - Instrument Flight RulesMCC - Multi Pilot Crew Coordination

TrainingCRM - Crew Resource ManagementTEM - Threat & Error ManagementPF/PNF - Pilot Flying/Pilot Non Flying

Future Industry StructureFuture Industry Structure

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License & Skill Requirement : Technicians and Engineers

Aircraft Engineers can be classified into:• Licensed Aircraft Engineer• Non-Licensed Engineers or Aircraft Mechanics

Basic License: For Example EASA,

CAAS, ICAO license

Specialization

B1 License: Specializing in

mechanical parts & engines

B2 License: Specializing in

CRS or avionics systems

Type Rating

Specialization in a particular aircraft, for example Boeing 747-

400 type rating

Familiarization Course

Recency Requirement

If Stopped working for 2 years on an

aircraft

Licensing Programme is extensive and require a long time line

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Market Forecast - Outlook for Pilots, Engineers, ATCs in Asia Pacific by 2020

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ATC Personnel Requirement (2010 – 2020)

Yearly Requirement

Increase in Demand

Retirement/Attrition

Air Traffic Controller Requirement is to increase from 2010-2020 at a CAGR of:

• Malaysia: 6.35%• Asia-Pacific: 6.19%• Middle East: 4.68%

In the period of 2010 to 2020, the total number of additional ATC that require training

• Malaysia: 860• Asia-Pacific: 11858• Middle East: 1388

Total ATC demand in APAC & Middle EastTotal ATC demand in APAC & Middle East

Source: Frost & Sullivan Source: Frost & Sullivan Highlights

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Pilot Requirement (2010 – 2020)

Highlights

Pilot Requirement is to increase from 2010-2020 at a CAGR of:


In the period of 2010 to 2020, the total number of additional Pilots that require training

• Malaysia: 3152• Asia-Pacific: 68710• Middle East: 7352

Yearly Requirement

Increase in Demand

Retirement/AttritionTotal Pilot demand in APAC & Middle EastTotal Pilot demand in APAC & Middle East


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Technicians and Engineers Requirement (2010 – 2020)

Highlights

Maintenance Mechanics and Technicians demand is to increase from 2010-2020 at a CAGR of:


In the period of 2010-2020, the total number of additional Technicians & Mechanics that require training

• Malaysia: 7022• Asia-Pacific: 107285• Middle East:17165

Yearly Requirement

Increase in Demand

Retirement/AttritionTotal Technicians & Engineers demand in APACTotal Technicians & Engineers demand in APAC


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Growth Opportunities and Strategies

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Training Opportunities: Framework

Immediate Gain(High Staff Shortage and High

Demand )

Avoidance Zone ( Low Staff Shortage and Low

Demand )

Sustained Maximum Opportunity

( High Staff Shortage and High Demand )

Future Market( Low Staff Shortage and High

Demand )

Opportunity Grid

Opportunity Grid is based on the mapping of the APAC countries on two parameters – Current Staff

Shortage for FY 2009 Vs CAGR (2010-2020) of annual demand.

Opportunity Grid is based on the mapping of the APAC countries on two parameters – Current Staff

Shortage for FY 2009 Vs CAGR (2010-2020) of annual demand.

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Opportunities : ATC Training

Immediate Gain Sustained Maximum Opportunity

• Category A (Malaysia): Air Traffic Controller Training for home students in Malaysia is controlled by DCA. Hence a collaboration with DCA provides a sustained source of students without any competitor.

• Category B (Brunei, Cambodia, Laos, Vietnam): High growth in ATC demand in these countries provides future market potential. First mover advantage provides market opportunity.

• Category C (Indonesia, Thailand, Philippines) & Category D (Middle East): These are the regions of high growth and also huge shortage in air traffic controllers. Potential countries with sustained market opportunity.

Air Traffic Controllers Demand Opportunity GridAir Traffic Controllers Demand Opportunity Grid

Avoidance Zone Future Market


Category A

Category B

Category C

Category D

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Opportunities : Pilot Training

• Category A (Malaysia): Pilot training demand is high but shortage is minimal. Tapping this market requires acquiring one of the existing schools.

• Category B (Brunei, Cambodia, Laos): High growth as Pilot demand in these countries provide future market potential. European Flying Training schools are already entering the market.

• Category C (Indonesia, India, Vietnam): Provides the maximum opportunity due to the huge demand from India & high shortage.

• Category D (Middle East): Large number of foreign pilots in the Middle East region provides opportunity to train homegrown pilots.

Pilot Demand Opportunity GridPilot Demand Opportunity Grid


Immediate Gain

Avoidance Zone


Future Market

Category A

Category B

Category C

Category D

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Opportunities : Technicians Training

• Category A (Malaysia): Aircraft Maintenance Future Demand is high but the current shortage is low. This requires expanding the skilled manpower supply to cater to rising demand. Acquire training schools.

• Category B (India, Singapore and Australia): Existing MRO hubs. Heavy future demand and high shortage provides maximum training opportunity. But category B is adding sufficient capacity.

• Category C (Other APAC Countries) :They represent the Highest future demand but low shortage currently. They should be the target market for growth.

• Category D (Middle East): Though the Middle East countries have high demand and minimal current shortage, the requirement is expected to increase. Chances of attracting students from the region is bleak but provides an excellent job market.

Technicians Demand Opportunity GridTechnicians Demand Opportunity Grid

Immediate Gain

Avoidance Zone


Future Market

Category A

Category B

Category C

Category D


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Aviation Personnel Requirement Opportunity : Summary

Training Segments

Growth %

Fixed Investment

Variable Cost

Career Lucrative

Cost Saving through Synergy

Aircraft Technician

> 6.4% Medium HighLow-

MediumLow

Air Traffic Control

> 6.1% High Low High High

Pilots > 5.8% High High High Medium

Cabin Crew > 6.7% Low Medium Medium Medium

• Aircraft Maintenance and Air traffic control training seems to be most lucrative for training investment.

• If proper synergy can be created between the training schools, a lot of investment costs can be saved or optimized.

Bottom-line

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Next Steps

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Join us at our annual Growth, Innovation, and Leadership 2010, 19-20 October 2010, Kuala Lumpur (www.frost-gil.com)

Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news)

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For Additional Information

Donna JeremiahCorporate CommunicationsAsia Pacific603 6204 [email protected]

Subhranshu Sekhar DasDirectorAerospace & Defense603 6207 [email protected]

Kunal SinhaConsultantAerospace & Defense603 6207 [email protected]

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