Indonesia Aircraft MRO Market Outlook to 2028

Indonesia Aircraft MRO Market Overview

• The Global Aircraft MRO market was valued at USD 88 Bn in 2023, witnessing steady growth due to increasing air traffic and the aging aircraft fleet, necessitating maintenance and repair services.
• Key players in the Indonesian Aircraft MRO market include PT Garuda Maintenance Facility AeroAsia, GMF AeroAsia, PT. Cardig Aero Services Tbk, and others. The market is driven by factors such as the need for fleet modernization, regulatory mandates for aircraft maintenance, and the rise in outsourcing of MRO services by airlines to reduce operational costs.
• In 2024, the Indonesian government allocated IDR 30 trillion (USD 2 billion) for aviation infrastructure development. This investment includes building new airports and expanding existing facilities to accommodate growing air traffic. Improved aviation infrastructure enhances MRO capabilities, supporting the MRO market's growth.

Indonesia Aircraft MRO Market Analysis

• The primary products in the Indonesian Aircraft MRO market include airframe maintenance, engine maintenance, component maintenance, and line maintenance services. The rise in passenger traffic and new aircraft deliveries necessitates regular maintenance and repair services, boosting the demand for MRO services.
• In 2024, Garuda Indonesia announced a fleet modernization program, replacing older aircraft with newer models. This initiative involves significant MRO investments to maintain operational efficiency. The program aims to improve fuel efficiency, reduce maintenance costs, and enhance passenger safety, positively impacting the MRO market.
• Eastern Indonesia dominates the Indonesia Aircraft MRO market. Bali, a major location in East Indonesia, has seen substantial investments in MRO facilities. FL Technics, in partnership with PT Angkasa Pura Properti, is developing a major MRO hub at I Gusti Ngurah Rai International Airport in Bali, covering 17,000 square meters with an initial investment of USD 25 million​.

Indonesia Aircraft MRO Market Segmentation

The Indonesia Aircraft MRO market is segmented based on various factors. Here are three key segmentation types with their sub-segments and estimated market share ranges:

By Service Type: Indonesia aircraft MRO market segmentation by service type is divided into airframe maintenance, engine maintenance, component maintenance and line maintenance. In 2023,airframe maintenance holds the largest market share due to regulatory requirements for regular inspections and repairs to ensure structural integrity. Airframe maintenance is essential for ensuring the safety and airworthiness of aircraft, making it a priority for airlines and MRO providers alike.

By Aircraft Type: Idonesia aircraft MRO market segmentation by aircraft type is divided into narrow-body, wide-body, regional and business aircraft. In 2023, Narrow-body aircraft dominate the market due to their widespread use in domestic and short-haul flights. These aircraft require frequent maintenance, driving demand for MRO services.

By Region: In 2023,Indonesia Aircraft MRO market segmentation by region is divided into Java, Sumatra, Sulawesi, and Other Regions. Java dominates the market due to its concentration of airports, airlines, and MRO facilities. Being the most populous island in Indonesia, Java has a significant share of air traffic and aviation activities. PT Garuda Maintenance Facility AeroAsia, headquartered in Java, benefits from its strategic location and proximity to major airports and airline hubs, strengthening its dominance in the region.

Indonesia Aircraft MRO Market Competitive Landscape

• GMF AeroAsia Expansion: In 2023, GMF AeroAsia announced a USD 200 million expansion to increase maintenance capacity. The project includes new hangars and advanced equipment acquisition, enhancing GMF AeroAsia's ability to serve more clients domestically and internationally.
• Lion Air Group and FL Technics Partnership: In 2023, Lion Air Group partnered with FL Technics to establish a new MRO facility in Indonesia, involving a USD 150 million investment. This joint venture aims to reduce dependence on foreign MRO services, create over 500 jobs, and boost local MRO capabilities.
• PTDI Avionics Testing Facility: In August 2023, FL Technics, a subsidiary of Avia Solutions Group, partnered with PT Angkasa Pura Properti to develop a new aircraft MRO facility at I Gusti Ngurah Rai International Airport in Bali. This facility, covering 17,000 square meters, represents an initial investment of USD 25 million

Indonesia Aircraft MRO Market Analysis

Indonesia Aircraft MRO Market Growth Drivers

• Expansion of Low-Cost Carriers (LCCs): The proliferation of LCCs like Citilink and Lion Air in 2024 significantly contributed to aviation sector growth, with LCCs accounting for nearly 50% of total air traffic. These airlines operate more flights, leading to increased wear and tear on aircraft. Consequently, the demand for MRO services has risen as LCCs prioritize fleet maintenance to sustain operational efficiency and safety standards.
• Increasing Air Traffic in Indonesia: In 2024, Indonesia's air traffic surged, with over 120 Mn domestic and international passengers annually. This increase is driven by the expanding middle class and rising disposable incomes, making air travel more accessible. Domestic passenger traffic grew in 2023, reflecting a strong post-pandemic recovery, leading to higher demand for MRO services to ensure aircraft safety and reliability.
• Aging Aircraft Fleet: As of 2024, many of Indonesia's commercial aircraft fleet is over 10 years old. Older aircraft require more frequent and intensive maintenance, boosting the MRO market. Airlines like Garuda Indonesia and Lion Air invest heavily in maintaining their aging fleets to comply with safety regulations and enhance operational efficiency, increasing the demand for MRO services.

Indonesia Aircraft MRO Market Challenges

• Shortage of Skilled Workforce: In 2024, the Indonesian MRO market faces a skilled labor shortage, with a deficit of qualified technicians and engineers. This shortage hampers the industry's ability to meet growing MRO demand, affecting turnaround times and overall maintenance quality.
• High Operational Costs: Operational costs in the Indonesian MRO sector are high due to the importation of advanced technologies and equipment. In 2024, the cost of imported aviation parts and maintenance equipment rose by 20% due to currency fluctuations and global supply chain disruptions, impacting MRO providers' profitability and pricing competitiveness.
• Regulatory Compliance and Bureaucratic Hurdles: Compliance with stringent international aviation safety and maintenance regulations presents significant challenges for Indonesian MRO providers. The Civil Aviation Safety Regulations (CASR) require rigorous standards, which can be costly and time-consuming. Bureaucratic delays in obtaining necessary certifications further complicate the regulatory landscape, affecting MRO operations efficiency.

Indonesia Aircraft MRO Market Government Initiatives

• Tax Incentives for MRO Investments: In 2022, the government introduced tax incentives for MRO infrastructure and technology investments. These incentives include tax breaks and subsidies to reduce financial burdens on MRO providers. These incentives attracted substantial investments, modernizing facilities and adopting advanced maintenance technologies.

• Aviation Workforce Development Program: Launched in 2021, the Aviation Workforce Development Program addresses the MRO sector's skilled labor shortage. The initiative focuses on training and certifying technicians and engineers to meet international standards. The program successfully trained over 1,500 new professionals, enhancing the industry's capability to handle growing MRO demand.

• Infrastructure Development Fund: Established in 2023, the Infrastructure Development Fund allocates resources for aviation sector projects, including MRO zones at airports. Major airports like Soekarno-Hatta International and Sultan Hasanuddin International received funding for MRO infrastructure improvements, boosting the industry's capacity.

Indonesia Aircraft MRO Market Future Outlook

The Indonesian Aircraft MRO market is expected to show significant growth, driven by increasing air travel demand, ageing aircraft fleet, and technological advancements.

Future Market Trends

• Increased Foreign Investment and Strategic Partnerships: The Indonesian MRO market will witness a rise in foreign investments and strategic partnerships. International MRO giants will announce joint ventures with local companies to establish advanced maintenance facilities in Indonesia. These collaborations will bring in capital, technology, and expertise, enhancing the local MRO industry's capabilities and competitiveness.
• Expansion of MRO Facilities: To meet growing maintenance demand, Indonesian MRO providers will expand their facilities. GMF AeroAsia and Batam Aero Technic will announce significant expansions, including new hangars and upgraded facilities. This expansion will increase service capacity, improve maintenance efficiency, and cater to the needs of domestic and international clients.
• Digital Transformation in MRO Operations: The Indonesian MRO market will embrace digital technologies such as predictive maintenance, AI, and blockchain. Leading MRO providers will implement AI-driven predictive maintenance systems utilizing real-time data to predict and prevent potential failures. This trend will enhance operational efficiency, reduce downtime, and lower maintenance costs, positioning the industry for future growth.