Fast 5: MHIRJ Pursues Diversified Maintenance Strategy

MHI RJ Aviation Group (MHIRJ) is expanding its horizons beyond traditional CRJ Series maintenance through platform diversification and hydrogen-electric propulsion ventures. Ismail Mokabel, senior vice president and head of aftermarket at MHIRJ, speaks with Lindsay Bjerregaard about the company’s aftermarket growth strategies.

MHIRJ has historically focused on CRJ Series maintenance, but now it is looking to diversify to other platforms. What will this entail?

We are the largest regional MRO in North America and we have over 30 lines of heavy maintenance. We want to utilize that infrastructure to continue to create value for our CRJ customer base, but also drive value for customers that are flying platforms other than the CRJ. That helps us in two folds. One, it’s a new, blue ocean for us to grow and offer our services to a different client base that can help manage the different risk profiles of aviation cycles, but [it can] also open new frontiers for us to tailor to customers that would value from having that infrastructure available. They might be flying the CRJ today, but have a mixed fleet, and they are looking for us to support them as well on other platforms that support their network.

We started this vision a couple years ago and have been pretty successful. We wanted to enter new markets where the CRJ flies. Today, the majority of the CRJ fleet is flying in commercial applications, but there’s also a market in semi-private travel and charter operation that grew during COVID, and that became a new frontier for us to also help grow. That was one of the markets where we wanted to diversify and also help scale because, ironically, that market is not as impacted by the pilot shortage like the commercial world.

We also wanted to go after other platforms. A lot of our customer base has dual fleets, so they fly the CRJ and the Embraer fleet in the regional network. It was pretty complementary to start offering MRO services for the Embraer platform. We’ve been successful in winning Embraer work, bringing it into our West Virginia facility.

Last year you expanded your West Virginia Service Center. What’s driving this growth?

We’ve added 100,000 ft.² of state-of-the-art hangar space purposely built in support of this diversification strategy. It can also accommodate larger aircraft, so the specs with which we’ve chosen to build these hangars were designed in a way to help us grow all the way up to narrowbody aircraft, which is another frontier of growth that we are pursuing as well. It is expected to be one of the platforms that would continue growing quite a bit from an aftermarket perspective. We’re positioning ourselves through this most recent investment in West Virginia to have the right infrastructure to be able to tailor to that market.

In North America we have about 70% of the CRJ fleet flying and a pretty extensive regional network as well, in addition to our appetite to go after the small narrowbody fleet. It is a bit more of a natural sort of progression for us, and this is where we believe we’re going to deploy most of our capital investments in North America, given our presence, our scale and the labor network that we have successfully built and continued to nurture here over time.

Last year MHIRJ also expanded its presence in Europe by adding Air Nostrum Engineering and Maintenance as an authorized service facility. How has international expansion been going?

Our strategy in Europe was to align with partners that have the same type of vision and appetite for growth. Air Nostrum has been a great supporter of the CRJ platform, and they also fly other regional platforms as well. They have created an infrastructure that supports their own airline, but also other smaller airlines in Europe, so they can tailor to beyond the airline needs. We found a complementary strategic alignment here where we see them as a good partner with the same strategy and alignment for growth.

We have a pretty good infrastructure as well in Valencia that we wanted to enable technical support, and to position them as our storefront per se in Europe, in support of the European market.

The aftermarket has seen growing action in the component repair space. MHIRJ also offers component repair and overhaul capabilities, so what trends are you seeing in this segment?

That’s actually one of our biggest success stories that we’ve done organically, and we’re pretty active in continuing to grow on that front. What we found is in our two service centers is that we had a lot of back shop capabilities that we’ve developed over time to support the turnaround time of the heavy maintenance shops. When you have capability to repair components or even manufacture components on site, that gives you a bit of an edge in supporting your turnaround capability for your customer base. We decided to combine all these back shop capabilities and turn it into a business in 2021.

Now, we’ve opened a brand new component repair and overhaul facility at West Virginia Industrial Park. We took all that unique capability that we’ve developed over time in the service center and positioned it as a service offering for customers, and that really opened that market space for us quite a bit. We were able to grow the business from inception to where we are today five times in a span of two years, and we want to really grow that business again by 10 times over the next five years.

That next growth cycle is going to require us to get into different ATA chapters to complement our capability and structural repairs. Some would maybe require us to get into the M&A market to acquire some of that capability and add it to our network.

MHIRJ is involved in ZeroAvia’s efforts to develop hydrogen-electric engines for regional jets, offering engineering services, aircraft integration and certification support for retrofitting CRJ700 regional jets. What lessons have you learned from this project so far?

We are in the repair business and, when it comes to the notion of sustainability, I think reduce, reuse and recycle kind of comes first before you start reducing the carbon footprint of anything else you want to produce. Being in the aftermarket and the business of repairing components, getting the aircraft that have tremendous sunk carbon footprints already back in the air and extending the life cycle is actually one of the best things we can do in support of sustainability. We are happy to heavily participate in that with the CRJ fleet.

What’s also key for the environment is how we continue keeping that fleet flying, and providing retrofit capabilities that can enable it to capture the latest and greatest propulsion technology out there.

I think our collaboration with ZeroAvia really does both. First, it helps co-develop with our partners technology that would create a revolution in propulsion by providing hydrogen-based solutions but, at the same time, providing it in a way that can retrofit the existing fleet. By supplementing the existing propulsion with a new propulsion solution, you don’t have to produce a brand new aircraft that has the latest technology—you can apply the latest technology on the existing fleet, which I think is a win-win solution for us and our partners with ZeroAvia.