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Military to privatize aircraft maintenance

The military aircraft maintenance market is to be opened to local civilian defense contractors next year in a move that is expected to create more than NT$10 billion worth of business opportunities, the Ministry of National Defense said.

All aircraft in the three services -- including fighter planes, trainers, transport planes and helicopters -- are to be maintained by civilian contractors in the future, the defense ministry said last week.

Besides military aircraft, other types of major hardware such as tanks and fighting ships are also scheduled to be released to the civilian sector for maintenance, Deputy Chief of the General Staff General Ho Shou-yeh (何守業) said.

Ho made the announcement at a closed-door meeting with representatives from major domestic aviation and aerospace companies yesterday, where he briefed corporate representatives on the military's plan to open the aircraft maintenance market to the civilian sector.

According to the plan, the military is to begin the practice next year. The market is estimated to be worth more than NT$10 billion a year, the defense ministry said.

A high-ranking military official, who attended yesterday's meeting, said in private that the main purpose for the opening of the maintenance market was to save money.

"Because of the Chingshih personnel streamlining project running for the past few years, the military has experienced a drastic reduction in manpower," said the official, who declined to be identified.

"The only thing we could think of to solve the manpower shortage problem was to adjust the logistics system. The solution is to seek help from the civilian sector. By establishing a strategic alliance with civilian companies, the military can save not only personnel costs, but also operational costs for logistics affairs," the official said.

"We aim for a `win-win' situation for both parties. In the past, we had also cooperated with civilian companies in maintaining military hardware. But we were unable to give them any commitment at the time," he said.

"Now we are able to give them commitments. One of those commitments is the guarantee of a long-term contract, say 15 years, to them. With the contract, civilian companies can be certain that their investment will not be wasted," he said.

Not all of the military aircraft components will be released for maintenance by civilian companies, the official said. Highly sensitive items such as weapons and fire-control systems are to be excluded.

Foreign defense contractors are also welcome to get involved in the business, but they have to go through the "government-owned, contractor-operated" process, the official said.

"[The process] is an official process that the military is to adopt for the establishment of strategic alliances with civilian companies. We have to protect domestic companies," he said.

Major domestic aviation and aerospace companies, including EVA Air, China Airlines, Asia Air, and Aerospace Industrial Development Corporation, have all expressed interest in bidding for the business associated with the opening of the military aircraft maintenance market.
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