Lion Air’s engineering company, Batam Aero Technic (BAT) and Garuda Indonesia’s Garuda Maintenance Facility (GMF) AeroAsia signed a cooperation agreement Aug. 14 to develop and build Phase 3 of BAT’s MRO facility in Batam Hang Nadim airport.

The agreement will see around IDR10 trillion ($701.8 million) injected through 2028, including the construction of eight hangars that could accommodate 24 narrowbody aircraft across an area of 24 hectares (59 acres).

Both parties also signed another joint venture deal with tire manufacturer, Michelin, for a tire rethread facility at Hang Nadim. 

The company hopes the facility can increase MRO intake from Indonesia and the region, and minimize outsourced work by 10% within 10 years.

The Lion Air Group—comprising Thai Lion Air, Malindo Air, Batik Air, and parent company Lion Air—has a fleet of more than 200 Boeing 737s, and over 400 Airbus A320s and 737s on order. Garuda’s 737s and LCC Citilink’s A320s will also benefit from the site. 

GMF president director Tazar Marta Kurniawan told Indonesia newspaper Kompas the tie-up is part of the company’s so-called “Acceleration Action” to cooperate with various manufacturers and MRO companies and increase the business diversification of GMF. He added that there would be closer coordination between the two companies to prevent “double investment” in the sector.

The site was preferred because of its proximity to Singapore as a logistics hub, which is 20km (12.5 miles) away across the sea and its accessibility to spares and parts. BAT currently has four hangars at Hang Nadim, first built in 2013.

BAT and GMF also inked a business agreement with aviation training center AMTO to ensure the availability of aviation human resources, such as engineers and technicians in the country. 

Chen Chuanren,