Singapore's SIA Engineering Company (SIAEC) is making its first investment in the development of an aircraft engine.

It is taking a small stake in a Risk-Revenue Sharing Programme with aircraft engine maker Pratt & Whitney (P&W). P&W is building a next-generation engine for single-aisle aircraft.

Signing the latest deal with P&W, SIAEC is recognising the changing landscape in the maintenance, repair and overhaul (MRO) business.

SIAEC sees a growing trend of airlines entering exclusive deals with original equipment manufacturers (OEMs) directly for servicing.

William Tan, president, CEO, SIA Engineering Company, said: "The industry changes so rapidly. Today, with the airlines going to agreements with the OEMs, it is now very necessary for us to plug in together with OEMs upfront in the total support, total care of the engines when it is sold initially to the customer.

"The traditional MRO facilities will certainly face a lot of competition from the OEMs in the market place and we have the advantage of having the joint ventures with OEMs. Being able to participate in the development of the new engine puts us together with them in position to market our services upfront."

To prepare for further growth, SIAEC is investing for the first time in the development of an aircraft engine, which is due to enter service in 2013. The engine is expected to help deliver double-digit improvements in fuel efficiency and environmental emissions, and a 50 per cent reduction in noise.

The new engine will power the Bombardier CSeries aircraft and Mitsubishi Regional Jet (MRJ) aircraft - seen to be a growth segment.

Todd Kallman, president, Comm. Engines and Global Services, Pratt & Whitney, said: "If you look at the forecast over a 20-year period, there is going to be about 22,000 in what we call the single-aisle market.

"The CSeries and MRJ cover seat classes that cover about 50 per cent of that market reach, so if you go through that longer term outlook, there is a great opportunity."

SIAEC will take a three per cent stake in the CSeries engine programme, and a one per cent stake in the MRJ programme. Both parties declined to disclose the value of the deal.

The terms provide for Eagle Services Asia, a joint venture between the two companies, to become the first centre to perform MRO work on the new engine.

The upstream investment is expected to ultimately allow SIAEC to benefit from more work downstream of the value chain.