Despite acute manpower shortages and supply chain constraints, the maintenance, repair, and overhaul (MRO) segment is looking ahead to a brisk decade to compensate for shortfalls caused by Covid-19, according to leading forecasters.<\/p>\n
In a 10-year forecast published in February, consulting firm Oliver Wyman estimates\u00a0the world’s commercial fleet will expand by 33 percent to more than 36,000 aircraft.\u00a0\u201cAviation\u2019s global aftermarket, which provides the MRO to keep the fleet flying, expanded 18 percent in 2022 and is expected to grow another 22 percent this year, topping $94 billion\u2014a mere 2 percent below its 2019 peak,\u201d the report said. \u201cBy 2033, it will reach $125 billion\u2014a compound annual growth rate of 2.9 percent.\u201d<\/p>\n
Mike Stengel, principal of Michigan-based\u00a0AeroDynamic Advisory, also expressed a bullish outlook for the MRO business.\u00a0\u201cDespite all the macro challenges faced in 2022\u2014omicron, Russia-Ukraine, rolling lockdowns in China\u2014demand in the commercial MRO segment really started to hit its stride in 2022 as the \u2018hangover\u2019 effects of green-time engines [with little remaining time to overhaul]\u00a0and inventory burn-down started to subside,\u201d he told\u00a0AIN<\/strong>.<\/p>\n However, the industry quickly ran into several challenges, including tight labor availability, constraints across the supply chain (partly driven by tight labor availability),\u00a0record price increases, and teething problems on new-generation engines that resulted in lower-than-expected reliability or time on-wing.<\/p>\n \u201cSlower-than-expected deliveries prevented older aircraft from being retired; instead, they continued to operate longer and demand more maintenance,\u201d he said. \u201cThe delay in retirements has in turn delayed the supply of cost-effective used or serviceable material (USM).\u201d<\/p>\n Looking to 2023, he said the industry continued to cope with the same challenges, although some signs of improvement have appeared lately. \u201cInflation appears to have peaked, actions are being taken to address labor and supply chain bottlenecks, and aircraft deliveries continue to\u2014slowly\u2014improve,\u201d he said. \u201cNo one is expecting all of these problems to be solved this year.\u201d<\/p>\n Third-party MRO providers, such as Lufthansa Technik and counterparts\u00a0in China and Singapore,\u00a0have all kept busy carving niches and finding ways to serve international markets, noted Stengel.<\/p>\n \u201cIt\u2019s hard to compare all of the major MRO providers on a like-for-like basis because they\u2019ve all defined a focus area for themselves,\u201d he explained. \u201cLufthansa Technik is perhaps the most \u2018global\u2019 MRO integrator in terms of geographic exposure and breadth of services, Singapore continues to be the destination of choice to serve customers outside of China, and Chinese MROs of course focus primarily on serving Chinese customers.\u201d<\/p>\n Stuart Hatcher, chief economist at the UK’s IBA consultancy, cited evidence showing that the success of MRO, and even more pointedly, cargo, offset Lufthansa Group’s dismal airline division performance, which saw an operating loss of \u20ac300 million ($322 million) in 2022.<\/p>\n In general, a concentration of services to fewer vendors has left\u00a0the remaining incumbents stronger. \u201cAn example of this was SR Technics exiting the component power-by-the-hour (PBH) market,\u201d Stengel continued. \u201cMoreover, with airlines so thinly resourced, they will likely rely more heavily on their MRO vendors, which may mean more outsourcing.\u201d<\/p>\n While supply chain constraints in the aftermarket relate\u00a0mainly to engines, the segment is coping with several inter-connected challenges\u2014including the aforementioned new engine teething problems, lower reliability\/time on-wing for new engines, and strong demand for overhauls on mature engines\u2014that all soak\u00a0up shop visit capacity and demand for new material, Stengel concluded.<\/p>\n","protected":false},"excerpt":{"rendered":" Despite acute manpower shortages and supply chain constraints, the maintenance, repair, and overhaul (MRO) segment is looking ahead to a brisk decade to compensate for shortfalls caused by Covid-19, according to leading forecasters. In a 10-year forecast published in February, consulting firm Oliver Wyman estimates\u00a0the world’s commercial fleet will expand by 33 percent to more …<\/p>\n","protected":false},"author":1,"featured_media":6668,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[92,102],"tags":[],"class_list":["post-6667","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-airports","category-featured-en"],"yoast_head":"\n