Aviation sector has been shaken up by the impact of the global pandemic, businesses have struggled and continue to do so. MRO’s are struggling to plan effective long term maintenance as Airlines and operators feel the burn of reducing flying programs. COVID-19 hit all the stages of the MRO market.
Nearly 18 months later, businesses have restructured, the travel sector has opened up (slowly) and lock downs have ended. Are things heading in the right direction and is there any opportunities or major changes concerning the MRO market after the crisis?
From MRO point of view, a smaller fleet translates to less work. Demand is expected to be 33%, or $60 billion, below combined pre-COVID-19 projections for 2020 and 2021. While the market is beginning to recover, the long-term MRO growth is now roughly half of pre-COVID-19 expectations. Cumulatively, MRO demand is expected to be $95 billion lower over the forecast period.
Less independent operators:
Before COVID-19, we already started to see big groups acquiring smaller companies in the MRO industry. Since few years now, the market structure is evolving, going from a lot of proximity and local companies to bigger groups operating in multiples airports. The French group Sabena Technics illustrated this strategy in 2019 by acquiring Aeromecanic and AeroTech Pro strengthening its presence on helicopter and military MRO markets respectively.
Post COVID-19, this strategy is even more relevant to reduce costs and better face economic situations that are difficult to overcome for small companies.
New fleet, new MRO?
Some of the parked fleet during the pandemic might certainly never come back into service. The industry slump caused by the pandemic has sped up airlines’ existing plans to retire older aircraft. The coming retirement of a large portion of the current fleet has long been expected. According to the industry estimates, around 2000 current aircraft that are at least 20 years old will be retired early as a result of the COVID-19 slowdown. This is a massive increase over the last five years, which have been seen annual retirements in the 550-750 range.
While replacing these outdated models with more efficient and sustainable ones can be seen as a positive in light of the aviation industry’s growing green ambitions, the accelerated retirements of older aircraft also come with a downside for the MRO industry. Aircraft require more maintenance as they age and these later-life upkeep projects are typically more expensive than early-cycle maintenance.
The next generation aircraft will be more technological and more connected than their predecessors. With the replacement timeline now compressed because of the industry downturn, the MRO industry will have less time to adapt to the new models. New innovative solutions like predictive maintenance, increased digitization, utilization of Big Data and blockchain technologies are no longer some hypothetical far-off future. They’re here now and MRO suppliers will have to make investments to both support these new capabilities and train their technicians on how to operate and service them.
Further complicating this challenge for MRO suppliers, newer aircraft are not only more high-tech, they also require less maintenance and fewer replacement parts. With traditional MRO services thus likely to decline, how suppliers respond to the shift to next-generation aircraft will be vital.
On 19th, 20th and 21st of October, 2021, we will be attending MRO Europe, feel free ton contact us to book an appointment. We will also be presenting our clients on the show.
Contact-us to learn more and discuss your business development plans.
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