With the sudden shifts in influx and efflux of air traffic and the aviation industry taking a hit in the global markets, it is understandable that carriers are more motivated to maintain the optimal health of the existing fleet of airplanes.
The focus has shifted from procuring new planes to introducing modifications and improvements; to boost the efficiency of the carriers to maintain the costs. This shift in focus has led to several initiatives being developed for airports to incorporate activities and plans from the Maintenance, Repair, and Operations (MRO) industry.
Numerous airports have brought in the latest technological systems to obtain better upgrades leading to the expansion of the MRO market in recent times.
This move has increased the scope for the MRO industry to boom between 2020 and 2025. Now more than ever, it has become essential to employ MRO Market Intelligence to understand and be up-to-date with the trends.
MRO Growth Trends for the Next Decade
The aviation business and industries are encountering one more period of unrivaled development on account of the extension in the worldwide population, ready to bear the increasing cost of air travel.
A constant rise has been observed in in-service fleets as the years pass, with the incomes of consumers and their expenditure towards travel surging each year.
Many studies estimate that by the end of the next decade, there would be an increase in the total aircraft fleet by 11, 600, and an annual 3.9 percent increase in the in-service fleet.
Along with passenger travel, there is a surge in cargo volume, which is the result of the significant growth in e-commerce sales. Studies show that the MRO industry and the overhaul market will continue to grow, as it supports the expansion of the commercial aviation industry and its businesses.
The MRO spent in 2019 was $81.9 billion, and will rise to about $116 billion by the end of the decade. One can attribute this growth to the increasing need for thorough maintenance and constant technological upgrades.
Developing countries like India and China are estimated to see a surge in the aviation industry in the coming decade, with projects introduced to increase the number of airports due to the spike in demand, and the governments pushing funding for infrastructure development.
Studies project that the MRO market would experience an average annual growth rate (CAGR) of 3.5 percent throughout the decade.
Many estimate this significant growth to take place between the first five years due to the inclination as mentioned earlier of airports and governments leaning towards spending on MRO in recent times.
The start of 2024 is seen to experience an escalation in the number of new-generation airplanes brought into the fleet.
The newer, more advanced technologies and designs will cause an increase in the use of materials such as titanium, composites, and aluminum alloys, which are proven to reduce corrosion and fatigue.
The new airplanes are bound to have extended intervals of maintenance and lesser need for repairs and replacements as compared to the older models. This rise in quality would result in a fall in MRO expenditure.
Impact of COVID-19 on MRO Demand
The commercial aviation industry has taken a massive hit due to the sudden emergence of the global pandemic. The lockdowns imposed by the governments and the fear of infection by going out in public has resulted in passenger air travel to come to a standstill this year.
The travel restrictions on an international level and the closing of the borders aimed at containing the spread has significantly impacted international air travel.
It is a known fact that the decrease in demand for commercial passenger flights has led to the airline industry experiencing substantial financial burdens, and in extreme cases, shutdowns and bankruptcy.
This deficit has led to a tremendous fall, about 45 percent, in the global demand for MRO in 2020, with the estimated cost falling from $91.2 billion to $50.3 billion. MRO spending will continue to decline by over 40 percent globally, except in China.
Many planes are retired or side-lined due to insufficient demand and hence are stripped for their parts, creating a disruption for MRO to get involved in the Used Serviceable Materials (USM) market.
This disruption has created an increase of unreliable sources for used parts that impact the services of the MRO industry, creating a domino effect in the supply chain in the aviation industry. However, airlines would look to cut costs on their operations as the demand for air travel returns.
This change would be advantageous to the MRO providers as they provide access to stable and reliable sources for used parts, which would be significantly less expensive than procuring new parts, resulting in the eventual stabilization in the growth of the MRO industry.