Post Covid-19: Why the Aviation MRO and Aircraft Parts Market Is Going To Grow

Aircraft and Innovation
Nick Cummins
min read
August 7, 2020

Repair and maintenance of aircraft engine on the wing of the aircraft

Spare parts and MRO services could see a flood of business for their market. As soon as the coronavirus pandemic has run its course, the industry looks set to see a lot of activity. Why and how can your firm take advantage of it? And what are the perils or dangers that await? Read on to find out.

How Have MRO and Aircraft Spare Parts Services Been Affected?

Make no mistake, after airlines and airports, the next most affected victims of the current crisis are MRO and aircraft spare parts suppliers. Simple math dictates that without planes flying, there is less demand for maintenance and no requirement for spare parts.

"As soon as aircraft are grounded, demand for all flight hour/flight cycle linked maintenance disappears (although calendar time-based maintenance remains). Thus, MRO is hit first in any downturn, and MRO providers and spare parts suppliers suffer immediately."
Manfred Hader, Senior Partner at Aerospace industry firm Roland Berger

Even when planes start to fly again, the market place will open in stages. First, airlines will require MRO to operate aircraft. However, due to the slow return to normal, MRO firms won't exhaust their onhand spare parts for a significantly longer time. This lead time means that spare parts traders and AOG providers who lack parts, will be hampered despite an uptake in business.

"Global demand for maintenance, repair, and overhaul (MRO) in 2020 would be about $50.3 billion, 45 % lower than our original pre-COVID forecast of $91.2 billion. All regions of the world, aside from China, will experience declines in MRO spending of 40% or more"

Aviation Analysis firm Oliver Wyman

Let's examine how MRO and spare parts industry will change as the aviation industry wakes from its slumber.

Bringing Forward Essential Maintenance

Airlines haven't been sitting idle; as the crisis stretches on many have decided to bring forward major maintenance tasks. This would include overhauling aircraft that have been in service for a while, and ensuring that they return back to the market in a similar condition to when like they left the factory assembly floor.

“We have been doing our best to find the opportunity amidst the crisis,” states Etihad Engineering vice-president technical sales and customer service Frederic Dupont. “We have taken advantage of the grounding period and used it to carry out maintenance services to ensure the entire fleet is operating at its optimal and will be uninterrupted by maintenance requirements as services return.”

MRO services need to reach out to their customers and suggest using this brief pause as a way to ensure their aircraft are in top shape - before the coming maintenance and parts rush.

Returning to service

To get back into the sky, many airlines will need to pull aircraft from deep storage in remote facilities, like Alice Springs in the middle of the Australian Outback, and have them completed overhauled. This will place a high demand on MRO servicers almost overnight, as airlines insist on tight deadlines for their aircraft maintenance delivery. But not all aircraft will return to service at the same time. Airlines will prioritize the maintenance of newer and more fuel-efficient aircraft first - a strategic tactic that MRO services will need to be equipped for in order to meet the upcoming demand.

"[MRO] players with access to the new technology fleets [will be] in a better position to ramp up their operations first”

David Doyle, Lufthansa Technik’s vice-president of corporate strategy, business development and innovation management.

Alas, moving aircraft back into service only happens where there is either demand, or an airline is attempting to steal market share. MRO firms should expect a slower and drawn out return to operations, focusing on narrow-body short-haul aircraft maintenance for domestic flights before the bigger wide-bodies start returning to service.

Changing roles for Aircraft

In the past, aircraft have focused on either passenger movements, or cargo operations (private travel would include both). However, a new lucrative market has appeared during this current coronavirus crisis - medical transport. Either converting passenger aircraft into emergency medical equipment cargo aircraft (a service that only an MRO can perform quickly), transporting citizens back to their home countries or in a recent case, medical evacuations. Thanks to the efforts of Airbus, the flexible Airbus A330 platform has been converted into a patient carrier by some carriers.

"The OEM’s A330 Multi Role Tanker Transport (MRTT), derived from the commercial A330 platform, was already being used by the French Air Force to provide medevac transport for COVID-19 patients since March 18"

Aviation Week

For MRO firms, the best strategy is to ensure that they have equal access to spare parts.

Airlines Will need Spare Parts and MRO More than Ever

One of the key reasons why the spare parts market looks set to skyrocket, is pure economics. The bottom line is that airlines are cash-strapped. They don't want to buy any new aircraft - one only needs to look at the recent aircraft orders this year from Boeing and Airbus, to see how dramatically the numbers have fallen. Instead; they want to ensure that their existing airframes keep on flying. To do this, they need parts and MRO services to keep the engines humming and the aircraft is good condition. The cheapest form of spare parts is from existing aircraft from defunct carriers or carriers looking to downscale. An example of this would be Virgin Australia recent decision to sell off its Boeing 777-300ER fleet.

"Flights will resume, but revenue starved airlines will be desperate to conserve what cash they have left. Many airlines will eschew expensive factory fresh products for less expensive, well maintained used planes and parts"

Andrew Curran at Simple Flying.

Airlines can snap up these secondhand planes at reasonable prices, and strip them for required assets. However, there are only so many planes in the market that are kept in good enough shape to be useful, and as soon as aircraft start flying again, the market will turn upside down. There will not be enough spare parts to keep every aircraft in the sky, and any airline still holding onto aircraft in good enough condition will find themselves in a buyers market.

"MRO providers face disruption in the used serviceable materials (USM) market, as the inventory of sidelined and retired aircraft are stripped for parts"

Aviation Analysis firm Oliver Wyman

The bottom line is that MRO firms looking to prepare for a return to service, need to first secure their line of spare parts - especially from older grounded aircraft.

“This is an opportunity for MROs to work with airlines to effectively utilize the pool of surplus material they are sitting on”

 David Doyle from Lufthansa Technik’s to Flight Global.

Airlines are likely to keep older aircraft running for longer, requiring both the services of MRO and access to increasingly valuable spare parts.

If you are an aircraft operator or an MRO firm that wants help setting up in the best possible position for the strong return to service, then please get in touch with Eways Aviation today.

Nick Cummins
Copywriter - Aviation Journalist
Journalist - Working in news media for over a decade with outlets including 9News and the Discovery Channel, Nick is an airline marketing specialist with a Masters level education. Working closely with AirAsia, Virgin Australia, Turkish Airlines and others, Nick provides unique insight and analysis on a variety of aviation topics. Based in Sydney, Australia.

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