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Post Covid-19 — Aviation MRO Trends
The need for agility is now more obvious in MRO and the use of digital technology from data collection and tracking to supply-chain analysis is the most effective way to implement these changes and improvements
by Sukhchain Singh
PHOTOGRAPH: Lufthansa-Technik
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s COVID-19 proliferated across the world in 2020, the aviation industry lost over $118 billion with many airlines pursuing bankruptcy protection or ceasing flight operations entirely, according to the International Air Transport Association. The pressure on cash flow of airlines and the reduced demand for air travel led them to put thousands of aircraft into storage, retire twice as many as normal, convert some for cargo and cancel or defer deliveries of new planes. This now means cash preservation will remain a top priority for airlines, which is not good news for aerospace manufacturers and Maintenance, Repair and Overhaul (MRO) service providers. After the pandemic was declared, the global fleet in service was reduced by more than 50 per cent, to about 13,000 aircraft. Today, the 2021 fleet has increased to about 23,700 aircraft. The forecast is that by 2031, the fleet will be more than 36,500 which is
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still low from pre-COVID projections that had put the 2021 global fleet at 28,800 and the 2030 fleet at more than 39,000. For MRO companies, a smaller fleet translates into lesser work. The early retirement of planes will reduce aerospace sales of new parts because of increased competition from the flow of used components and green-time engines from retired aircraft. It will take about three years to consume these used serviceable components. Parts demand is expected to be 33 per cent or $60 billion, below combined pre-COVID projections for 2020 and 2021. While the market is beginning to recover, the long-term MRO growth trend is now roughly half of pre-COVID expectations. Despite the reduced expectations for MRO, the compound annual growth of the sector till 2031 is bullish at three per cent. The combination of near-term lower demand and long-term growth prospects has created an attractive environment for private equity investors and interest in MRO is high.
