MRO industry to see slowing growth

The global economic slowdown which has resulted in a decline in air traffic is expected to depress the maintenance repair and overhaul (MRO) sector’s growth over the next few years.

The worsening economic crisis and weakening demand for air travel will impact airlines more – parking aircraft and deferring nonurgent maintenance. Carriers which are impacted more by the downturn may also resort to cannibalising parts of older aircraft and using them as spares. All this would only depress the growth ofthe MRO industry.

Industry experts had already projected a decline in growth last year with the high oil prices when several airlines across the US and China indicated that they would be retiring old aircraft. As of end-February some 910 aircraft were retired reducing the annual MRO sales by about US$171 million.

Other issues stalking the MRO industry are – a growing shortage of skilled and experienced personnel, rising labour costs, competitive pricing and more companies entering the fray. Should the shortage of labour persist it will be a serious issue in the long-term.

Lower pricing for maintenance of CFM56 engines is also anticipated as more facilities surface to capture a slice of the business for the first major MRO cycle of the -5B and -7 powerplants. Engines account for about 40-50 per cent of the total MRO revenue. Currently there are 40 facilities in Asia, Europe and the US offering overhaul services for CFM56 engines. Three more will be operational by the end of 2010.