MRO Industry – Pandemic Years to Current
Labelled as a Black Swan event, for over two years and on, with the onset of the coronavirus pandemic, the entire commercial aviation space and others too, have been grappling with unprecedented challenges. With more than 16,000 passenger jets grounded worldwide, (according to industry researcher Cirium), COVID 19 practically wiped-out air travel.
With sliver thin profit margins to go by during normal times, airline companies mainly, suffered astronomical financial losses. To get back on its feet, the airline industry had to take some challenges head on. Finding sufficient and suitable parking space for what amounts to more than half of the world’s planes, servicing them part by part, keeping them airworthy for certification, has been the need of the hour.
Step in the MRO industry, and the players have their work cut out for them. Continued maintenance of grounded aircraft (AOG) (even though one saw practically zero air travel), required a host of activities – and revenue generation for MROs /OEMs and all participants in the aftermarket supply chain, remained a reality.
The pandemic and Brexit, more so the western world, have been deeply impacted by the two events. Supply chain for many businesses have been disrupted. Relying on smaller and local suppliers is not an option given the largeness and scale of the MRO business, especially handling and delivering critical parts, right on time – time after time.
MRO Industry – Forecast
The MRO industry forms the backbone of the aerospace and defence sectors, and recovery post pandemic, has to be a carefully and pragmatically planned – where cost control, service quality and reliability, are all priorities.
Some highlights:
- Global MRO is set to grow by $28B in the next 7 years, from $82B in 2018
• Asia-Pacific will be the 2nd largest market, accounting for 21% global value
• A320 and B737 families will contribute to 40% of the total MRO output
MRO Industry & Post Pandemic Recovery
Demand for air services with lifting up of travel restrictions will trigger change in MRO processes, due to change in fleet mix, newer aircraft engineered to reduce carbon emission, retiring of older fleet, hiring and retention of staff with the right work experience
Digital upgrades and updates of enterprise application for keeping up with the demand, migration to a cloud-based set up are in vogue.
Better integration between applications can speed up information flow, reduce human errors, availability of smart diagnostic tools, which will help with pragmatic decision making.
Technologies to manage cost, time, and quality needs of the MRO industry. The below infographic from Infosys Knowledge Institute, clearly defines the path to recovery process through digitisation.
An AOG caused by the pandemic still needs careful maintenance work and attention while in storage. From hydraulics and flight-control systems, prevention of the corrosive action of humidity on parts and interiors, keeping aircraft loaded with fuel when parked on the runway- to keep tanks lubricated and prevent the aircraft from rocking in the wind, revving and powering up engines, inspecting air-conditioning and anti-ice systems, rotation of tyres Boeing 737 and Airbus SE A 380s on a weekly or fortnightly basis, reconnecting aircraft batteries every 14 days – are all in a day’s work for at an MRO outfit.
As if that were not all, aircraft need to be protected against insects and wildlife, as also nesting birds – there is always ‘round- the-clock monitoring’ of AOGs, as any damage comes with a hefty bill if neglected.
An army of staff are deployed for cleaning and shampooing aircraft cabin interiors, changing seat covers, to give the for a refreshed cabin interior.
The list of responsibilities just goes on…and all of these do nevertheless make the cash register ring!
Tackling Climate Change
Climate change is an emergency that will remain ongoing, with sustainability as one of the top priorities on the job list of those working in the MRO sector. “Climate change will potentially cause massive disruption on an ongoing basis,” says Helen Alder, Knowledge Manager at CIPS. “Brexit and COVID are probably a road test for what’s to come in a stressed global supply chain.”
Sustainability is big on the agenda of MRO companies, and all systems and process are likely to be recalibrated, with a focus on the same. Reusing and recycling of parts, as much as applicable helps to reduce costs, as also puts a check on carbon footprint.
Glimmer of Hope come with Challenges
Some bright spots have emerged even in the dark firmament caused by the corona virus pandemic. What is leading recovery are large chunks of domestic markets that remain unaffected by the international travel bans and related border restrictions. Markets taking the lead are America and China, with America – the world’s biggest internal market witnessed a demand for seats reaching over 80% of pre-covid levels. China with its strict lock down policies across its vast domestic air travel market, have regulators expecting a climb of up to 85% of the pre-covid levels, this year.
With the relaxation of lock down rules, international air travel will see an improvement; this will create a huge demand for MRO services as also stress, since both grounded and operating aircraft will need tending to.
Airlines in the Asia-Pacific region have stiffer travel restrictions, with every variant of the corona virus being detected. Carriers from this region may run to full capacity in a phased manner.
Whatever it is, it’s a humongous task the MRO players have on their plate, but all of these are sources of revenue generation. Having said that, MRO companies must have the bandwidth to pick business opportunities coming their way.
In the meanwhile, Original Equipment Manufacturers (OEMs) are looking to increase their market share and MRO companies are having to deal with competition from here as well. For the former, Asia-Pacific region is tipped to become their largest fleet base in the world.
The demand for new generation aircraft by LCCs, is not only forcing MROs to switch to usage of new-age materials, but to come up with competitive pricing for this price-sensitive segment.
Low-cost Airline Growth Established MROs such as Lufthansa Technik, AAR, SR Technics and AFI-KLM have setup bases in APAC to tap the market.
It is imperative therefore for businesses to rise to the occasion and tackle the headwinds and counter the impact of the ever-shifting goalpost in this highly competitive space.
Conclusion
The Aerospace and Air Defence MRO industries can start from taking cognisance of the learnings from the recent crisis and how to better prepare for future occurrences and be able to mitigate and manage risks better, going forward. Bringing in automation to effectively digitize various operations, enhance sustainability, and necessary skilling of staff will lead to effective integration of digital and physical workflows. Technology will help simplify processes and aid humans in critical decision making. It would bode the MRO sector well to substantially invest in digitization for time management, which is critical and excellence in service delivery.
Read more stories… Creating a sound eco-system for development of skilled labor in aerospace
The infographic from the lac-group is a reflection of how unaware the lay public are about the MRO industries criticality and importance. Having a safe and comfortable, on-time performance of a flight can directly be attributed to efficient MRO services.
