The COVID-19 pandemic aftermarket recovery was predicted to be sluggish for most MRO markets of the world. The reasons being obvious, uncertainty over resuming international travel, lacking passenger confidence in air travel due to pandemic spread, the struggle of maintenance of parked aircraft and the effort of bringing back the parked fleet to airworthy standards. These are just few of the reasons why forecasters predicted slow MRO recovery till last year. The global market is recovering largely as Boeing projected in 2020. Demand for domestic air travel is leading the recovery, with intra- regional markets expected to follow as health and travel restrictions ease, followed by long-haul travel’s return to pre-pandemic levels by 2023 to 2024.
As per Boeing predictions, as health and regulatory dynamics will continue to shape the market dynamics, commercial airplanes and services are showing signs of recovery and resilience. Availability and distribution of COVID-19 vaccines will continue to be critical factors in recovery of passenger air travel. Countries with more widespread vaccination distribution have shown rapid air travel recovery, as governments ease domestic restrictions and open borders to international travel. The global commercial fleet will surpass 49,000 airplanes by 2040. China, Europe, North America and other Asia-Pacific countries each account for about 20 per cent of new airplane deliveries, with the remaining 20 per cent going to other emerging markets.
India – Upcoming MRO hub?
However now with the pandemic behind us the MRO recovery across the world has resumed a much faster pace than anticipated. As per statistica forecasts, aircraft MRO market in India is expected to show a growth rate of 9.5 percent in the decade from 2019 to 2028 followed by Middle East, with China sitting at the third spot. The reason being Indian government initiatives to make India an MRO hub to boost the country’s current aviation sector so that the maintenance cost of the aircraft will come down, with a ripple effect on the prices of the airfare. France-based Safran Group is considering building an engine facility in Hyderabad, India. The facility would bolster India’s aviation infrastructure, providing a platform for further growth in a key long-term market for big aircraft manufacturers like Airbus and Boeing. In 2019, Safran announced a USD 43 million plant to manufacture LEAP engine parts in Hyderabad. Currently they are finalizing an investment plan of 100 million euros for the airport at Jewar near Indian’s capital, New Delhi.
India’s rising middle class and healthy competition, has made it a robust target for airlines as millions take to the skies for the first time. Aviation grew at a rate of more than 10 per cent annually for a decade before Covid hit, according to the Indian government. The International Air Transport Association expects the country to become the third largest air-transport market in the world by 2026, catapulting from seventh in 2018.
China is not far behind…
Another major upcoming MRO hub is China due to automation, digitalization, smart manufacturing, and industrialization. The manufacturing sector in the country is at the forefront across the world due to significant investment by the government in the sector. By investing in Industry 4.0 China is all set to take the next leap in manufacturing. According to GSMA, China will account for one third, about 4.1 billion od the world’s IoT connections by 2021. Such investments will automatically fuel the MRO market growth in the country.
China is home to one of the largest GTF fleets, where 11 airlines will be operating more than 200 A320neo family aircraft by the end of 2021. Pratt & Whitney and MTU Maintenance recently inducted its first GTF engine for maintenance, repair and overhaul in China. The shop inducted a PW1100G-JM model engine, which powers the Airbus A320neo aircraft family. Joe Sylvestro, vice president, Aftermarket Global Operations at Pratt & Whitney said, “To have an active shop in China brings immediate benefit to our customers in the region. We are eager for the induction pace to build and for our other GTF MRO network members in China to begin maintenance operations as well. All of this helps to enhance our customers’ operations.” This is a clear indication of engine masters like Pratt & Whitney and MTU Maintenance see tremendous potential in Chinese MRO market.
Could Middle East over-rule everyone as the next MRO hub?
As per Boeing forecast airlines in Middle East are expected to require 3,000 new airplanes valued at USD 7000 billion and MRO services worth USD740 billion, as the middle east positions to capitalize on recovery of regional and international travel and cargo demand. Over the next couple of decades Boeing forecasts that Middle Eastern passenger traffic and commercial fleet to double.
Randy Heisey, Boeing managing director of Commercial Marketing for the Middle East said, “The Middle East region’s role as a global connecting hub continues to be important for developing markets to and from Southeast Asia, China and Africa. The region has been a leader in restoring confident passenger travel through multi-faceted initiatives that aid international travel recovery.”
Middle East fleet and MRO growth
- To accommodate increased passenger and cargo traffic, airlines are predicted to grow their fleets to 3,530 jets.
- The region will continue to see robust widebody demand, with 1,570 deliveries supporting a growing network of international routes.
- The current single-aisle fleet of 660 airplanes is forecast to nearly triple to 1,750 jets.
- Commercial services opportunities include fleet renewal, maintenance, repair and parts supply, and operations optimization.
As per Boeing’s report the market for support and services is expected to be worth USD 3.2 trillion in the twenty years ranging from 2021 to 2030. Services markets include maintenance, repair, overhaul, and modifications; training and professional services; and digital solutions and analytics. A majority of the MRO activities are driven by fleet utilization and cycles. In total, the MRO market is 70per cent of USD 3.2 trillion served market.
The global fleet has seen continual renewal over many decades. Today, operators are actively flying their most efficient and right-sized aircraft to fit adjustments made to their schedules and routes. Amid managing customer needs coming through the pandemic, service providers are investing in training, digital capabilities and infrastructure upgrades to support the changes brought about from the pandemic. Service providers are considering business models that match the current environment. As operators become more resourceful, parts pooling programs have increased in popularity. These types of arrangements can be less costly because operators don’t have to maintain their own inventory of spares. Contract terms between service providers are becoming more flexible in order to minimize risk, and outsourcing and partnership activities as a result of right-sizing to a new operational size is giving their customers the flexibility to ride out the downturn without additional measures.
