Aircraft maintenance organisations strategies to cope with difficult economic conditions

Citation

(2009), "Aircraft maintenance organisations strategies to cope with difficult economic conditions", Aircraft Engineering and Aerospace Technology, Vol. 81 No. 6. https://doi.org/10.1108/aeat.2009.12781faf.008

Aircraft maintenance organisations strategies to cope with difficult economic conditions

Article Type: Mini features From: Aircraft Engineering and Aerospace Technology: An International Journal, Volume 81, Issue 6

The number of carriers servicing their aircraft in-house has dipped drastically from more than 80 per cent to less than 20 per cent over the last three decades. The increase in aircraft maintenance outsourcing attributes to the straitened circumstances in the aerospace industry, which is grappling with an increase in labour, infrastructural and tooling costs. Outsourcing will receive a further boost from new and low-cost carriers that continue to rely on external organisations for maintenance and engineering support.

New analysis from Frost & Sullivan, The Proliferation of Aircraft Maintenance Outsourcing in the USA, finds that future migration of aircraft outside of North America to overseas maintenance, repair and overhaul (MRO) facilities will likely slow due to new administration, demands from labour and consumer groups, and demands for more FAA oversight of repair stations.

“The current economic climate holds many uncertainties, therefore MRO companies should identify their value,” says Frost & Sullivan Industry Analyst Nathan K. Smith. “It is important that MROs mould their operation around airlines' purchase factors of cost, ability and experience to maintain aircraft fleet types as well as security.”

However, MRO companies must prepare for capacity adjustment in the airline industry, which is facing fewer travel demands, tighter credit markets, and fuel hedge losses. The resultant dip in cash, earnings and profits could cause airlines to exercise prudence by preserving cash, renegotiating contracts with suppliers, selling-owned aircraft and leasing back in order to build cash reserves. Many of the parked aircraft are old and inefficient and will unlikely return to operation or sent for MROs.

Although such conditions do not bode well for after-market services, aircraft original equipment manufacturers (OEMs) will continue to produce new, more efficient aircraft, at a slightly reduced rate. The rolling out of new aircraft could compensate, in part, for reduced orders from old aircraft.

“The MRO service providers in the United States are also likely to face stiff competition from low-cost Asian and Latin American MRO companies,” says Smith. “To compete against them, U.S. participants have to not only lower costs but also increase productivity, reduce wastage, provide timely and quality products, and focus strongly on customer satisfaction.”

The Proliferation of Aircraft Maintenance Outsourcing in the United States is part of the Aerospace Growth Partnership Service program, which also includes research in the following markets: merging air transport market dynamics, world commercial helicopter market, North American aircraft and engine MRO markets, global commercial aviation electrical power systems and infrastructure market assessment, as well as composite application market assessment. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.