MRO Firms Could Lose Out Even as Global Market Grows

 - April 16, 2015, 3:18 PM
Mechanics work on a Transavia Boeing 737 in Hangar 4 at Amsterdam’s Schiphol International Airport. (Photo: Flickr: Creative Commons (BY-NC) by dirkjankraan.com)

Disruptive technologies such as predictive analytics and aircraft health monitoring systems could cost existing commercial-aircraft maintenance, repair and overhaul companies 15 to 20 percent of their business by 2020 even as the global MRO market grows by more than $3 billion annually, according to consulting firm Oliver Wyman.

“The use of big data in the aviation industry will become pervasive, with the rise of aircraft health monitoring and predictive maintenance systems," said Oliver Wyman in its recently published 2015 MRO Survey. “The way MROs touch the aircraft will change with wearable and other new repair technologies and additive manufacturing. And most aviation companies will have to manage overhauls of the aging IT backbones that have been inhibiting efficient working environments.

“We anticipate these advances could cut 15 to 20 percent of MRO spending from the aftermarket, and spawn new business models and revenue streams,” it added. “In total, this would amount to a redistribution of $10 billion to $15 billion of value among current industry players and entice new competitors to enter.”

Summarizing the company’s 2015 MRO Survey and its Cavok MRO consulting division’s 2015-2025 Global Fleet & MRO Market Forecast, Cavok vice president David Marcontell forecast the global MRO market would grow from $67.1 billion this year to $83.2 billion in 2020 and $100.4 billion in 2025.

However, Marcontell revealed 65 percent of respondents to Oliver Wyman’s MRO survey thought predictive maintenance stands to help airlines, while only 7 percent thought MRO companies would see benefits.  

Only 13 percent of respondents felt the MRO industry innovates frequently, while two-thirds indicated it innovates only periodically or sporadically and another 21 percent said the MRO business innovates primarily in response to OEM innovation.

“As new technology hits the market, MRO providers risk losing profitable work and the opportunity to define the commercial frameworks for deploying technology,” noted the survey. Marcontell added in his presentation that OEM’s will take an increased aftermarket market share for the newest generation of aircraft.

Cavok’s new global MRO market forecast suggests airframe maintenance could feel more detrimental effects than other MRO areas from predictive-maintenance technologies. The company sees airframe maintenance increasing by only $2.2 billion, to $16.7 billion in 2025 from $14.5 billion today, while the relative market share of all MRO falls from 20 percent in 2015 to 17 percent a decade from now.

Component maintenance will maintain a 19 percent share of the market and line maintenance an 18 percent share, but in 2025 engine maintenance will grow from 42 percent of the entire MRO market to 47 percent, climbing from a $27.9 billion business in 2015 to a $46.8 billion industry in the process, according to the forecast.