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Do MROs need to diversify?

With independent MRO companies facing increasingly tough competition for contracts, from airline MROs, from new entrants to the market in developing economies and, of course, from OEMs, could it be that the key to future growth is diversification?

Romanian maintenance provider Air Wings is looking to move into the wet lease market, meanwhile MTU is working on its engine leasing business and GA Telesis is expanding its asset financing arm – budgeting up to $1bn for such deals over the next three years.

Another potential avenue for expansion could be aircraft teardown and the burgeoning market in surplus serviceable parts – a market now valued at more than $3bn annually.

If it’s a sector appealing enough for Boeing to expand into then surely it makes sense for MRO companies with their established skills base in maintaining and repairing aircraft, engines and components to consider?

Or perhaps the key to survival is to diversify into servicing new lines? Adding new maintenance capabilities could be lucrative, but is not without its risks. Firms will, potentially, need to invest in staff training, equipment and marketing.

At the same time, OEMs are doing their best to tie orders for the next generation of engines and aircraft to long-term support contracts. It may be that partnering with OEMs and becoming a licensed provider will be the only way to diversify into these markets.

Taking an entirely different approach, maybe more MROs will follow FL Technics’ lead and enter into the training market. With a shortage of skilled engineers in the sector, particularly in growth regions such as Asia Pacific and Latin America, MROs could be drawing on years of experience to create and export training programmes.

No doubt there is plenty of scope for MROs looking to expand their business beyond traditional operations. It will be interesting to see who considers it.

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