A CFM Engine Stands Alone For Testing CFM
The introduction of new-generation engines such as CFM's Leap will have a noticeable impact on the engine segment in the coming years.

Engine Segment Drives Global MRO Spend

Boeing 737 and IAE V2500-A5 are expected to generate the largest MRO expenditures in 2017

The commercial aviation MRO segment will continue to grow at a strong pace in 2017, according to Aviation Week’s Commercial Aviation Fleet & MRO Forecast. The data projects the overall value of the commercial MRO segment will reach $74.3 billion in 2017, an increase from 2016’s figure of $63.2 billion.

In 2017 alone, the growth of the commercial MRO segment is expected to achieve a compound annual growth rate (CAGR) of 3.9%, increasing slightly above the 3.7% projected CAGR of the global fleet. Looking past 2017, this growth trajectory will continue over a decade that will see many opportunities emanating from the influx of new aircraft, engines and components into the global fleet, while operators extend older aircraft and engine variants’ life cycles.

The majority of the MRO market’s value is generated by the engine segment, with spending on this sector forecast to rise to an all-time high of more than $23 billion in 2017. Having increased from 2016’s figure of $21.9 billion, the engine market is set for a period of sustained and steady growth. In the long-term, the engine segment’s 5.2% CAGR will outstrip other maintenance areas such as components (4%), with the trio of airframe heavy work, line maintenance and aircraft modifications expected to grow at a minimum of 3.0% CAGR, respectively.

Looking ahead 10 years to 2026, overall engine maintenance spending will increase by more than one-third, amounting to about $37 billion in total. Further highlighting the opportunities for maintenance providers in the segment, the Aviation Week MRO forecast predicts just under 49,000 engines will enter the global fleet in the 10 years following 2017, a year that will see an estimated 70,000 engines actively in service.

The introduction of new-generation engines such as CFM’s Leap will have a noticeable impact on the engine segment in the coming years. Credit: CFM

Among the most ubiquitous in-service engine types in 2017 will be established options powering narrowbodies such as CFM’s CFM56-7 and CFM56-5B and International Aero Engine’s V2500-A5, with the latter accounting for $3.7 billion, the most MRO spend for the year. Powering fleet stalwarts such as the classic versions of the Airbus A319 and A320, along with the rapidly waning McDonnell Douglas MD-90, the fact it generates the most market spend is no surprise—more than 1,400 engine events are anticipated in 2017. Following the V2500 for expected MRO events are two variants of the CFM56 option: the -7 and the -5B.

The growing entry of next-generation engine types into the fleet also merits consideration. Pratt & Whitney’s PW1000G geared turbofan entered service at the beginning of 2016 on a Lufthansa-operated A320neo, and later in the year ran for the first time on a Swiss International Airlines Bombardier C Series jet.

The rival A320neo engine option, the CFM-manufactured Leap turbofan, also saw its first delivery in 2016 to Turkish low-cost carrier Pegasus, which took the 1A variant. The 1B version for the 737 MAX is set to follow in 2017, while the 1C variant for China’s Comac C919 jet will arrive in 2018. The Leap family of engines is forecast to become dominant fixture in the engine market, but maintenance spending will be low in its fledgling years, with the first really intensive work expected to begin from around 2020.

This has led to a growing number of OEM-MRO-led joint ventures focused on next-generation engines, a trend that inevitably looks set to increase in the coming years. Lufthansa Technik and GE Aviation are among the companies teaming up to focus on new engine types after announcing plans for a Poland-based joint venture operating as XEOS. From 2021, it will service the GE9X engine, expected for a 2020 entry into service powering the Boeing 777X, along with capabilities for the already operational GEnx-2B on the 747-8

In other market areas, component spending will amount to $20.2 billion this year, followed by line maintenance ($17.8 billion), modifications ($6.6 billion) and heavy airframe work ($6.1 billion). While engines, components and line maintenance work are forecast to grow further, maintenance spending for modifications and heavy maintenance work are expected to drop off in the year following 2017, before starting to rise again annually from 2018 through 2026.

In the line maintenance segment, MRO providers have targeted the expansion of their reach as more aircraft flood the market. Mark Smith, group president of U.S.-based line maintenance specialist STS Aviation, says the company’s line maintenance division is looking to further expand in 2017 following its acquisition of a number of domestic line stations in airport locations previously operated by HAECO Americas, which confirmed in October 2016 that it would divest most of its U.S.-operated line stations to focus on other MRO segments. 

STS also launched a foray into the overseas market by opening its first line station business in Nassau, Bahamas—with more expected to follow in the next year. “In the future, we will continue to open new stations in the U.S., but we also have our eyes on a few new opportunities overseas,” Smith says.

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The Boeing 777 has the highest projected global MRO spending of any widebody and third-largest of the entire global fleet for 2017. Credit: Boeing

Utilizing the ever-expanding global fleet by attracting a share of available third-party work is a global trend and not restricted to line maintenance providers in North America. UK-based Monarch Aircraft Engineering (MAEL), the maintenance arm of the Monarch Airline Group, which has around a 50-50 split between in-house airline and third-party customers, is also looking at adding new line stations domestically, and potentially in Europe.

Chris Dare, managing director and chief information officer at MAEL, tells Aviation Week that it expects to open a new UK line station in 2017, with more possibly following. “There could possibly be another [line station], with the second more likely to be overseas,” Dare says. “There’s a couple of potential destinations we are assessing, but we are being strategic about this and seeing who else is operating in those markets.”

Among the prevailing trends of the past few years has been the high volume of narrowbody orders and deliveries, particularly in developing regions.

Line maintenance providers such as Monarch Aircraft Engineering are looking to expand their footprint as a result of the increased number of aircraft operating worldwide. Credit: Monarch Aircraft Engineering

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The combined orderbooks of Boeing and Airbus stand at a record high. At the end of November 2016, figures from both manufacturers showed that the combined orderbooks were nearing the 12,000 mark.

The airlines’ penchant for narrowbodies will be reflected in 2017’s MRO market share, with Boeing 737-family aircraft—the OEM’s best seller—generating the most maintenance spending globally and accounting for a 24% share. This is followed closely by its single-aisle rival, the A320 family, comprising of the A318, A319, A320 and A321 variants, with 22%.

The leading widebody, in terms of predicted MRO expenditures for 2017, is the Boeing 777. The 777 is third in overall aircraft MRO spending for 2017, but is fourth in terms of airframe heavy maintenance events. Its engine option, the GE90-115B, is just 10th among the list of top engine events likely in 2017.

Heavy maintenance work also can be expected to pick up on the Airbus A380, nearing the 10th anniversary of its 2007 entry into service with Singapore Airlines and with a growing number of the 200-strong aircraft fleet entering their first intensive D check phase. MRO providers have taken notice, with the likes of Lufthansa Technik winning a number of third-party contracts with A380 operators, including Qantas and Asiana Airlines. The lion’s share of the MRO spending on the A380 is anticipated to be on its engines, followed by component and modification work. 

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