Analysis

An interview with Richard Brown of ICF International 'Trends, Dynamics, Challenges and Opportunities in the MRO Industry'

Richard Brown, chairman of the ap&m summit talks Trends, Dynamics, Challenges and Opportunities in the MRO Industry

Richard, you’ll be chairing this year’s ap&m summit but you’ll also be giving the opening presentation. Can you tell us what your main themes will be?

I’ll be starting with the ‘numbers’ - that means we will review the ICF MRO forecast that outlines the aircraft deliveries and retirements that underpin projected maintenance spend over the next 10 years. We will look at what is driving maintenance spend and where the growth opportunities can be found. From there, I’ll be moving on to the industry trends. We’ll discuss what are the factors that will be affecting suppliers to the maintenance market and the key issues and topics that those in the audience should be paying attention to.

And what do you see as the main challenges and opportunities facing the MRO sector?

Well, it’s certainly true that the MRO sector is facing both challenges and opportunities. On the positive side, there are the higher airline industry profits which have resulted from increased traffic and lower than anticipated aviation fuel prices. These translate into new maintenance opportunities in areas such as discretionary upgrades, particularly in the cabin. We’re also seeing continued growth in MRO outsourcing and an increase in the number of projected engine shop visits. However, there are also plenty of planned and anticipated aircraft retirements, and that is something of a double-edged sword.

On the one hand, it means there will be more serviceable parts which can provide airlines and MROs alternatives to new OEM parts. On the other, because it is sometimes cheaper to buy a used serviceable part than to repair or overhaul an unserviceable one, the increases in surplus parts may impact the rotable repair business for some mature and sunset equipment. Retirements will, of course, be balanced by the introduction of new aircraft and the industry that needs to make sure it has the right skills, facilities and parts in place. But we also have to face the fact that the MRO sector has excess capacity, particularly in airframe maintenance. Very few hangars have closed but new entrants continue toappear. Alsoas the market becomes more OEMcentric, independent MROs will have to decide whether they are going to try and align with the OEM, perhaps by becoming an authorised service centre, or compete vigorously by offering lower prices and faster lead

times.

Finally, although the overall MRO market is growing, most of that growth is taking place outside Europe. Asian and the Middle East operators are driving MRO growth. This raises the important question of how European providers are going to access this growth and potentially compete against local MROs that may have significantly lower labour costs.

How do you see your role as Chairman of the ap&m summit?

This will actually be my third time chairing the conference. It’s my role to encourage active debate, to make sure that everyone in the room has an opportunity to comment and to ask questions of the panellists and presenters. What really matters is that all of the sessions are of real relevance to those in the audience, whatever part of the MRO sector they may be from.

One of the great things about the ap&m summit is that it’s quite informal with plenty of opportunities for people to talk to the speakers during breaks and at the end of the day. With everyone in one place and the speakers available, it’s one of the best industry events for networking - and it’s through the sharing of knowledge that we all become smarter.

About Richard Brown

Richard is a principal consultant at ICF International, specialising in the aerospace industry. ICF International (NASDAQ:ICFI) provides professional services and technology solutions that deliver beneficial impact in areas critical to the world's future. He has been an aerospace consultant for 10 years, prior to which he worked in the aircraft component manufacturing industry in a variety of market analysis and business development roles.

www.icfi.com

@ICFI

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