Newfound airline focus on investor return is good news for maintenance, repair and overhaul (MRO) suppliers, but the industry needs more support hubs in fast-growing air traffic emerging markets such as Asia.
That was the consensus of an opening panel at the Aviation Week Network MRO Asia-Pacific conference in Singapore on Tuesday, Nov. 3.
In his opening remarks, ICF International Vice President-Aerospace & MRO David Stewart said airlines were now much more focused on return on investor capitol (ROIC), and this was “creating an opportunity for change,” as airlines such as All Nippon Airways, Japan Airlines and British Airways sought to outsource their MRO rather than sink capital in spare parts’ inventory.
Stewart said airlines spend about $62 billion per year on MRO—of which some 50% is for the cost of materials.
“A lot of this is in engines and components and a lot of that travels for its MRO,” Stewart said.
Stewart said there was a growing trend for airlines to move to an MRO integrator, particularly for new-generation aircraft such as the Airbus A350 and Boeing 787.
Another trend is the continuing globalization of aerospace MRO, with new clusters for labor-intensive activities being developed in southern latitudes, in places such as Brazil, Malaysia, Mexico, and Singapore, Stewart noted.
But there is still a shortage of qualified technicians in the world’s fastest-growing air traffic regions, and more progress is needed to develop regional hubs so that parts do not have to be shipped from the U.S. or Europe, panelist Brian Hogan of Global Aviation Consultancy said.
“We have very expensive equipment out there, but also very archaic supply chains,” Hogan said. “In Asia, we have to focus on having the right parts and people in place in the region.”