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Trent 1000 Aftermarket Poised For Steady Growth

New Rolls-Royce aftermarket strategy should benefit Trent 1000 operators down the line

As the Trent 1000 enters its fifth year of revenue service, the program’s theme is one of evolution. Aftermarket revenue, held in check by the honeymoon that new equipment enjoys, will soon begin to climb as the earliest engines begin to need work. The family—built to power the Boeing 787—also continues to change on the development side, with the family’s third variant, the Trent 1000 TEN, set for flight testing later this year.

The TEN represents the engine family’s most significant improvement. The first two changes delivered the improved fuel consumption and higher thrust needed to power the Boeing 787-9. The TEN incorporates 70-75% new parts compared to earlier versions, as well as advanced technologies proven on the Trent XWB family.

The Trent 1000 family’s rapid development is aimed at boosting the engine’s 787 market share. Aviation Week’s Commercial Fleet & MRO Forecast shows the Trent 1000 with 400 orders as of early March, or 35% of the 1,145 787 orders. The GE GEnx has a 52% share, or 593 orders, while the remaining orders do not yet have engine designations.

The selection of Trent 1000s by several prominent Asia-Pacific carriers has set the region up as the engine’s primary market for the foreseeable future. With 44 Trent 1000-powered 787s in service and 83 total commitments as of Feb. 29, All Nippon Airways (ANA) is the world’s largest 787 (and Trent 1000) customer. Air New Zealand has 12 commitments for Trent 1000-powered 787s; six are in service, including the first Rolls-Royce-powered 787-9, delivered last July. Singapore Airlines has 30 Trent-powered 787s on order—all of them -10s.

Aviation Week’s figures show that the Asia-Pacific region will be home to 44% of the Trent 1000s in service by year-end, with 156 of the global fleet total of 354. The region’s share will hold relatively steady over the next decade, settling in at 41% at the end of 2025, when the forecast projects 610 Trent 1000s in Asia-Pacific and 1,466 globally.

European carriers, led by British Airways (BA) and Norwegian Air Shuttle, will place Europe as the next-largest Trent 1000 market. Europe is projected to have about 100 Trent 1000s in service by year-end, 28% of the global total. It will continue to hold this percentage in a decade, when it is forecast to have 430 Trent 1000s in service.

MRO demand for the engine, which entered service with ANA in October 2011, will ramp up quickly during the second half of this decade. This year’s modest $33 million in projected aftermarket revenue is forecast to climb to $154 million in 2018 and $418 million in 2020. In 2025, the Trent MRO market is expected to top $815 million, accounting for more than 20% of the total 10-year demand of $3.8 billion, Aviation Week figures show. The forecast projects a total of 1,250 overhauls during the next decade.

The Trent 1000’s maturation will coincide with a substantial shift in Rolls-Royce’s aftermarket strategies—driven, at least in part, by the growth taking place in Asia and the Middle East. In November, Rolls-Royce lifted the territorial restrictions on its Hong Kong Aero Engine Services Ltd., Singapore Aero Engine Services Pte Ltd., and N3 Engine Overhaul Services joint ventures. The moves open up each shop to compete for both Rolls-Royce long-term agreement work and time and materials work.

“The structural change we made was more about the geographic region in which these [facilities] operate rather than the scope of activity that they’re actually doing,” says Warren East, Rolls-Royce’s CEO. “That geographic region means that somebody in Asia, for instance, can service a customer from Europe, and vice-versa, which was not the case previously.”

Rolls-Royce is also broadening its offerings to give operators with older engines more choices than straight power-by-the-hour deals or ad-hoc time and materials work. While long-term agreements have never been more popular—a Roland Berger analysis projects 85% of widebody engines in 2019 will be under such agreements, compared to 65% in 2009—they are  becoming impediments to operating older aircraft. This has created a drag on aftermarket revenues, especially for companies such as Rolls-Royce that rely so heavily on them.

“Where long-term service contracts have changed this is that airlines are increasingly reluctant to ‘pre-pay’ for maintenance on an old aircraft that they are ultimately not intending to own as it gets close to its next big maintenance event,” analysts at RBC Capital Markets say. “We think this has been one of the reasons that Rolls-Royce has been seeing lower than expected flying on mature Trent-powered widebody aircraft such as the [Boeing] 777, [Airbus] A330 and A340, as airlines have chosen to cut the flight hours on these older planes and save on the power-by-the-hour cost of maintenance that they have no plan of actually doing.”

The engine maker has responded with more flexible offerings that include custom workscopes, more used parts and other cost-friendly options that it hopes will help keep its older engines spinning more regularly. 

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