U.S. independent shops may have challenges in recruiting. And they struggle with OEMs for the MRO business. But both MROs and OEMs are going after a bigger slice of a pie that is growing larger, the increasingly important U.S. outsourced MRO market.
The top-ten U.S. passenger airlines notched up their outsourced share of maintenance spending 1% to 48% in 2017, according to FAA Form 41 data. Over the five years from 2012 through 2017, the outsourced share rose nearly 3% from 45% at the beginning of the period.
And much of this increase came from those reputed in-house addicts, the network airlines. American Airlines edged its outsourced share up less than a half percent in 2017, but over 3% in the past five years. Delta, which had the slimmest unit MRO costs among network airlines, increased its outsourced share nearly 3% in 2017 and more than 4% in the past five years. United has also increased its outsourced share more than 4% in five years. Competitive pressure to cut costs and the new generation of jets probably explain these increases.
Southwest, in contrast, has decreased its outsourced share 8% in five years, though at 53% this share still remains above the 45% average for network airlines. But JetBlue is outsourcing much more these days, 75% of its total maintenance spending. Frontier spends 45% of its maintenance outlays outside its own shops.
Despite recent changes, American still spends the smallest share outside, 39%, followed by Delta at 46% and United at 52%.
But pure scale still makes the network airlines the biggest outside spenders, with American paying providers $1.4 billion in 2017, Delta $1.1 billion and United $1.6 billion. Outside spending by Southwest and Jetblue were $837 million and $579 million respectively.
These short-term changes follow long-term trends, which have clearly been toward outsourcing. Since 1995, the outsourced spending share has more than doubled, from 23% to 48%, for the ten airlines and their predecessor carriers.