Aligning Shop Capacity With Seasonal MRO Demand

Carefully targeted marketing and strategic planning can ensure that MROs make the most of seasonal down time.

For most MROs, business is seasonal. For those companies catering especially to the airline industry, that can present a significant, yet not unsurmountable, challenge, as long as carefully targeted marketing and strategic planning are properly aligned.

“The passenger airlines want to fly their aircraft as much as possible in the summer months, which is the peak travel time for the legacy airlines, as well as the low-cost carriers that do a considerable amount of leisure travel business,” says Dany Kleiman, group vice president, repair and engineering for AAR Corp. “That means they will plan for major maintenance events that will take the airplane out of service when the summer is over.”

In contrast, he reports, the high season for cargo carrier operations is usually in the fall. “They want to keep their aircraft out of the shops during the late-fall/early winter period, which is critical for them,” says Kleiman.

Martynas Grigalavicius, head of FL Technics’s maintenance facility in Kaunas, Lithuania, reports that when it comes to base maintenance, the aircraft type typically determines when major work is scheduled.

“For the narrowbody segment, the hangars are usually full of aircraft undergoing major inspections such as
C checks, during the low travel season. However, for widebody aircraft, seasonal fluctuation is not as big an issue, since they tend to operate about the same amount, year round.” 

At the same time, Grigalavicius adds that FL Technics has been able to keep its lines going during the slower summer months, when base maintenance demand usually shifts to repossession and redelivery transactions. Along with base maintenance, he reports, FL Technics supplies spare parts, engineering, technical training and many other MRO services. “This allows us to balance and adapt our human resources as well as the overall work flow according to the demand.”

To illustrate the extent to which the seasonality of airline operations can impact an MRO’s bottom line, Philip Swanson, director  of sales, marketing and commercial for Cardiff Aviation in the U.K., reports that the four months of May through August account for just 13% of the company’s yearly revenue, on average. He attributes this to increased leisure travel, when most airlines want to keep their aircraft out of the hangar. For MROs, that implies the need for a mixed client base.

“Broadly speaking, if an MRO positions itself in the market to serve the air carriers more than the lessors, that MRO will be more exposed to the seasonal spikes in demand,” he notes. “That is why many MROs will base their business model on a mixture of clients from the leasing community as well as the airlines and charter operators to mitigate the seasonal effect.”

According to Swanson, lessors normally use MRO services more evenly throughout the year, while airlines strive to avoid grounding aircraft for maintenance in the summer at all costs. “So, an MRO with a high concentration of leasing clients should theoretically be better insulated from the shocks of the seasonal effect,” he points out.

Asked if MROs should take a more global marketing approach to offset any seasonal downturns in their home markets, Swanson explains that this strategy has its own inherent set of problems.

“There is an argument for going into markets not so deeply affected by the reduction in MRO activity during the summer in the northern hemisphere. However this effectively means shifting marketing activity away from the traditional markets toward different markets for half of the year.”

Cardiff Aviation’s focus, says Swanson, is Europe and the Commonwealth of Independent States, mainly due to the range of the aircraft types it services—specifically the Airbus A320, and Boeing 737 and 757 families, for which it holds European Aviation Safety Agency and U.K. Civil Aviation Authority approvals. “A number of European MROs with similar approvals market themselves in the Middle East and Africa where the seasonal variation is reduced,” he says. “However, there are economic and cultural issues to overcome in these regions alongside the geographical limitations. Consequently, the majority remain largely focused on the northern hemisphere.”

For Swanson, one of the most important concerns for MROs is the retention of qualified staff during the swing between seasons. In that regard, while most European MROs keep a core team of full-time staff even throughout the low-workload summer, they often manage the transition to the busy winter months by engaging experienced contract engineers, who prefer to work on seasonal assignments. “The services of these specialists bolster capacity in the winter months and while their hourly employment costs tend to be higher than local (permanent) staff, they leave in the spring and summer so the cost burden reduces with diminishing seasonal demand,” he explains.

One way to become less dependent on seasonal fluctuations in the business is “to expand capacity for core capabilities, while adding different tasks to the MRO’s current portfolio, says FL Technics’ Grigalavicius. “The demand for services such as component or landing gear overhaul is more or less steady year-round,” he suggests. “In general, it may prolong the full-power working schedule of the base maintenance team. Of course, the strategy and investments to do that should be thoroughly analyzed as everything depends on the MRO’s specific target markets.”

Reed Chase, general manager of Empire Aerospace, a Dash 8, ATR and Saab airframe and powerplant maintenance specialist in Coeur D’Alene, Idaho, says that diversifying the customer base could ensure a constant stream of work through a hangar. 

“To do this, an MRO facility should have at least two solid customers with a minimum of 20 aircraft each. That would assure at least one aircraft, per month, going through the hangar throughout much of the year,” he remarks. “But to make up for the times when the two primary customers may not keep the shop busy, you should have a few smaller customers—with 3-4 aircraft each—with different requirements, including heavy inspection and modification work. That will keep the maintenance lines going throughout the year.”

Along with that, Chase recommends having solid back-shop capability to support off-airplane work.  “For example, we have an ATR customer who removes damaged leading edge ice boots and sends them to us for repair. That type of work can fill any seasonal gaps.”

But Chase also points out that the company expects to diversify its customer base away from turboprops by moving into regional jet support for the first time. “By the end of this year, we will be adding either an Embraer ERJ 145, an E-175 or both. We believe that by expanding our capabilities into regional jets, it will provide an opportunity for additional customers, who could also fill seasonal gaps.”

Tucker Morrison, chief operating officer for Jacksonville, Florida-headquartered Flightstar Aircraft Services—a narrowbody aircraft specialist—advises that one way to fill up shop capacity in the slower months is to target operators with smaller fleets that normally do not have the purchasing power to solidify positions at an MRO facility earlier in the year. “That is when the larger operators are competing for slots,” he explains. “Since smaller carriers may not be subject to the same traffic demands that the big-brand legacy airlines have in the summer months, they can be a little more flexible as to when they can schedule work.”

But as Morrison reports, there appears to be an emerging trend with the large airline maintenance season.

“Low fuels prices have allowed airlines to extend the summer flying season on the front end, to begin in the late April/early May time frame, rather than mid-June, which was historically the case,” he notes. “For MROs, the challenge is to accommodate heavy maintenance demand earlier in the year. We are trying to work with our customers to get them to move some of their MRO demand into the summer, so we can still accommodate them in the early part of the year.”

Morrison adds that, generally, the airlines are becoming amenable to creative and customized MRO scheduling solutions. “They are certainly willing to consider all options as demand shifts, and as seasonality changes.” 

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