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Fleet Retirements Heavily $56 Billion MRO Market

Engine maintenance expenditures represent about 40% of market

The civil aviation MRO market will be worth about $56 billion this year, with engine maintenance expenditures representing about 40%, according to analysts who presented forecasts at Aviation Week’s MRO Americas Conference.

The civil aviation fleet will grow at a 3.1% rate over the next decade despite the fact that 6,400 jets and turboprops will leave the market through 2022, according to an ICF SH&E MRO market forecast. Retirements typically drive 20% of fleet replacement needs, but over the next decade, this figure will be 50%, which is unprecedented, says Kevin Michaels, VP with ICF SH&E. This means 600-700 aircraft will retire each year for the next decade—and the last aircraft off the production line usually have shorter economic lifecycles. ICF SH&E says the current civil air transport fleet includes 26,000 aircraft.

TeamSAI, which also includes jets and turboprops in its forecast, predicts there will be 22,529 aircraft in the 2013 in-service fleet, which will climb to 33,000 by 2023, says David Marcontell, TeamSAI president and COO. TeamSAI predicts a 3.7% compound annual growth rate over the 10-year period when the firm predicts that manufacturers will deliver 16,000 new aircraft, 38% of which will be replacements.

Fleets in North America will see a higher retirement rate than other regions, he says.

One out of every six jets leaving passenger service is converted into a freighter aircraft, say Yen-Pu Paul Chen, director of forecasts and analytics for Aviation Week.

Chen points out that airline mergers have led to larger fleets, which helps operators leverage their bargaining power to keep MRO costs down. They have also streamlined the number of aircraft types they fly, which has helped lower overall MRO costs. Of scheduled airlines and cargo operators with 50 or more aircraft in their fleets, they average 3.9 aircraft families, compared to 4.9 in 2002.

Over the course of the next decade, Marcontell predicts the MRO market size and labor rates between the Americas, Europe and Asia will about equal, which will mean some of the heavy maintenance now outsourced to regions with lower rates might remain closer to home.

Michaels says ICF SH&E thinks surplus parts account for 25% of all airline parts consumed. Of that $3 billion spent on surplus parts, 65% will be installed in engines. He says surplus parts dealers get 80% of their inventory from parted out aircraft.


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