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IATA Sees MRO Costs Increasing, Despite New Techniques

Although new technologies show promise for reducing MRO expenses, maintenance costs are still increasing.

Innovation in MRO techniques, new maintenance-stingy aircraft and more durable engines and components notwithstanding, maintenance spending appears to be increasing slightly, even on a unit basis. According to the International Air Transport Association’s (IATA) Airline Maintenance Cost Executive Commentary, direct maintenance cost per flight hour increased 12% in nominal terms from 2010 to 2014, or about 1.7% annually in real terms.

Chris Markou, IATA’s head of operational cost management, suggests several possible reasons: OEM part costs go up more rapidly than general inflation; new opportunities for more outsourcing of labor-intensive work have diminished as outsourcing has become dominant; there are fewer suppliers of many MRO materials and components; and testing and tooling equipment have become more expensive.

Of course, to the extent that slightly higher MRO spending increases reliability and thus avoids expensive cancellations and delays, airlines may willingly pay it. But data collected annually by IATA’s Maintenance Cost Task Force (MCTF) at least provides a reality check on OEM forecasts and airline hopes.

Participating airlines can use MCTF reports to estimate the maintenance costs of a possible new fleet and the benchmark their own costs against industry-wide averages of direct costs for line, engine, base and component maintenance and for overhead, productivity and other metrics. Further, Markou notes,  “Participating airlines can request customized reports, obtain specific analyses of future plans and get estimates of cost-management opportunities.”

Data-collection for the 2016 report is now underway. IATA’s 2015 report, based on 2014 data, represented 51 airlines and more than 20% of the world’s MRO spending. It is especially useful to have an airline reporting every year so relevant trends can be tracked. 

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