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Labor’s Day

U.S. costs rose in 2016 following five years of stagnation.

Monday’s revelations about increased labor costs in U.S. maintenance have been echoed by voices within the sector.

“The industry continues to be sensitive around the labor rate but inevitably it will need to increase in order to align with increased technician wages,” a U.S.-based MRO provider that wishes to remain anonymous tells MRO Network.

The company outlined the retirement of experienced workers, capability gaps on certain aircraft types and competition from airline technical departments as factors helping to push up wages.

Another factor is an expanding fleet and relatively low fuel prices, which allow airlines to keep older, more maintenance-hungry equipment in service for longer, which in turn increases demand for mechanics.

Following five years of stagnation, US aircraft technician and mechanic wages jumped about five per cent through 2016, increasing maintenance costs for many US carriers.

The leap follows a period in which MRO wages in China gained ground on those in the West, lessening the impetus for widebody operators in the US to shift heavy maintenance to Asia.

In 2017 MRO worker salaries in China are just five per cent behind those in the US, according to Oliver Wyman, but it seems their upward trajectory will need to continue if the differential is not to widen again.

Of course, airlines do not only consider labor costs when choosing an MRO: Experience, quality and proximity are also important, as is a past relationship.

Nonetheless, in the current political climate, it will be interesting to see if airlines are as quick to outsource work to Asia if wage differentials do widen again.

For a deeper look at labor rates in the MRO sector, pick up the next issue of Inside MRO.

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