More than half of MRO survey respondents indicated that the OEMs’ increased presence in the aftermarket (53%) and the maintenance workforce shortage (52%) will be the biggest potential disruptors to the civil aviation aftermarket over the next five years. The 2019 Oliver Wyman MRO survey specifically flagged airframe OEMs’ expansion into the aftermarket—either through joint ventures or acquisitions—as a concern.
The third ranking concern relates to the first: consolidation in the industry, at 47%.
Does this portend anticompetitive market concerns?
Oliver Wyman thinks market forces will ensure a competitive marketplace—which could mean more airlines bring certain maintenance activities inhouse instead of outsourcing them, and that MROs will prosper if they deliver services that meet operators’ expectations for cost, on-time performance, quality and consistency. Those expectations have been the core qualifiers to airlines for years, and they still far outweigh others, according to the Oliver Wyman survey.
What is not driving many airlines to choose an MRO are geographic proximity, breadth of offering, access to data, bundled products and services, or data analytics—which all ranked at less than a 10% factor in airlines’ decision-marketing processes. So while MROs need to differentiate their services and the one-stop shop concept has gained a lot of attention over the years, their decision-driving importance for airlines is secondary.
Given all of this, it shouldn’t be surprising that having a long-term relationship with an MRO also ranked very low, according to the Oliver Wyman MRO survey. Several MROs have tried to foster longer-term relationships with customers to build business stability—but at least according to this survey, at the macro level, it doesn’t look like the long-term relationship is a priority. However, will this change if the capacity and labor market is constrained?
Oliver Wyman’s MRO survey also found that 48% of respondents think MROs’ digital offerings over the last three years have been spotty and are not overly compelling. Although, 74% think strong digital analytics offerings are important when choosing an MRO, but it’s not a deal breaker. OEMs’ data analytics capabilities are still far advanced to those of operators and MROs, according to survey respondents.
This all comes at the backdrop of an expanding MRO market. Oliver Wyman pegs the civil aviation aftermarket at $81.9 billion this year—with 3.5% annual increases building the market to $116 billion in 2029, according to its Global Fleet and MRO Market Forecast 2019-29. And while economic and political forces—from Brexit to trade wars to increased interest rates—could disrupt the market, survey respondents are pretty optimistic about the next decade.