PMAs have been in the news recently, whether due to the recent agreement between CFMI and IATA or the potential for PMA suppliers to help OEMs with supply-chain issues.
The consultancy ICF estimates that PMA parts now represents less than 2% of MRO material spend, around $650 million, out of a total parts market of over $35 billion. Richard Brown, principal at ICF, has predicted that “PMAs are set to grow significantly over the next decade, growing at a 5.8% a year to more than $1.15 billion by 2027.” This is driven mostly by operators’ willingness to use PMAs in the cabin, increasing acceptance of PMAs by some airlines and in some cases lessors’ consideration of PMAs in mature and sunset aircraft, particularly in non-flight critical applications.
The IATA-CFMI agreement is another sign of a greater acceptance of alternative parts. However, PMA suppliers face a number of challenges that limit the adoption of PMAs, according to Brown.
First, Brown notes that the market for maintenance on the latest engines, for example LEAPs and GTFs, is effectively bound entirely by long-term service agreements with OEMs or their OEM partners. Since shop visits are low in the coming years it doesn’t make sense for PMA providers to invest in these engines until they come off their OEM and OEM-partner agreements. The focus of PMA suppliers will therefore be on engines such as CFM56 and V2500.
Second, much of engine maintenance for these mature engines is contracted directly with the OEMs. These engines are not typically addressable by PMA part suppliers. Also, Brown notes that many MROs have signed material agreements with engine OEMs that provide discounts on part pricing. It is not clear whether these agreements allow operators to purchase PMAs without putting price discounts at risk.
What about engines not under OEM or partner contracts or affected by MRO material agreements? Brown estimates that for typical narrowbody engines, about 30% of the market might be available for PMAs. However, he cautions lessors own about half of this potential market and so far lessors have been less willing to allow PMA usage in engines. So perhaps about 15% of engine shop visits are open to PMAs and repairs from firms such as HEICO, Chromalloy and others.
But some major airlines that order these shop visits have material agreements with OEMs that give them pricing discounts in return for sticking with OEM parts. And some of the remaining possible demand for PMAs will be satisfied by used surplus parts. These factors shave the potential PMA market further. Further, parts are only about 70% of total engine MRO spend.
This succession of factors significantly limits the possible PMA share of the engine aftermarket. However, given increasing shop visits, new part shortages and PMA alternatives, PMA supply will need to accelerate to meet even this limited demand, Brown judges. “Obviously, high-value parts such as turbine blades are the prime target. New part sets might cost $1 million so that should be good for suppliers if they can fulfill demand.”