Dany Kleiman, vice-president of operations for the MRO group at Illinois-based AAR
Given rising overseas labour rates and domestic productivity improvements, at AAR we are seeing more widebody MRO work returning to the US and we believe the trend will continue. The cost-benefit of ferrying an airplane overseas is shrinking dramatically and we see millions of man-hours can be shifted back to the US.
In addition to rising labour expenses, there are other costs associated with sending aircraft overseas for heavy maintenance. For instance, airlines typically send a team of their own employees overseas to monitor the work, which results in costs related to keeping a team overseas for long periods of time and for shipping parts back and forth.
In addition to heavy maintenance, US carriers are spending hundreds of millions of dollars to upgrade widebody and narrowbody interiors with lie-flat seats and other amenities like in-flight entertainment to be on par with new aircraft. To capture the expected increase in demand, AAR plans to open a new MRO facility at Rockford International airport in Illinois in the spring of 2016. The site will have two hangars capable of accommodating widebodies such as 777s and 787s and the focus will be on next-generation widebody aircraft.
We also recently completed a new hangar at our Lake Charles MRO facility capable of accommodating aircraft as large as the A380 and 747-8 and have already secured contracts that have the hangar booked for the next six months.
Sébastien Weber, VP marketing, product support and development at AFI KLM E&M
The commercial aviation sector is characterised by consolidation (of airlines, suppliers and MROs), by new technologies and by growth, especially in emerging countries, with a “shift to the east” being witnessed. There also is a pressure on price, which is expected to last.
New generation aircraft provide OEMs with the opportunity to introduce licensing schemes and to limit access to repair data. In addition they herald price escalations and better reliability that will also impact the MRO sector. As a consequence, this highly competitive market will probably force a decrease in the number of actors. However, from the airlines’ perspective, competition is necessary to keep pressure on costs.
For AFI KLM E&M new platforms, such as 787 and A350, mean new growth opportunities for component and engine support. In the past 10 years, we have invested more than €400m ($497m) in cutting-edge maintenance facilities in our European main bases, and in acquisitions or ventures. This has allowed us to develop a successful portfolio of services on last generation engines, such as GE90.
This will continue in 2015 with the opening of a brand new plant dedicated to aerostructures and composites at Paris’ Charles de Gaulle Airport, called Hélios. This will allow us to develop our capability, including with new generation composite aircraft.
Through our state of the art engine facilities in Amsterdam and Paris, we are also developing our engine portfolio with the GEnx, for which we are already EASA certified. And our component capabilities are being continuously extended, in particular with the E-jet, 787 and A350.
AFI KLM E&M is also developing its global MRO Network as demonstrated by our recent acquisition of Barfield in the US and the opening of a component shop in Shanghai. The group has also set up Bonus, a joint venture in Miami dedicated to engine teardown and PW4000 overhaul.
Zilvinas Lapinskas, CEO of FL Technics
The ongoing introduction of new aircraft types into the global fleet presents the MRO market with a variety of challenges. Firstly, the players will be forced to make substantial investments into equipment and know-how to be able to support the new complex systems and materials. As a result, human resource planning is likely to become one the top challenges for all MRO providers.
One of the continuing trends is connected to OEMs becoming increasingly proactive in the aftermarket, launching more patents to delay or prevent rivals from introducing competing products, such as PMA parts. This is a cause for alarm, as operators know that over-reliance on OEM services could result in reduced competition in the MRO market, and the manufacturer’s prices could easily escalate to unacceptable heights.
Although there is a struggle between MROs and OEMs in engine MRO, there is room for their cooperation in the airframe segment. OEMs acting as technical data centres with independent MROs executing their service contracts and expanding OEMs’ geographical reach, seems to be becoming an increasingly realistic scenario for future cooperation of these players.
Meanwhile, the increased availability of surplus and teardown parts is adding new dynamics to the aftermarket sector, as the growing number of OEM alternatives increases competition and can affect PMA makers and OEM positions in the short-term. However, in the long-term, as more new generation aircraft are introduced, the number of alternative products on the market is likely to decline, resulting in OEMs regaining their position as market leaders.
Ian Bartholomew, interim managing director for Monarch Aircraft Engineering
Early indications suggest that 2015 will continue to remain very busy for MROs, with significant demand from operators. There will, however, be challenges related to skills shortages and the availability of trained engineers. One solution to this is to ensure we bring the next generation of engineers through. At MAEL we have been extremely successful at doing this through our industry-leading apprenticeship scheme.
Operators are also seeking MROs which can provide full solutions, such as line maintenance, spares/material management and technical management, as well as airframe heavy maintenance. At MAEL we are ideally positioned to benefit from this as we already have a number of customers contracted for the full suite of services.
The MRO industry is a multibillion-dollar industry and successful MROs will be able to be more selective with their service provisions and customer proposition, which will ensure they have a long-term viability. As an award-winning MRO, MAEL is focused on maintaining the highest level of customer satisfaction, which in turn will ensure we retain our long-term, loyal customer base.
Stefan Weingartner, president of MTU Maintenance
Our research estimates that there will be an eight per cent growth in revenue from engine MRO over the next 10 years and an annual two to three per cent growth in the number of shop visits for commercial jets with more than 100 seats. However, while the engine MRO market is growing and booming, we are facing a structural change which will affect the sector as a whole.
The older generation engines are slowly, but steadily, being replaced by newer, more economical versions which need fewer shop visits and have longer on-wing times. This means that engine MRO providers with a focus on ageing engine types are struggling and looking for ways to compensate for their decreasing work-load. This results in increasing cost pressure and an overcapacity of older engine models. However, thanks to our extensive part repair capabilities and service solutions for mature fleets, MTU Maintenance is well positioned to gain market share.
We are also witnessing a more than proportional growth in demand for engines, such as the V2500-A5, CFM56-5B/-7, GE90 and CF34-8/-10 engines. MTU Maintenance entered into these growth platforms years ago, and we are confident that we will benefit from our investments also in the future.
With this development in mind, we expect some consolidation of the engine MRO sector over the next few years, with large strong players dominating the market and smaller players that cover specific market niches. In addition, OEMs are increasing their presence in the aftermarket, especially for the next generation of engines.
To stay ahead of the competition, MTU is tying its manufacturing and maintenance businesses closer together. As an independent MRO provider and a risk-and-revenue share partner for popular engines types, MTU has access to both aftermarket segments. In 2015, we want to continue to dominate the independent MRO market with our broad portfolio of alternative repairs and service solutions. At the same time, we want to offer our services as a partner to the OEMs, especially on the PW1100G, to gain access to this growing market as well.
André Wall, CEO of SR Technics
In 2015, SR Technics will strengthen our position in the MRO marketplace and further consolidate our business in existing and emerging aircraft to ensure we become more successful in A320, A330/340, A350, 737 and 787 fleets.
Over the next few years, SR Technics will keep pace with market and customer expectations on a global scale by ensuring our flexible services are available in new locations. However, today’s customers demand much more than simply well-located classic MRO services. They want to optimise all their business relationships. They want a guarantee of aircraft availability and fleet protection from unplanned groundings and unnecessary part replacements. That means they demand increased reliability and performance and better returns on investment. So SR Technics' good OEM relationships and value-adding networks and services are going to become critical.
In 2015, our management structure will become more streamlined and less hierarchical. To ensure that we still set market trends, we shall invest more in innovations, such as automated processes, real-time parts tracking, smart logistics and fault predictive maintenance solutions. We shall also continue to energise our operating culture by creating ever-more agile and cross-departmental integrated teams that come together to serve particular customer requirements.
SR Technics’ innovative, increasingly globalised, business, is constantly adapting to match changing customer expectations in today’s legacy, mature and emerging aircraft technologies. We aim to be the most agile, collaborative MRO business and the sector’s leading serial innovator.
Lim Serh Ghee, president of ST Aerospace
The global aviation industry has undergone rapid changes over the past 10 years. In the past, the structure of the aircraft MRO industry was neatly partitioned into airframe, engines and components, but as competition intensifies, businesses have started to broaden their service offerings through the bundling of traditional MRO services and providing new products and services.
At ST Aerospace, we have sought to differentiate ourselves as a "total aviation support provider" by moving up the value chain. We have gone into new market spheres ranging from aircraft conversions, cabin interior reconfiguration and VIP aircraft completion to commercial aircraft seating, wi-fi in-flight entertainment systems and pilot training.
With each new generation of aircraft, we are seeing an increase in the use of composites, alongside a technological leap over the previous generation. This pervasive use of composites on newer aircraft will result in the need for new inspection techniques and repairs. ST Aerospace aims to capitalise on this, leveraging our comprehensive knowledge of composite material and non-destructive testing processes, garnered through our experience in new generation aircraft MRO, as well as in composite design and manufacturing.
All the above is in line with ST Aerospace’s objective is to offer an integrated MRO solution that covers almost every part of aftermarket support a customer could look for.
Valter Fernandes, operations vice-president of TAP Maintenance & Engineering Brazil
The main challenge facing MROs in 2015 and in subsequent years is the growing presence of OEMs in the aftermarket sector. On engines this it is a given, but on components also the barriers to working with new products for independent and even airline MROs is greater than ever. That said, TAP considers that OEMs and MROs will continue to strengthen their relationships, as they can complement each other and offer together a more competitive product to the end costumer.
Several good opportunities are on the horizon for TAP. We recently expanded our landing gear shop, adding three new platforms (A320, E-Jet and ATR). We also have several OEM partnerships that will mature and become fruitful in 2015, mainly in the components shop. Partnering with OEMs is a good solution to provide local support to our domestic customers. The Brazilian airline market is expanding and, as most carriers look for in country capabilities to avoid the burden of logistics, this is another good opportunity for us.