These are interesting times for widebody airframe MRO providers, as the first of a new generation of twin-aisle airliners approaches its initial major maintenance events. At the same time, older models are still undergoing heavy checks and extensive modifications, although they represent a diminishing market.
Statistics compiled by Aviation Week show that widebodies remain well within the list of top 10 aircraft families for 2015-16 (see table above), in terms of heavy MRO expenditures. However, the trends clearly show a declining market for four-engine transports such as the Boeing 747-400, but increasing MRO activity for current production twins such as the Airbus A330-300. To cite some numbers, estimates for 747-400 maintenance spending this year are about $413 million, but by 2016 that likely drops to $327 million. For the A330-300, the respective figures for 2015 and 2016 are $219 and $242 million.
This data validates what MRO vendors and industry observers report.
“We can expect to see more Airbus A380s making their first six-year heavy maintenance visits, although some A380 operators may be able to in-source this work to their own MROs,” says Rogier van der Velde, senior service manager of consultancy SGI Aviation in Amsterdam. He explains that approximately 35 Airbus A380s, built between 2009-10, will likely be slated for heavy checks in 2015 and 2016. “At the same time, we can see that a number of in-service passenger Boeing 747‑400s are gradually being phased out by several operators. For MROs, this will mean more 747-400 dismantling.”
According to Richard Brown, principal at ICF International in London, the growth in demand for widebody aircraft airframe and rotable maintenance is now being driven by the A330 and 777—with the A380 coming soon. “The A380 will start to generate more maintenance activity as the fleet matures; however, the [large] quantity of 777s and A330s means that these aircraft are set to dominate widebody maintenance spending,” he says.
But Brown also stresses that this will be offset by continued retirements of maintenance-intensive aircraft such as the 747-400s, 767s, MD-11s, and the A300s, A310s and A340s.
“The challenge for MROs is that aircraft replacing an airplane such as the 747-400 will require less maintenance man-hours, and therefore fewer technicians,” he notes.
The cost advantages enjoyed by Asian MRO suppliers will continue to erode due to shortages of skilled labor and wage inflation. “Widebody airframe heavy check migration from North America to Asia has peaked, and ICF sees more airframe work remaining in North America,” he says. “Average labor hours per heavy maintenance check are declining, which means the labor savings from developing regions are becoming less important. Also, skilled labor shortages in Asia have driven up labor rates to the point that U.S. labor rates are now comparable to those in Asia.”
Added to this is the “available airframe facility supply” in North America and planned expansions, says Brown. “This adds up to a resurgence of maintenance activity in North America.”
Jumping on that trend, AAR Corp. plans to open a new widebody MRO facility in the next 18-24 months at the Chicago Rockford International Airport in Illinois. The company, in fact, is ramping up to service the new generation of widebodies, including the 747-8, 787, and the A380. According to Dany Kleiman, AAR’s group vice president, repair and engineering, the company also anticipates an increase in demand for heavy maintenance events and modifications in 2015 and 2016, particularly on the 767, 777, A330 and A340.
“There will be a continuing narrowing of the gap in costs between U.S. providers of widebody aircraft MRO and their Asia/Pacific counterparts,” Kleiman notes. “This will provide an opportunity to recapture a lot of widebody aircraft support that went to the Asia/Pacific region. We are definitely focused on bringing more of that business back and being competitive enough to do that.”
Not everyone agrees. “Costs are rising, even in traditionally lower-cost Asian MRO markets, and many are forecasting a shift back to the U.S. in the near future. We do not see this happening as yet,” says Lim Serh Ghee, president of ST Aerospace in Singapore. “We believe that pricing is not the only competitive differential. Work quality and turnaround time are equally important.”
Narrowbody airframe specialist FL Technics is entering the widebody MRO market, adding that capability to its Part 145 repair station certificate, starting with the A330. As CEO Zilvinas Lapinskas of the Lithuania-based company explains, the rising demand for A330-related services “has been noticeable within the industry for some time now,” given the aircraft’s growing popularity among carriers.
“From an MRO perspective, this trend presents an opportunity to become more flexible and less dependent on the seasonality of demand for narrowbody base maintenance,” Lapinskas notes. “Since Airbus A330s are not subject to seasonal demand changes, it creates opportunities to keep the company’s growing capacity busy year-round.”
Sebastien Weber, vice president-marketing, product support and development, Air France Industries-KLM Engineering And Maintenance, reports that in the next two years, “there will be opportunities” for Boeing and Airbus to introduce licensing schemes and restrict access to technical data to (certain approved) MROs for the 787 and A350. “As a consequence, there will probably be a decrease in the number of maintenance providers—although from an airline perspective, competition is necessary to keep pressure on costs,” he says. “For AFI-KLM E&M, new platforms such as the 787 and A350 clearly mean new growth opportunities for component and engine services.”
Along those lines, Lufthansa Technik, which provides MRO for most widebody types, is analyzing the extension of those services to include 787 and A350 base maintenance, according to Marcus Motschenbacher, director network sales and customer service, aircraft base maintenance. The company’s “primary widebody aircraft MRO concentration” is on the A330, A340, A380; the 747-400 and -8, and the 767. It also provides all services for the 777 through joint venture partner AMECO.
As Motschenbacher sees it, the major trends for widebody MRO in 2015-16 will include longer maintenance intervals coupled with a shorter total life cycle, due to the phase-out of aircraft with high maintenance costs and fuel consumption, such as the 747-400 and the A340. “For the time being, there are still a reasonably large amount of these aircraft being operated,” he says. “They are aging and thus will need more MRO over time, given that they will not be stored.”
He adds that widebody airframe operators will focus more on deferring base maintenance work to the winter season, thus making for increased seasonality of the business.
Asked if Lufthansa Technik expects an increase in specialty work on widebodies, such as cabin or structural modifications, Motschenbacher reports that any above-average increase in that kind of demand could occur due to any requirements (issued by) Airbus and Boeing. “Additionally, the increasing competition on the airline market might lead airlines to refurbish their cabins more often than was traditionally done, or redesign the booking classes—introducing premium economy or decreasing first-class capacity. As for particular aircraft types, the first A380s are reaching the age for heavy base maintenance, so we expect it to contribute to our MRO activity over the next few years,” he says.
A version of this article appears in the December 29, 2014/January 14, 2015 issue of Aviation Week & Space Technology.