Global aviation MRO market to grow to 100 billion

22 April 2015 Consultancy.uk

Considerable fleet capacity will be added in the coming decade, with an average growth of 3.7% to 2025, the skies will continue to fill with aircraft. The old and new aircraft will require continued MRO, with a recent report from Cavok finding that the MRO market is expected to grow at 4.1% annually, to $100 billion by 2025.

Recent analysis from Cavok, the aviation consulting subsidiary practice of Oliver Wyman, explores the aviation market. The report, titled ‘Turbulence Ahead Disengage the Autopilot’, considers projected changes in the aviation market that will affect the multi-billion dollar Maintenance, Repair, and Operations (MRO) market between now and 2025. 

Adding planes
The consultancy finds that the growth of the global aircraft fleet is expected to average 3.7% over the period between now and 2025. With Narrowbody aircraft growing at the highest rate at 4.9% annually between 2015 and 2025, adding 7965 planes in the period and Regional Jets' numbers expected to decrease slightly, dropping from 3,396 to 2,906. While the world will be adding around 10,481 planes in the period, there is considerable variation in which regions are growing and at which rate.

Global fleet growth

Particularly the Asia Pacific region, which includes China and India, will see considerable growth, with 10 year CAGR estimated to be 6.1% which means that the fleet will almost double in the 10 year period, up 5,235 on its current 6,452 planes. Africa and the Middle East too will enjoy strong growth at 5.5%, while Europe manages modest growth of 2.8% adding a further 1.965 planes to its fleet. North America is the slowest to grow, at 0.9% annually to 2025.

Absolute fleet growth

While considerable new capacity will be added in the coming 10 years, 43% of all new aircraft deliveries will replace old technology aircraft over the forecast period. With 18,068 passenger planes to be added while 7,346 are retired. A small number (716) of passenger fleet planes will be converted to cargo, with 423 new cargo planes added to rejuvenate the loss of 664 cargo plane retirements.

Adding and subtracting fleet

With the addition of new models and the retirement of old models, the fleet makeup is expected to change radically over the coming 10 years. 1970’s models will be reduced from 2% to around 0.1%, while 1980’s models will too be decreasing in proportion as some are retired and the 2010 fleet comes into operation, with a pie decrease of 26% to 9%. The 2000’s models will increase from 9% of the fleet to 16%, with the 2010’s model coming to take a 29% share by 2025.

Fleet proportion by year

Increase in MRO
With the growth in fleet, the MRO spend too is projected to increase significantly over the coming 10 years. With especially engine MRO seeing significant growth over the period at around 5.4% per annum, with an absolute increase from $27.9 billion to 48.8 billion. While the total market is expected to grow at an average annual rate of 4.1%, growing from $67.1 billion to just over $100 billion. 

The segment to see the greatest increase in market share are engines, up from 42% in 2015 to 47% in 2025. While, with innovation on airframe technology, the need for heavy maintenance has decrease with a corresponding drop in market share from 22% to 17% and a slowed annual growth in costs.

Growth in MRO

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