Airplane MRO market EU up third in coming decade

20 October 2015

The aviation MRO market in Europe will grow by about a third between 2015 and 2025, a recent report from Cavok finds. Although the total fleet size is expected to increase at an annual rate of 2.8%, the additional fleet will place constraints on the MRO market as their more advanced monitoring and technology reduces their overall maintenance demand.

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.

European fleet changes

European Skies
The coming ten years will see a 25% increase in the absolute number of EU planes in the sky, with a growth rate of 2.8%, the total number of planes will grow from 6,131 today to more than 8000 in 2025. However, the numbers hide that the fleet makeup is set to change. In the ten year period, 2,100 planes are set to retired and will be replaced by the addition of more than 4,100.

Change in fleet family type

The retirement and addition of new aircrafts is set to change the makeup of the overall fleet in the EU, with particularly older planes, those from ’70s and ’80s retired and newer models added. The change in the vintage of the fleet will see $2.9 billion in MRO leave the market, while the addition and continued maintenance of the fleet will see MRO on ’90s, ’00s and ’10s aircraft increase $9.9 billion in the next ten years.

Oil price on MRO demand

Jet A prices on MRO demand
One factor that has the potential to affect the MRO market is the decrease in oil price. The spot price per gallon for Jet A fuel has dropped by almost two thirds. In the plot against utilisation hours and Jet A fuel, that define the economic value of investment in new aircrafts, new jets are less profitable than their relative gas guzzling vintage generations. Keeping the older generation around, with their higher MRO costs may therefore increase wider MRO demand and thereby the industry.

The authors of the report, however, do not expect the decrease in oil price to change the orders currently on the books in the long term as oil prices are projected to increase back above the inflection point in the long term.

European MRO market development

Increasing MRO
Over the whole period, the MRO segment is projected to climb by about a third in the coming 10 years, from $18 billion in 2015 to $24.9 billion in 2025 – which constitutes an average growth rate of 3.3%. Following the retirement of old plane and addition of new planes with newer technologies, particularly engines will see growth by 2025, while airframe and line will continue to be flat.

The loss of older aircraft to repair, and the change in fleet to include more planes that have advanced technology requiring less maintenance, as well as more advanced self-monitoring technology, will mean decreased demand on MRO and a constraint on the market. As a result of which, the MRO market will flatten out after 2022. Cavok advises MRO suppliers that “despite the solid growth, aftermarket participants will likely still need to have an aggressive and innovative plan to maintain market share.”


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