MRO market to grow 4% annually to $115 billion by 2028

19 March 2018

The global aviation fleet is set to see solid growth, up 4.2% annually to 2028, when a total of more than 32,000 plans will be operational. A new study shows that the MRO market will see comparable growth in the same period, up by 4% on average to around $115 billion. The Chinese market is set to see the most growth, while engines are increasingly the focus of maintenance.

Commercial aviation is set to see solid growth over the coming decade, buoyed by increasing demand from Asia, as well as replacement and repair of current and future fleets. To better understand the impact of the changes on the MRO segment, Oliver Wyman has released its latest industry focused report, titled ‘Global Fleet and MRO market Forecast Commentary’. The report is based on the firm’s analysis of data from the IMF among other sources.

Global fleet by aircraft class

The global fleet is set to see significant growth over the coming decades, as total aircraft numbers hit almost 38,000 by 2028. Growth is set to be the most significant between 2018 and 2023, with the fleet size up by 4.2% annually on average to 32,300 planes. The years to 2028 will see growth of 3.3% meanwhile. The fleet is set to become younger overall, with older planes being retired – fleet age will fall from an average 11.2 years in 2018 to 10.5 years by 2028.

In terms of plane type, the narrow-body type is set to see the most significant increase – on the back of growing domestic and regional demand. The category is set to increase by 5.2% overall to 2028, totalling almost 25,000 units. Wide-body jets will see growth of 3.4% over the period, while regional jet and turboprops are projected to see slight declines, of -0.9% and -0.5% annually respectively.

Growth rates by region

India and China are marked as the most solid movers until 2023, at 11.7% and 10.4% annually, respectively. The Asia Pacific as a whole sees growth of around 5% for the period, while Western Europe and North America clock 3.5% and 1.5% respectively.

Demand in China and India are both set to tail off slightly between 2023 and 2028, to 5.8% and 7.2% respectively, while Europe falls to 2.1% and North America drops a small 0.1% to 1.4%. Overall China will see growth of around 8.8%, India 8.7% and the Middle East will see growth of 4.7%.

MRO market forecast

The growth in fleets is set to be a boon for the MRO segment, even while the practicalities are set to change. Overall, the industry will grow to around $115 billion by 2028, up from close to $80 billion this year – at CAGR 4%. The engines segment is set to see the strongest growth, at 4.9% CAGR to 2028, on the back of higher temperature and pressure designs, while airframes – the quality of which has improved significantly – will see slower 2.2% growth. Components are projected to see a modest rise, up by 4.5% per annum over the coming decade.

Growth in demand for MRO service is likely to create various pressures, with employment in the segment already cited as an issue in some regions.

Total MRO spend by region

Regional MRO spending increases which reflecting regional fleet growth will be the most significant in China, where the projected spend is set to increase from around $6 billion to around $18 billion over the next decade. The Asia Pacific region will see more modest increase from a little under $15 billion to around $21 billion, while Western Europe and North America climbed around $5 billion and $4 billion respectively.


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BDO administrates Flybmi amid aviation industry turbulence

21 February 2019

Around 400 jobs in the UK, Germany, Sweden and Belgium have been lost following the collapse of commercial airliner Flybmi. The administration, which will be overseen by professionals from BDO, constitutes the third failure of a commercial carrier since the start of 2019, with the industry having suffered from sustained turbulence for the duration of last year.

The initial 4 a.m. announcement informing customers that Britain’s longest-surviving airline, Monarch, had been placed into administration meant that many passengers arrived at airports only to find their flights cancelled and holiday plans inconvenienced, while many were left with no means of returning to the UK. Beyond the immediate ramifications, however, the collapse of Monarch also drew to a close six years of steady improvement for commercial carriers across the world. 

Since the economic shock of 2011 – an echo of the 2008 financial crisis – the number of commercial airlines falling into administration across the world declined at a relatively consistent rate. According to data from – barring an anomaly of a year which saw only four airlines falter in 2014 – the number of collapses in the sector declined continuously. In 2017, the figure stood at just 10, compared to a huge 46 in 2011, and a  staggering 61 in 2008.

Global number of airlines to have failed since 2005

Following Monarch’s precipitous fall, however, the situation once more seems to have commenced a nose-dive in the following year. 15 airlines failed in 2018, and less than two months into 2019, another three have followed suit. That puts 2019 on pace to reach 24 airline collapses. 

The latest of these firms to spiral into administration is Flybmi, an East Midlands-based airline which until February operated 17 regional jet aircraft on routes to 25 European cities. The company operated more than 600 flights a week from regional airports including Bristol, Newcastle, Aberdeen and the East Midlands.

News of the firm’s demise emerged as it cancelled hundreds of flights at short notice over the space of a single weekend, leaving many passengers stranded and out of pocket. Flybmi advised customers to seek refunds from credit and debit card companies, or to rebook with other airlines, before eventually appointing administrators from professional services firm BDO.

The appointment, initially reported by UK paper The Telegraph, came following a weekend of chaos, with passengers and staff desperate for information, but without an administrator to turn to, as authorities had remained tight-lipped on the matter. The process was reportedly delayed until the following Monday by a Scottish law which prevents insolvency specialists being appointed over the weekend.

Turbulence ahead

Commenting on the task at hand, BDO Business Restructuring Partner and joint administrator Tony Nygate said, “As joint administrators, we are taking all necessary steps to ensure customers, staff and suppliers are supported through the administration process. Our job is to maximise recoveries and minimise distress for all parties, acting as smoothly and swiftly as possible.”

Administrators from the firm now face questions over what preparations were in place prior to the carrier’s collapse, including actions that could have softened the blow for thousands of stranded passengers. Meanwhile, some 376 employees in the UK, Germany, Sweden and Belgium have been made redundant, with the remainder staying to assist with the administration. Unions have since demanded urgent talks with Flybmi’s administrators, with Unite, which represents about 40 of the airline’s 376 staff, calling for a buyer to be found in order to ensure wages are paid in full.

Unite Regional Secretary Paresh Patel told the press, “Unite is shocked and saddened by the news that Flybmi has gone into administration…  This is a terrible blow for the airline’s workforce and their families, as well as the East Midlands economy. We will be giving maximum support to our members who work for the airline across the UK at this very difficult time for them.”

The Brexit process seems to have played a key role in the downfall of Flybmi. Airlines are required by law to purchase carbon credits to offset their carbon emissions – something which until recently was subsidised through a free allocation of credits by European authorities. Now, however, Brussels has excluded UK firms from their allocation of credits ahead of the UK’s divorce from the EU in March, and it is anticipated that this may  well lead to more casualties in both the airline industry, and the broader British economy.

Glen Flannery, a Partner at law firm CMS, told The Telegraph, “The European Commission has started to implement its No Deal Brexit contingency plans. With effect from January 1st, it has temporarily suspended the UK’s free allocation of carbon allowances, auctioning, and the exchange of international credits. This has created a huge amount of uncertainty for UK participants, the full effects of which have yet to play out.”