Industry analysts see overall growth in the maintenance, repair and overhaul industry over the next decade, yet industry consensus points to today's fragile recovery remaining at the mercy of high oil prices.
TeamSAI executive vice president David Marcontell, speaking at the Aviation Week MRO Americas conference in Miami, expects global MRO spending to increase by 10.8% in 2011 to $46.9 billion, up from $42.3 billion in 2010, supporting a worldwide fleet of 20,203 aircraft, up from 19,675 in 2010.
Marcontell says the 3.2% increase in the fleet size has driven the increase in MRO spending, while the overall economic recovery has increased aircraft utilization .4% year over year. As a result, engine maintenance has risen 6.4% - accounting for 46% of the total spending - while airframe, component and line maintenance has increased 1%, coupled with a .3% decreased in the labor rate.
A 3.8% CAGR will grow MRO spending to $56.4 billion by 2016, accelerating to 4.1% CAGR into 2021, he adds, with Asia posting the fastest growth at nearly 6.8% CAGR between 2011 and 2021, though Marcontell cautions North American growth will be slow.
TeamSAI only expects the North American narrowbody fleet to grow in the next five years as widebody and regional jet fleets continue to contract, with a .3% CAGR decrease until 2016, followed by a positive 1.4% trend between 2016 and 2021.
Overall, David Marcontell anticipates a 3.5% compound annual growth rate (CAGR) in the fleet, with 28,591 aircraft in service in 2012, with the MRO sector expected to grow to $69 billion in the next decade, with a 5.3% CAGR in air seat kilometers (ASK) over the same period with high utilisation of larger aircraft with more seats over longer routes.
Though near-term industry growth could be threatened with the steady climb of oil prices says Chris Markou, assistant director engineering and environment for the International Air Transport Association.
Markou says fuel costs threaten prospects for airline profitability in 2011, with just under $10 billion forecast for the year if oil prices remain around $96 per barrel, though he cautions the industry will be "highly unprofitably" at $120 to $150 per barrel.
In 2009 and 2010, says Markou, fuel accounted for roughly a quarter of total airline costs, down from its peak of 34% in 2008 when oil reached $147 per barrel, though he adds that depending on the type of operation fuel has accounted for more than half of some operational budgets as the price climbs again.
However, Kevin Michaels a partner at Aerostrategy expects long-term growth to more modest with a 3.3% CAGR, with the industry overestimating the airport and infrastructure growth in emerging markets outside of China, calling a 5.5% growth rate in ASKs "overstated."
Michaels says despite potentially overstated growth in certain markets, an increasing share of aircraft are being used to replace older less efficient models, shifting from what once was 20% of deliveries as replacement and 80% for growth to what is now 40-50% for replacement and the balance for growth. The result is a faster turn over in aircraft fleets and lower near-term maintenance costs.
Source: Air Transport Intelligence news
