MROE: Third-party MRO providers urged to form partnerships

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Third-party maintenance providers need to form partnerships to be able survive in the future MRO market, according to the head of KLM Engineering & Maintenance.

Independent maintenance companies in particular have come under increasing pressure from both the original equipment manufacturers and large, airline-affiliated MRO groups to be squeezed out of the aftermarket, said Peter de Swert, executive vice-president of KLM E&M, at Aviation Week's MRO Europe 2011 conference in Madrid.

While it was possible in the past to focus on the existing service portfolio or become an expert in niche capabilities, this is no longer the case today, he added.

The industry is more volatile and sensitive to sudden external influences, such as the volcanic ash cloud or regional unrest. Competition has become much more aggressive with airlines making long-term, full-support agreements with the OEMs and some large MRO groups being able offer to maintenance contracts at cut-throat prices, where they effectively buy market share. Finally, new-generation aircraft types are entering service, requiring large investments and intensive engineering efforts to establish repair capabilities.

"Personally, I think the MRO industry is out of balance," said de Swert. The sector is "rapidly changing" after a period of "relative stability", he added.

The solution for independent MRO companies will be in finding partners. This could be with OEMs, airlines, other maintenance providers and, significantly, also a combination of those different parties.

"Growing bigger is one solution but probably not a sufficient [strategy]," suggested de Swert.

With regard to the whole industry, he added that "selective combining of partners at both sides of the competition scale [manufacturers versus third-party MRO providers] might restore the balance".

Asked whether airline-style alliances between maintenance providers could be solution in future, he responded that this was certainly an option.