The UK maintenance, repair and overhaul and aviation logistics sector needs to become more competitive and raise its profile to maintain its market share in the future, warns the trade body for the aerospace, defence, security and space industry, ADS.
Even though aircraft MRO and logistics services make up around a third of the UK aerospace industry's total revenues, with the country taking the second largest share in the global aerospace market after the USA, its contribution to the national economy is sometimes overlooked, says Graham Chisnall, managing director of ASD's aerospace and operations division.
Approximately 30,000 employees at around 450 companies generate £6 billion ($9.6 billion) in sales, equal to an 8% share in the worldwide MRO and logistics support market, worth $120 billion.
Increasing global competition is one major challenge. While demand for MRO and logistics services is expected to increase at a global average of 3.2%, the regional markets in Asia Pacific, China and the Middle East are expected to grow at 4.5%, 9% and 7.6%, respectively. This is a business opportunity for suppliers in the mature market but will also lead to new competition in the emerging economies.
Government cuts in defence budgets are another bugbear, with programmes coming under threat and some aircraft fleets being downsized or retired. Western Europe's military fleet is likely to be reduced from about 7,040 aircraft today to around 6,650 in 2013, equal to an annual decline of 1.4%.
However, ADS expects a "small positive growth" for the MRO industry as older aircraft would need to fly longer and require more maintenance. This would be further helped by increased outsourcing of support functions from the armed forces to private contractors.
Greater technological sophistication of new generation aircraft could also prove favourable for MRO providers in the mature markets. While these models should require less labour-intensive maintenance, the balance tips towards capital-intensive support of engines, systems and components - currently still a stronghold of suppliers in North America and Europe.
ADS has called for the government and industry to give the MRO and logistics sector greater prominence in their "strategic aerospace activities". But the association also urged the maintenance and logistics companies to increase productivity and attract "high calibre people" into the sector.