Aviation Maintenance Industry - Finding New Opportunities
MROs Should Seek Partners To Gain Work On New Airplane Models; Potential Repatriation Renaissance Could Create 5,000 Mechanic Jobs in U.S.
ATLANTA--(BUSINESS WIRE)-- For independent aviation maintenance, repair and overhaul providers, the world is shrinking as original equipment manufacturers muscle into the maintenance market.
In our annual MRO Survey, Oliver Wyman confirmed this competitive imbalance is deepening. To thrive rather than survive, MROs must bid for long-term maintenance contracts during aircraft selection. They could do so by forming partnerships with aircraft lessors and airframe manufacturers.
"Aircraft engine and component OEMs have blocked MROs from winning work on new models that comprise the lion's share of modern fleets. As such MROs are left with a vanishing piece of the pie - aircraft nearing retirement - and licensing partnerships which are less advantageous for them over the longer run," said Oliver Wyman partner Chris Spafford, a co-author of the 2013 MRO Survey.
Key survey findings and analyses include:
1) MRO Market Share Is Squeezed for Independents; MROs Try to Counter Trend with Licensing Agreements:
Airlines are regaining leverage by procuring maintenance services at time of aircraft acquisition which has made it easier for OEMs to lock out independent MROs. However, more than 80 percent of airline respondents want MROs to bid for long-term maintenance work when aircraft are purchased.
To counter, MROs are trying to create partnerships with OEMs. More than 70 percent of MRO respondents indicate reaching at least one OEM partnership within the last three years. However, more than 80 percent of such respondents characterize those partnerships as a licensing agreement, which amounts to a short-term MRO survival strategy.
Meanwhile, half of the respondents reported failed partnership attempts with more ambitious joint ventures and intellectual property sharing/development initiatives.
2) Potential Heavy Maintenance Repatriation Opportunities Emerging for Some Regions:
Of North American airline respondents, 56 percent would consider moving airframe maintenance work back to the U.S., even if it cost more, providing a potential avenue for domestic MRO growth.
A wave of US airframe repatriation by 2020 could bring 5,000 new jobs.
3) Serviceable Material Usage Increases to Help Bolster Margins:
Two-thirds of airline respondents say their organizations have increased the use of repairable parts during the past three years, a strategy for airlines to cut costs in the face of OEM maintenance dominance.
About the MRO Survey
Oliver Wyman each year surveys maintenance, repair and overhauls companies, airlines, and aviation original equipment manufacturers about the state of the MRO industry. For the 2013 survey, we received more than 100 responses from a variety of industry participants from across the globe.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm's 3,000 professionals help clients improve their operations and risk profiles, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.
Birgit Andersen, 214-758-1806
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