Growing landing gear MRO market: a challenge or an opportunity?

Analysts forecast the global commercial aircraft landing gear market to grow at a CAGR of 9% over the period between 2012 and 2016. One of the key factors contributing to this growth is the increasing passenger traffic followed by unprecedented demand for new aircraft. However, there are still a number of factors in play that are having a distorting effect, including early retirement of aircraft and increased service intervals.

Since the landing gear MRO market traditionally follows aircraft delivery cycles the shops should be busy in the next few years as commercial jet aircraft ordered in 2004 and 2005 are approaching the 10 year milestone and are therefore due for landing gear overhaul. As a result, the AWIN's forecasts show demand for overhauls of nearly 4 100 nose gear and more than 4 000 shipsets of main landing gear for that fleet from 2013 to 2015. Approximately 80% of main landing gear overhauls will be performed on mainline jets: roughly three-fifths these will be on Boeing models, and about one-third on Airbus jets. However, the market for landing gear MRO is changing as older aircraft leave service and newer types appear on the horizon. As a result, the major challenge for the market is the increase in technological advancements in the aircraft.

“On the one hand, older types have recently benefited from more components becoming available, as fuel efficiency concerns have lead airlines to scrapping aircraft at an earlier date, which has resulted in extra rotable stock coming into the market. However, there is also another side to this trend. For instance some members of the Airbus A320 family might not even reach second or third overhauls, as they will be replaced by the 320neos, while some early A330/340s are already being parked, thus re-shaping the market accordingly,” shares Deividas Jurkstas, the Head of FL Technics Engines and Components Management Department. “Moreover, as landing gears are becoming more reliable, the service intervals might change. In such new aircraft as the Boeing 787 and the Airbus A350XWB, the landing gear units are designed to go up to 12 years between overhauls. Such an increase would mean that 10% of the annual market immediately disappears, which could pose a threat to a number of MRO facilities.”

While major existing participants in the market agree that continuing technological progress will gradually weed out smaller shops, the landing gear MRO business is now gearing up for increased competition because of the record number of aircraft orders and deliveries in the years since 2004. Thus, in 2014 alone approximately 1 100 aircraft of 100 seats or more will have their landing gear sets overhauled, the total market being around $500 million. The estimates are the market is set for annual compound growth of 9% a year for the foreseeable future. However, due to increasing activity of OEMs in the aftermarket, there’s another factor to keep in mind.

“Another key element in the landing gear MRO development is the substantial investment the MROs have to make in buying landing gear sets for exchange. Many airlines are becoming increasingly reluctant to purchase spare sets, preferring to rely on pool items and short-term leases. This has driven the landing gear MRO industry to carry this financial burden. In addition to that, independent MROs have been feeling the OEMs are making it difficult for them to compete on a level playing field, as they have been drastically increasing spare-asset pricing,” shares Deividas Jurkstas.

However, according to the Head of FL Technics Engines and Components Management Department, although the OEMs are certainly becoming more dominant, they still realize they cannot support the demand on their own and consequently - some more than others - work alongside reputable repair shops in the support of their product. “Thus, although the technological and investment hurdles might be high, for those competitors willing and able to surmount them, the rewards for staying in the race could be very worthwhile,” concludes Mr. Jurkstas.