Narrowbody aircraft MRO: is undercapacity on the horizon?

With the prospect of new single-aisle jets to replace B737s and A320s still at least 15 years away, the heavy maintenance industry is preparing to offer continued support for the existing fleet. As a result, in the 2014 the airframe MRO of Airbus’ and Boeing’s popular jets will account for over $7 billion worldwide. However, due to rapidly increasing demand for heavy maintenance of these aircraft, the MRO industry is equivocal about the actual capacity it can offer, especially as concerns adequate supply of qualified workforce to handle the work.

The airframe MRO market - including heavy checks, line maintenance and modifications - for the narrowbody aircraft is expected to reach approximately $9.1 billion in 2014. Aviation Week’s data shows the biggest drivers of narrowbody airframe MRO in 2014 to be the A320 family (including the A318 through A321) and Boeing 737 (-300 through -900 series), which are expected to generate over $7 billion. 

Of course, these numbers are a reflection of the global fleet size rather than any unusual maintenance requirements. However, this trend will only continue to accelerate as more than 1 100 new aircraft in these segments will be delivered in 2014, nearly 58% of anticipated narrowbody deliveries in 2014. Thus, for instance, with in-service 737NGs requiring 40 heavy checks per month overall, the fleet has put pressure on MRO capacity for which the requirements will almost double in the next five years. 

“The 2014 MRO spend of 737 NGs, 757s, and A320 family aircraft are comparable. However, by 2024 the 737 NG/MAX family is expected to far outpace the MRO spend of even the next largest fleet, the A320 family. The business implications of this trend are not only the need for more hangar space and gaining necessary certification to perform maintenance on the types, but also meeting increased training requirements, especially in software and highly integrated systems,” says Kestutis Volungevicius, the Head of FL Technics Training.

Moreover, it should be noted, that the MRO growth is higher than the forecast fleet growth because the MRO spent in the next 10 years is driven by the fleet growth in the last 10 years. Between 2002 and 2013 there was significant expansion of the fleets, especially in the developing world. It is these aircraft that are putting more pressure on the segment. Modifications pick back up and the high number of deliveries of the early 2000s return for their second round of heavy visits, while the 2005-2009 and 2010-2014 deliveries begin their first round of heavy maintenance visits, driving a CAGR of 3,9% by 2023. 

“On the one hand, there continues to be more than sufficient global 737NG capacity. Numbers of visits will increase and the average scope will become increasingly complex as the fleet ages, but we must remember older fleets are being retired, thus removing demand elsewhere. Moreover, the recent data by TeamSAI suggests increased carrier consolidation and a slow economy will result in excess MRO capacity for narrowbodies, especially in Western and Eastern Europe,” says Kestutis Volungevicius, the Head of FL Technics Training. “On the other hand, however, a need for more global 737NG maintenance capacity is anticipated to emerge, since Boeing has increased its narrowbody production to an unprecedented 42 a month. Thus, there are signs that together with increasing 8, 10 and 12-year checks on older NGs, the MRO industry will have to enlarge with regard to capacity in the next three to five years.”

According to the Head of FL Technics Training, the big question is, whether the existing workforce supply is sufficient to handle increase work volumes. For instance, according to a recent survey, Western European MROs are already reporting a challenging hiring environment, with 39% finding “few” candidates, even with intense recruiting efforts. The global situation is certainly comparable. “Therefore, regardless of whether the fear of undercapacity is exaggerated, the industry must still take such a possibility with maximum caution,” concludes Kestutis Volungevicius.