Although the on-going fleet renewal will most probably help carriers to cut down on oil-related expenses, the situation with the MRO market seems to be different - the cost of maintenance per single shop visit is definitely going to rise. Under such circumstances the strategies of MRO providers searching for ways to remain attractive to clients are expected to be largely focused on automatization in order to reduce the cost of maintaining large numbers of highly paid technical specialists. Since the quality of the services provided is going to become the most important factor when choosing an MRO partner for airlines, the requirements for the qualification of the remaining technical staff are expected to be higher than ever.
The current situation in the aviation market can be described as a certain paradox. On the one hand, carriers need to cut down on operating expenses has pushed the aircraft manufacturers to introduce new generation of more fuel-efficient aircraft. On the other hand, according to the TeamSAI MRO market overview, new technologies used in the development of such aircraft may raise the cost of MRO per shop visits, thus forcing airlines, already struggling with profitability issues, to recalculate their MRO budgets. As a result, even if the process of fleet renewal does not proceed as fast as it is forecasted to, it is inevitable that soon enough the MRO segment will be the one to be forced to contribute to the overall efforts of cost optimization the most.
“Needless to say, the most popular strategy of carriers looking for cheaper MRO solutions would be to outsource the work to those regions where the cost of the respective services is significantly lower due to lower labour rates. In Europe the cost of labour in the MRO segment tends to vary from $70 or 80$ per hour. When in Asia the same cost does not climb over $45, the solution seems to be obvious. Nevertheless, as labour rates in the developing regions are expected to reach the levels of the ones in the developed regions in approximately 10 years time, keeping operating expenses low will surely get trickier,” shares the CEO of AviationCV.com, Skaiste Knyzaite. “On the one hand, this change will help the European maintenance providers to rejoin the competition. On the other hand, market players will still be expected to either offer lower prices or come up with more appealing MRO solutions…or preferably achieve both. Either way, the workforce will most probably take the first hit.”
Since, according to AviationCV.com, labour is the second highest (up to 25%) of all carriers’ OPEX elements, all MRO providers wishing to withstand the growing competition and maintain profitability will be also eventually faced with the need to reconsider their personnel management strategies. The on-going process of fleet renewal contributes to the fact that the situation in the MRO market is commonly perceived as being more favourable to OEMs. Firstly, their solutions have already proven to be popular in the engine and component MRO, since they occupy up to 80% of the segment. Moreover, they can influence the market by complicating access to instructions for continued airworthiness. But, with even such industry giants as Pratt & Whitney reducing their personnel to ensure economic stability, the analogical trend is definitely foreseeable: the future of MRO providers as well as manufacturers will definitely rely on the implementation of new technologies and increasingly automated processes. Nevertheless, although such a step appears to be inevitable, the total elimination of human labour is still impossible. Thus, the optimization of services must be inseparable from the investments into qualified technical personnel.
“With the rising competition among MRO providers, developing a reputation for being the best a particular activity or segment is always a great selling point, but it must be based on real facts. Thus, the possible need for personnel reduction implies that the remaining staff maintains the highest possible level of qualification,” says the CEO of AviationCV.com “Since the industry is changing rapidly, any delay in implementing the necessary improvements could lead to considerable economic losses. After all, the time needed to raise the qualification of the current generation of technicians can be unaffordable, when changes need to be done as soon as possible. This is especially true in the case of such developing regions as Asia, where MRO facilities are already talking about the demand for a few thousands of technical specialists. Under such circumstances, quickly finding and employing those who are already available in the global market may be the most reasonable strategy to remain competitive, while saving precious time and money.”