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Airline MRO

Maintenance, repair and overhaul (MRO) services play an invaluable role in assuring that commercial airliners remain safe, durable and profitable. As new companies enter the aircraft maintenance business and others change or expand their value propositions, MRO providers will be compelled to become more collaborative, more open – and more competitive. To position themselves for the future, these organizations must be prepared to take on new roles and heighten their value by working more closely with others.

Aircraft MRO services have several segments. The attractiveness of the aircraft maintenance business is underscored by the number of new companies entering the field, and the fact that existing MROs are shifting and expanding their roles, Aircraft MRO is commonly segmented into four main service groupings:

  1. Line maintenance, which diagnoses and corrects troubles on the aircraft and carries out minor and major aircraft checks and repairs, is very labor-intensive. Good line maintenance is an essential part of good airline operations, so much so that where low cost airlines are happy to outsource their base maintenance. However, they are not prepared to totally outsource their line maintenance. Instead, like flight operations staff, line maintenance personnel are seen to be at the very heart of airline operations. This being said, there has been significant refocusing of airline values in recent years and where significant savings have been made in many other areas of airline operations, line maintenance costs have proven more difficult to reduce.

  2. Component maintenance, which repairs components such as wheels, brakes and interior components, from around US$8 billion today to over US$11 billion by 2017. (Approximately 70 percent of component maintenance is currently outsourced.) For component maintenance, the actual nature of the service provided is shifting. Customers are looking for suppliers who offer component access services that combine component maintenance, logistics and component engineering on a “power by the hour” basis.

  3. Engine maintenance, which includes dismantling, inspecting, assembling and testing aircraft engines, is the largest MRO segment. Engine maintenance makes up about 35 percent of maintenance spend, and is expected to increase from around US$17 billion today to over US$26 billion by 2017. (More than 60 percent of the cost of engine maintenance is materials, with labor being 22 percent.)

  4. Heavy maintenance, which encompasses structural modifications, landing gear repair, engine changes and regular calendar checks, is also expected to grow – from around US$9 billion (about 23 percent of spend) today to over US$13 billion by 2017. More than 65 percent of the cost of heavy maintenance is labor – making it attractive to set up low-cost locations around the world. The use of composites in new aircraft frames will help keep down the costs of heavy maintenance.

These four groupings vary enough to be viewed as fundamentally different businesses. They each require a different set of skills and services, and few independent maintenance companies specialize in all. Few MRO segments can fulfill every requirement – creating new and expanding opportunities for these businesses.

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