Addressing the Growing Engine MRO Capacity Gap

Release date: 2024 September 20

The aircraft engine MRO sector is currently facing significant challenges, which present additional bottlenecks in commercial aviation, obvious to both manufacturers and operators, as well as customers and passengers alike.

MRO facilities are grappling with the dual pressures of servicing an increasing number of aging narrowbody engines and handling the first maintenance visits for many new-generation engines. As a result of that, airlines are staring down the barrel of record-high turnaround times—35% longer for the old timers, and over 150% for the fresh-faced machines, compared to the golden days before the pandemic hit. Waiting for a spot at these repair joints can stretch on for two, three, sometimes even six months, leaving planes grounded, collecting dust, and burning holes in airline pockets.

The surge in demand for MRO services can be attributed to several interconnected factors. First, the global commercial aviation fleet is aging, with a substantial number of narrowbody aircraft reaching their mid-life. These older engines require more frequent maintenance and repairs, placing a heavier burden on MRO facilities.

Second, the introduction of new-generation engines, often with advanced technologies and complex maintenance requirements, has further exacerbated the capacity crunch. The initial maintenance visits for these engines, known as “first visits,” are particularly demanding, as MRO providers must familiarize themselves with new procedures and components.

The Consequences of MRO Delays

The prolonged turnaround times associated with MRO services have far-reaching implications for airlines. Delayed engine maintenance can result in operational disruptions, including flight cancellations and delays. This, in turn, can lead to significant financial losses for airlines, as well as damage to their reputation. Moreover, the increased time aircraft spend in MRO facilities can reduce their overall utilization, limiting revenue potential.

Despite some progress in restoring the parts, labor, and facility capacities that were reduced at the beginning of the pandemic, the industry remains strained. Recent analyses suggest that engine MRO demand will peak around 2026 and remain tight through the end of the decade. This situation presents both a challenge and an opportunity: MRO companies and suppliers that invest now in expanding their capabilities could capture a larger share of the market and position themselves for long-term growth.

Problems with the Introduction of New Engines

The aviation industry is currently experiencing a significant challenge: a surge in engine maintenance demands. This increase can be attributed to several interconnected factors. During the COVID-19 pandemic, airlines were forced to ground a substantial portion of their fleets, leading to a postponement of routine engine maintenance. As a result, a backlog of engine services has accumulated.

Adding to the strain, the introduction of newer engine technologies, such as the CFM International LEAP and Pratt & Whitney GTF, has presented unexpected challenges. These engines have exhibited a higher frequency and complexity of repairs compared to their predecessors, further increasing the workload which maintenance facilities are facing.

Moreover, the ongoing supply chain disruptions have hindered the production of new-generation aircraft, forcing airlines to rely on older fleets. These older aircraft often require more frequent and complex maintenance procedures, further intensifying the pressure on engine service providers.

So, the confluence of these factors has created a significant challenge for the aviation industry, resulting in a substantial backlog of engine maintenance and straining the capacity of engine service providers.

Persistent Capacity Constraints Amid Fleet Transition

A significant contributor to the longer TATs is the scarcity of spare parts. Demand for OEM parts is outstripping supply by 10% to 20%, and labor shortages are exacerbating the situation, with MRO shops struggling to hire and retain skilled technicians. Additionally, OEMs have not issued enough repair licenses to meet the rising demand, further limiting the availability of repaired parts.

Despite the intense efforts of MRO facilities to meet the immediate surge in demand, the current capacity constraints are expected to persist, driven by a generational transition in airline fleets. While maintenance for older engines is currently at its peak, a significant increase in demand for servicing new-generation engines is anticipated toward the decade’s end.

Airlines have largely opted to delay retiring older aircraft due to uncertainties surrounding new OEM deliveries, which has in turn restricted the availability of used parts. These used serviceable materials (USM) are crucial for operators, offering a cost-effective and lower-risk means of sourcing life-limited parts. In some MRO shops, USM parts account for as much as 30% of the total demand. This trend is particularly evident with the postponement of retirements for aircraft like the Boeing 737NG and Airbus A320ceo, a situation likely to persist given the ongoing shortage of new aircraft deliveries.

Future Teardowns May Offer Limited Relief

Although the supply of parts from aircraft teardowns is expected to increase eventually, the parts available later in the decade will likely have reduced lifespans. This reduction is due to the more aggressive utilization of engines over recent years. Components in particularly short supply include high-performance items such as combustion chambers, turbine parts (like high-pressure turbine blades), and essential elements like castings, forgings, and controls.

The unexpected demand for early maintenance on new-generation engines is straining labor and facilities that would otherwise have been allocated to legacy engine repairs. Although these newer engines often require different resources, primarily serviced by OEM-approved MRO providers, most facilities handle both engine types. It will take several years to address the quality and durability issues that have led to the increased frequency of these early visits.

The global shortage of skilled labor, especially experienced mechanics, remains a significant challenge for MRO operations. For instance, in the U.S., the need for aircraft mechanics and service technicians is projected to grow by about 4% by 2030, according to the U.S. Bureau of Labor Statistics, significantly outpacing the 1% growth of the working-age population. This trend is mirrored in other key regions with large MRO workforces, including China, Singapore, Japan, Brazil, and Europe, where demographic trends suggest a flat or declining working-age population, according to World Bank projections.

Projected Shortfall in MRO Capacity

If MRO capacity continues to expand at its historical rate, projections indicate that cumulative demand for shop visits by the end of the decade could surpass supply by nearly 17%. This shortfall could constrain air traffic growth, forcing airlines to reduce flights and routes. Without swift action to address this capacity gap, airlines could face higher operational costs, which, coupled with the rising expenses of decarbonizing air travel, could slow the growth of passenger travel.

So, they are all out there, the so-called winners, playing the long game. And they are sweating over blueprints and balance sheets, trying to squeeze a little more juice out of the same old machine. Businesses are partnering closely with customers to better predict MRO needs, aiming to reduce the impact of maintenance delays. This involves crafting detailed projections for each aircraft model, including anticipated shop visit intervals for next-generation engines that are still in their early stages.

Embracing technology, especially AI and automation, is now seen as a key to boosting productivity. For example, computer vision is revolutionizing inspection processes by increasing both speed and accuracy, helping smaller teams do more with less. AI is also enhancing knowledge management, aiding technicians in diagnosing issues, troubleshooting problems, and streamlining workflows. These tools can accelerate traditionally slow processes like repair approvals while improving results and cutting down on the time needed to train new employees.

Additionally, leaders in the industry are channeling resources into parts repair and used serviceable materials (USM). The current lag in turnaround times is largely due to a shortage of engine parts. Expanding the capacity to repair individual components and increasing access to USM can alleviate the pressure on new OEM parts, thus helping to reduce the bottlenecks in repair queues.

While the current engine maintenance capacity crunch poses significant challenges, it also presents substantial opportunities for MRO providers and suppliers. By investing in productivity enhancements, parts repair, and scaling up operations, companies can successfully navigate this complex environment and position themselves as industry leaders.

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