Beyond the Horizon: The Commercial Aircraft Engine Maintenance Outlook

Release date: 2024 May 3

The commercial aviation industry is on an upward trajectory, fueled by a rebound in travel demand and a growing global appetite for air cargo.  This translates to a healthy outlook for the commercial aircraft engine maintenance market, which plays a crucial role in keeping the world’s airplanes safely airborne.

As airlines continue to expand their fleets and modernize their aircraft, the demand for engine maintenance services is expected to increase significantly. This trend presents opportunities for companies specializing in engine maintenance to capitalize on the growing market.

Indeed, market analysts predict steady growth for the commercial aircraft engine maintenance sector in the coming years. Numerous reports suggest the market size could reach $54.68 billion by 2029, reflecting a Compound Annual Growth Rate (CAGR) of 6.37%.

Growth on the Horizon

This growth is driven by several key factors, one of which is the abovementioned fleet expansion. Namely, airlines are expanding their fleets to meet not only rising passenger traffic, but also steadily growing volume of cargo transported worldwide by air transport. And this also translates to a larger pool of engines, which, in turn, obviously require maintenance services.

To meet this rising demand for engines, leasing businesses strategically acquire used aircraft. This allows them to not only source usable engines for their lease pool, but also potentially generate additional revenue by parting out the remaining engine and airframe for components.

When it comes to finding new engines, leasing businesses typically buy aircraft that may have one engine that is usable for the lease pool and another that can be parted off along with the airframe. To cut expenses, any small repairs that might be required could be farmed out.

Although engine leasing companies frequently prioritize private investment, airlines are nonetheless required to cover maintenance costs. They are being forced to rely on purchasing engines with usable remaining life as the overall costs rise due to rising OEM list pricing on material and a shortage of used serviceable material being offered at reasonable prices.

Eventually, higher lease rates reflecting increased overhaul costs and rising ongoing engine costs will have to be accepted by the market. This may lead to airlines fronting financial strain as they struggle to keep up with maintenance expenses. As a result of that, some operators may need to reassess current engine leasing agreements and explore alternative cost-saving measures.

It has always been challenging for a mid-life lessor to perform an overhaul and have a zero-time engine with a high book value, which is another example of this private investment mindset. Half-life engines have always been the specialty, and in some respects nothing has changed. Though leasing rates have increased slightly to help offset the rise, the price point of that engine has increased, posing a hurdle.

While mid-life lessors have traditionally focused on half-life engines, the current environment presents new problems.  Engine repair turnaround times have virtually tripled due to parts shortages, and the focus of major manufacturers on producing new single-aisle aircraft further strains the supply of components. These factors make the traditional overhaul model with zero-time engines less viable.

The Global Fleet Isn’t Getting Any Younger

Another factor is related to the issue of aging aircraft. A significant portion of the current commercial aircraft fleet is aging, leading to an increased need for maintenance, repair, and overhaul (MRO) services for their engines. Additionally, advancements in technology are allowing for more precise and efficient engine diagnostics and repairs, further enhancing the efficiency of MRO services.

Additional well-known aspect is an inevitable shift towards efficiency. Airlines are increasingly focused on fuel efficiency and reducing operating costs. This trend incentivizes them to invest in advanced engine maintenance practices that optimize engine performance. Investing in advanced engine maintenance practices not only ensures optimal performance but also helps extend the lifespan of the engines, ultimately reducing overall maintenance costs for airlines.

Due to their preference for mid-life engines, the firms tend to have a large customer base, particularly with cargo airlines and ACMI. Major airlines, while occasionally facing ad hoc requirements, often rely more on their own overhaul capabilities. Recently, there has also been a rise in interest, with a number of majors searching the market for mid-life engines. This may be interpreted as a reaction to the various issues that such companies are currently facing.

This heightened interest even has a potential to create a more competitive market, and there are already some indications that it is becoming such as companies must carefully consider their options for mid-life engines. Still, despite the challenges presented by rising prices, the demand for such powertrains obviously remains strong due to their cost-effectiveness and reliability.

A standard lease length is twelve to thirty-six months; shorter terms, such three or six months, increase the risk of discovering technical issues during installation or removal. When using an outside provider, major airlines often prefer shorter leases because it’s usually an emergency circumstance. However, in this case, they’re probably going to take the standard period.

Presently, the inventory is the main issue facing leasing companies because demand has caused levels to plummet. They will therefore need to restock with a little more ingenuity. It is inevitable that purchasing prices will rise.

The mid-life engine leasing market is experiencing a crisis due to delays in new aircraft deliveries. The prolonged GTF issue is expected to have a significant effect on the entire supply chain. In recent weeks, leasing rates for V2500 engines have begun to increase in response to demand. This will encourage healthy competition for high-quality V2500 engines early in the following year in order to support the GTF-affected operators.

GE Leads the Pack in the Engine Aftermarket

GE Aerospace, a major player in the engine manufacturing and maintenance arena, recently announced ambitious growth targets.  As their parent company General Electric prepares to spin off its energy division, GE Aerospace will become the sole entity remaining under the legacy GE name.  This strategic move positions them as a dedicated aerospace powerhouse.

GE Aerospace’s optimism is fueled in part by the strength of their aftermarket business, which accounted for roughly 70% of their revenue in 2023.  As airlines extend the lifespan of their existing CFM56 engines, GE benefits from increased maintenance needs. This trend aligns perfectly with the overall growth predicted for the overall engine maintenance market.

GE Aerospace isn’t just focused on servicing older engines.  Their next-generation LEAP engines are in high demand, poised to meet the production ramp-up of Airbus A320neo and Boeing 737 MAX aircraft. With a healthy backlog of 900 orders for their GE9X engine powering the Boeing 777-9, GE Aerospace is well-positioned to capitalize on the growth in new aircraft deliveries.

Of course, engine manufacturers like GE Aerospace, Rolls-Royce, and Pratt & Whitney are not only focused on aftermarket services, but also on developing next-generation engines that are more fuel-efficient and environmentally friendly. The high demand for GE’s LEAP engines and the healthy backlog for Rolls-Royce’s Trent XWB engines powering the Airbus A350 are among the most obvious indications of such focus on innovation.

Looking Ahead

The commercial aircraft engine maintenance sector is witnessing a growing emphasis on predictive maintenance.  This proactive approach utilizes data analytics and sensor technology to identify potential engine issues before they occur. By anticipating problems in advance, airlines can minimize downtime, reduce repair costs, and enhance overall engine lifespan.  Predictive maintenance also contributes to improved safety by mitigating the risk of in-flight engine failures.

Yet, the commercial aircraft engine maintenance market faces some challenges of its own.  The increasing complexity of modern aircraft engines necessitates a highly skilled workforce. Ensuring a readily available number of mechanics and qualified technicians trained to maintain these sophisticated engines will be crucial. Additionally, the rising cost of spare parts and the potential for supply chain disruptions can impact maintenance budgets.

So, with a lot of issues to confront head-on, the prospect for the commercial aircraft engine maintenance market still remains positive. Technological advancements in data analytics and automation offer exciting opportunities for optimizing engine maintenance processes and improving efficiency.  Furthermore, a growing focus on environmental sustainability is driving the development of more eco-friendly engine maintenance practices. The commercial aircraft engine maintenance market is poised for stable growth, fueled by a resurgent aviation industry and a growing emphasis on safety and efficiency.  By embracing innovative technologies and prioritizing workforce development, the commercial aircraft engine maintenance sector can ensure that the world’s commercial aircraft continue to operate safely and efficiently for years to come.

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