Supply Chain Constraints Driving Demand for Aftermarket Solutions
The engine aftermarket is experiencing substantial growth despite persistent supply chain disruptions. With new engine production struggling to keep up, the demand for spare engines, parts, and even tools like aircraft stand, has skyrocketed. Airlines and MROs are increasingly seeking solutions such as leasing and used serviceable materials (USM) to keep their fleets operational.
Planes should not rest. When an engine falters, the cost is measured in millions. A grounded jet means lost revenue, disturbed passengers, and frustrated boardrooms. The engine aftermarket, which also includes the vast, intricate web of maintenance, repair, and leasing, keeps aviation in the air. We could even say, that, without it, nothing flies. In 2024 alone, the market for used serviceable material (USM) surged by 30%, while shop visit backlogs extended beyond 12 months at many MRO facilities. The need for used engine stands for sale has also risen, as operators seek cost-effective solutions for handling engines during maintenance cycles.
Engine Leasing Becomes a Necessity
Airlines are turning to leasing solutions to maintain operations amid prolonged maintenance delays. The global engine leasing market grew by 18% in 2024, with lessors placing heavy investments in various CFM56 variants, as well as V2500, and LEAP-1A engine models. New entrants like Hanwha Aviation have committed over $500 million to expanding leasing options, while Phoenix Aviation Capital secured a $1.2 billion funding package to support short- and long-term leasing deals.
Leasing has become more than just a stopgap measure; it is now a fundamental strategy for airlines struggling to keep their fleets operational as aircraft stand as cornerstone of their operations. The demand for spare engines is particularly high for narrowbody fleets, as A320neo and 737 MAX deliveries continue to be delayed due to OEM production constraints. With shop visit turnaround times stretching to over a year in some cases, airlines are increasingly signing long-term lease agreements rather than waiting for new deliveries or repairs.
In addition to traditional operating leases, power-by-the-hour (PBH) contracts are seeing a surge in popularity, offering airlines a flexible cost structure based on actual flight hours. This allows airlines to mitigate the financial burden of jet engine failures without committing to outright ownership. Major lessors are expanding their portfolios to include short-term lease options, catering to operators that need immediate solutions for AOG situations where aircraft stand grounded unexpectedly.
Lessors are also exploring partnerships with MRO providers to create integrated solutions, where leased engines are supplied with guaranteed maintenance support, reducing downtime further. The secondary market for used serviceable material (USM) has also grown as part of leasing strategies, helping extend the life of older engine models while providing a cost-effective alternative to new replacements. For those looking to buy engine stands, the increased focus on maintenance efficiency has driven demand for durable and cost-effective options, such as cradle engine stands.
The Future of Engine Leasing and MRO in Europe
In the European context, Ireland stands as a cornerstone in the global aircraft leasing industry, managing approximately 65% of the world’s leased aircraft fleet. This dominance is attributed to a combination of historical innovation, a favorable business environment, and a highly skilled workforce. The industry’s significance is underscored by its substantial economic impact, contributing nearly $1 billion annually to the global market share.
Engine leasing is an equally critical component of Ireland’s aviation sector. Dublin-based AerCap, the world’s largest aircraft lessor, is a dominant player in both aircraft and engine leasing, signing over 160 leasing agreements in the second quarter of 2024 alone. The deals span across wide-body and narrow-body aircraft stand and extends to helicopters, and critically, engines. Other leasing giants like Avolon and SMBC Aviation Capital continue to expand their engine leasing portfolios, investing heavily in high-demand models such as the CFM56 and LEAP series.
In 2024, Ireland’s leasing sector saw an uptick in investments, with Avolon acquiring 118 aircraft from Castlelake Aviation Limited, bringing its total fleet to 1,129 aircraft. However, the industry is not without its challenges. The ongoing legal battle in Dublin over €2.5 billion worth of aircraft stranded in Russia following the invasion of Ukraine has highlighted the geopolitical risks associated with leasing. Meanwhile, supply chain disruptions continue to impact new aircraft deliveries, leading lessors to extend lease terms and maximize the life cycles of existing assets.
To sustain its leadership, Ireland is focusing on long-term strategic initiatives. Element Fleet Management’s establishment of a centralized leasing hub in Dublin demonstrates the country’s appeal to global investors. In the engine sector, increased investment in MRO capabilities will be key to maintaining Ireland’s competitive edge. With the demand for spare engines skyrocketing and maintenance backlogs growing, Ireland’s lessors and MRO providers must innovate to ensure operational efficiency and fleet reliability.
Durability Issues Impact Next-Generation Engines
Newer engine models, such as the Pratt & Whitney GTF and CFM LEAP series, have shown lower-than-expected durability. Average time-on-wing for GTF engines has fallen to 7,000 cycles, compared to the anticipated 10,000 cycles.
In response, Pratt & Whitney has committed over $1 billion to resolving contamination issues that have led to early removals. The defect, related to contaminated powdered metal used in manufacturing, leading to microscopic cracks in high-pressure turbine disks, has necessitated accelerated inspections and maintenance, causing substantial disruptions for airlines. For instance, Wizz Air had to ground approximately 40 aircraft in 2024 due to these engine concerns, prompting Pratt & Whitney to agree to compensation arrangements.
Likewise, CFM International’s LEAP engines have encountered durability issues, particularly in hot and harsh environments. In December 2024, the U.S. Federal Aviation Administration and the European Union Aviation Safety Agency certified a high-pressure turbine hardware durability kit for the LEAP-1A engines, designed to enhance time-on-wing performance. This initiative aims to ensure that LEAP-1A engines achieve maturity and durability levels comparable to the earlier CFM56 models.
Manufacturer’s latest LEAP-1A upgrade aims to improve time-on-wing by 15%, though the effectiveness of these modifications will take years to assess fully. The demand for legacy engines like the CFM56-5B and CFM56-7B remains high, as operators look for more reliable alternatives.
These engine durability issues have had their effects across the aviation industry. Airlines have faced operational disruptions, leading to flight cancellations and adjustments in flight schedules. For example, Wizz Air had to cut some flights to and from London Luton and Gatwick Airports due to the need for engine inspections.
Market Risks and Long-Term Outlook
Meanwhile, the availability of replacement parts remains a critical bottleneck, with key turbine components facing lead times of up to 18 months.
While the aftermarket is thriving, future challenges remain. As aircraft manufacturers ramp up production to meet the rising demand for new aircraft, there is a risk of an oversupply of mid-life assets entering the market. This influx could lead to a decrease in leasing values for these aircraft, as operators may have more options to choose from, potentially reducing the premium associated with leasing mid-life aircraft. Notably, mid-life aircraft stand to their values which have held steady in recent months, with some models experiencing significant increases, indicating a strong market for these assets. The aviation sector is actively pursuing sustainability through various projects, including the development of open-fan architectures and hybrid-electric propulsion systems.
These technologies aim to enhance fuel efficiency and reduce emissions as modern engines power the Airbus A330 and other aircraft models. For instance, CFM International’s RISE program is exploring open-fan engine designs that could achieve a 20% reduction in fuel burn and CO₂ emissions compared to current models. Despite these challenges, global air traffic is expected to grow at 4% annually through 2035, ensuring continued demand for aftermarket support, particularly in high-growth regions like Asia-Pacific. The need for aero engines and reliable maintenance platforms will remain essential to sustaining the aviation industry’s momentum.
