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Service Provider Opportunities in the Aerospace Industry: Maintenance & Repair Operations

Service Provider Opportunities September 20, 2021

Service Provider Opportunities in the Aerospace Industry: Maintenance & Repair Operations
Anubhav Bhatt

Content Developer

Contributors

Jaidev Bejoy
Jaidev Bejoy

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Despite major disruptive events and a severe budget crunch among key players, the aerospace sector is expected to reach new heights at over USD 430 Bn by 2025. The order books of leading firms are slowly recovering as airlines, logistics, and other allied services recover from a pandemic-induced slump.

An industry-wide adoption of emerging technologies fuels this resurgence.

Emerging technologies like Artificial intelligence, Machine Learning, Data Analytics, and IoT are now enabling a more efficient and digitally-powered ecosystem that is reshaping the industry.

Major growth factors in the industry include increased demand for air travel, technological advances, emerging economies, change in social behavior, and low-interest rates.

However, a key sub-sector in the aerospace industry that service providers have so far failed to capitalize on is the Maintenance & Repair Operations sector.

Aircraft maintenance integrates various multifaceted activities, commonly referred to as Servicing, Maintenance, Repair, and Overhaul (SMRO) or MRO, and are either carried out by OEMs or outsourced to Aerospace Engineering Service Providers (ESPs).

MRO is essential not just for the current aviation needs but for the future air mobility requirements too.

A substantial amount is spent by airlines every year on MRO activities to abide by the regulations laid down by authorities to ensure the safety of the passengers and the crew.

The global aerospace maintenance, repair & overhaul (MRO) market is expected to grow at a CAGR of 4.29% from USD 82 Bn in 2018 to USD 110 Bn in 2025.

MRO Market Challenges

The global aerospace industry is witnessing innovative changes backed by technological advances and developing economies growing with it.

However, there are still particular challenges existing in the industry, including:

Growth in OEM aftermarket presence:  As OEMs solidify their place in the aftermarket, MROs, and operators are trying to create strategies that insulate themselves from rising material costs through partnering with OEMs and securing discounts.

Advancements in technology: Advanced technologies such as robotics, AI-powered drones, additive manufacturing, AR for MRO training, AI, and ML have the potential for transforming industry operations.

Labour/material cost management: The labor cost is increasing due to the pre-existing labor shortage in the market driven by an aging workforce.

Rising oil prices: The oil rally is raising the prices of jet fuel, posing another challenge for airlines still struggling from the outcomes of the pandemic.

To combat these challenges, service providers are adopting evolving strategies that seem to be effective. Some of the strategies include:

  • Partnering with OEMs to secure discounts
  • Leverage data analytics, aircraft health monitoring, and predictive maintenance to reduce material and labor usage
  • Establish technician training programs
  • Outsourcing to lower-cost facilities
  • Using additive manufacturing to print replacement parts faster and cheaper.

Evolving MRO Market Landscape

The commercial aviation MRO landscape is changing across multiple facets, and businesses must develop strategies to align with or counter the impact of these changes to survive in this highly competitive space.

Some of the noticeable changes in the Aerospace MRO landscape include:

  • OEMs are looking to increase their share of the revenue in the aftermarket.
  • APAC is set to host the most extensive fleet base overtaking North America and Europe.
  • MRO needs of new-generation aircraft are different due to the usage of new materials.
  • Low-cost carriers are highly cost-sensitive, forcing MROs to come up with competitive pricing.
  • Established MROs are providing a range of services from production inspections to reliability monitoring to global OEMs.

MRO Outsourcing Analysis and Opportunities

Product engineering services, consulting & system integration, and infrastructure management services are the major outsourced sub-verticals in this industry, comprising over 73% of the total segments. Application development & maintenance, reporting & analytics, and digital services comprise over 27% of the total outsourcing segments.

Along with outsourcing, the key focus areas of MRO include Predictive aircraft maintenance, maintenance training programs, and repair facility establishment.

The key focus areas can be classified by timeline into short-term, medium-term, and long-term.

  • Short-term focus areas include aftermarket services and repair facility establishment.
  • Medium-term focus areas include engine maintenance.
  • Long-term focus areas include predictive aircraft maintenance, maintenance training programs, and on-board diagnostics and maintenance.

Service providers operating in areas such as AI, ML, IoT, and Skill development can benefit from the ongoing outsourcing drive in the aerospace industry. Service providers can utilize these emerging technologies and relative technologies to enter the MRO market.

By using Sales Intelligence platforms such as Draup for Sales, service providers can identify niche outsourcing opportunities before they become mainstream.

Draup leverages data from over 4000+ sources which is then fed to our custom machine learning models that extract actionable insights for sales leaders across domains.

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