MROs are keeping a close eye on the global economy and market opportunities in 2023, but will likely face cost challenges that will result in higher maintenance costs despite a general improvement in demand being anticipated.
“There are clearly some macroeconomic headwinds that will impact 2023,” says Oscar Torres, chief executive at aftermarket services provider Kellstrom Aerospace.
"We believe that the likely recessionary environment may reduce demand for air travel during the year," says Torres. "In addition, all market participants are likely to deal with a higher cost environment driven by high labor costs, supply chain inefficiencies and higher borrowing costs."
However, Torres still believes that demand for MRO services will continue to gain traction throughout the year for both narrowbody and widebody aircraft and their respective engines.
“Over the past several years, airlines have managed to defer maintenance events by utilizing green-time assets from either their own fleets or those generally available in the market,” he says.
Torres adds that the rise in narrowbody aircraft utilization started much earlier as domestic travel in the U.S. and within other regions was the first to recover after COVID-19. Widebody aircraft were slower to see increases in utilization as cross-border travel continued to be impacted by restrictions, especially in the Asia-Pacific region.
“However, in 2023, the convergence of aircraft traffic returning to pre-pandemic levels, continued delays in the delivery of new aircraft to support the increased traffic and the reduced availability of green-time assets to offset maintenance requirements should result in a return to pre-pandemic levels for MRO activity,” Torres suggests.
Fraser Currie, chief executive at Jordan-based MRO Joramco, feels opportunities in 2023 will come in the form of capacity and capability expansion. He says the market opportunity is greater than the MRO capacity, so choosing capabilities wisely and expanding at sustainable levels is key for MROs. “Therefore, opportunity awaits those MROs that can expand their business with the right combination of aircraft types,” he says.
Over the past couple of years, airlines have taken advantage of every opportunity to manage through the financial challenges caused by the pandemic.
As Torres notes, this resulted in a significant deferral of maintenance events as there was easy access to serviceable aircraft and engines. “Those opportunities have largely been depleted and we expect MRO activity to continue to be strong throughout 2023,” he says.
The strength of the U.S. dollar will certainly impact the global supply chain and Torres agrees that there are several factors that will result in higher costs to the global aviation market in the coming year, including rising interest rates, labor costs and a strengthening dollar.
Joramco observes the supply chain still catching up from the effects of the pandemic, with both narrowodies and widebodies impacted. “Where possible, we have chosen to build our own capabilities, such as the fabrication of parts such as seat rails from non-routine cards," says Currie. "In the future we might look to offer similar services to OEMs, so in essence, putting things in our own hands where we can.”
Related Content
