Crystal Ballin’

Record low oil prices. Record high airline profits. Slow growth in the U. S. and slower than predicted in China. Workforce retirements. Big data. More electric aircraft. Unmanned aircraft systems (UAS). New technologies.
All of those factors and many more impact the MRO marketplace. Every year at this time, industry forecasts are released by the FAA and consulting groups. Let’s take a look at some of the forecast numbers and see what they are saying about our industry.
2015 was the fifth consecutive year of profitability for the industry. The FAA Annual Forecast says, “The 2016 FAA forecast calls for U.S. carrier passenger growth over the next 20 years to average 2.1 percent per year, slightly faster than last year’s forecast. The sharp decline in the price of oil in 2015 is a catalyst for a short-lived uptick in passenger growth in 2016.” The report goes on to say even though oil prices are projected to fall to around $43 per barrel in 2016, their forecast assumes that they will rise thereafter to exceed $100 by 2023 and $150 by 2036, the end of the forecast period.
“Although the U.S. and global economy continued to sputter in 2015, stable demand and lower energy prices resulted in record profits for U.S. airlines. U.S. carrier profitability should remain steady or increase as the recovery leads to strengthening demand,” the report goes on to say. The U.S. commercial fleet is forecast to increase from 6,871 in 2015 to 8.414 in 2036. That is an average annual growth rate of 1.0 percent a year. See the FAA Forecast here: https:// media/FY2016-36_FAA_Aerospace_Forecast.pdf
Dave Marcontell, VP of Oliver Wyman’s Cavok Group, presented the Oliver Wyman 2016-2026 Global Fleet & MRO Market Forecast at the recent MRO Americas conference in April, agreed with the FAA saying, “Record net profits are due in large part to the glut in the oil market.” Interestingly, their report says that this will not impact the fleet plans of operators. They predict new aircraft deliveries and backlogs will continue to grow. But, Marcontell cautioned, economic growth, interest rates and oil prices could disrupt the equilibrium at any time. See their report at
The Aeronautical Repair Station Association (ARSA) in conjunction with Oliver Wyman released a joint MRO market report with the following MRO specific figures. Airframe MRO will account for $16 billion in 2016 and grow to $19.2 billion in 2026. Engine MRO will be around $25.7 billion in 2016 and grow to $43 billion in 2026. Component MRO is on track for $13.1 billion this year and headed for $18.6 billion by 2026. And finally, line MRO is targeted at $12.8 billion in 2016 and aiming for $18.1 billion in 2026. The total forecast for the 2016 year is $67.7 billion growing to $98.9 billion by 2026.
The Executive summary of the joint MRO market report says, “Modern aircraft are also self-monitoring, with the capability to report on the condition of hundreds of systems and components, creating gigabytes of data from each flight. Properly harnessed, this data will provide the operator and the MRO information on the health of the aircraft, as well as provide prognostications of impending issues.”
New technology aircraft like the 787 will have 65 percent fewer airframe heavy maintenance checks than legacy aircraft. These new generation aircraft are already producing vast amounts of data, big data is the buzzword, but what will be done with all that data? Is the MRO world ready for it? One chart in the Oliver Wyman forecast shows that today’s operational fleet produces about a billion gigabytes of data a year. That will quadruple in just three years as the fleet changes. But what is truly phenomenal the report says, is that by 2026, a mere ten years from now, the aircraft fleet will be producing 98 billion gigabytes of data year. What is done with this data, where it is stored and kept secure is an area of potential growth for the MRO IT community.
The FAA report says that unmanned aircraft systems will be the most dynamic growth sector within aviation. The potential sales of commercial small UAS requiring registration was forecast to be over 600,000 for 2016, growing to 2.7 million by 2020. “Venture capitalists are already investing considerable amounts of money into this emerging industry,” the forecast says. FAA has developed the UAS Focus Area Pathfinders initiative which addresses many areas of operation for UAS but what about maintenance? How will these aircraft impact the maintenance world? It is yet to be determined.
According to an ICF presentation at another recent conference, the consultancy expects the MRO market to grow by 4.1 percent per annum between now and 2025 to $96 billion. Strongest growth, according to ICF, will be the Asia Pacific MRO market, which they say will nearly double to $32.2 billion by 2025.
Another highlight from the ARSA/Oliver Wyman summary gives these figures: “In the United States, approximately 3,900 firms with more than 184,000 employees operate in the civil MRO market (including airline and affiliated MRO employees). There are 136,000 technicians in the U.S. and approximately 37% are certificated.” The summary can be found on the ARSA website,

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