Aircraft Engine MRO Market – Growth, Trends, COVID-19 Impact and Forecast (2022)
The Aircraft Engine MRO Market is expected to grow from USD 30 billion in 2021 to USD 49 billion in 2027, registering a CAGR of around 1.58% during the forecast period. The impact of the COVID-19 pandemic on the Aircraft Engine MRO Market has been significant.
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Due to a large number of aircraft in storage and less utilization, the demand for MRO of aircraft engines dropped significantly in 2020. However, in 2021 aviation began to see a gradual recovery, this which has led to an increase in passenger traffic and aircraft movements. This has led to an increase in the demand for aircraft maintenance, repair and overhaul activities.
Rapid fleet expansion plans of airlines and military forces are expected to further drive the growth of the aircraft engine MRO market during the forecast period.
The aging military aircraft fleet in some countries may generate significant demand as some of these countries have plans to extend the life of these aging aircraft due to a lack of defense funding.
The introduction of new generation engines in new aircraft is expected to further increase MRO demand for aircraft engines. New engines will have more expensive material requirements than older generation aircraft.
Introduction of advanced technologies that will digitize and automate the maintenance activities to increase the overall efficiency of the maintenance process, reduce the overall turnaround time and improve the safety of the engine MRO players are expected to drive the market growth in the years coming.
Main market trends
The commercial aviation segment dominates the market in terms of market share
The commercial aviation segment currently holds the highest market share and is expected to maintain its dominance over the forecast period. This is mainly due to the large fleet of commercial aviation compared to military aviation and the high cost of engine maintenance compared to general aviation. In recent years, several new contracts have been signed for aircraft engine maintenance between airlines and MRO service providers. For example, in November 2021, SR Technics signed a Memorandum of Understanding (MoU) with Vietjet Air to provide MRO services for CFM56-5B engines onboard Vietjet’s fleet of Airbus A320 and Airbus A321 aircraft. The agreement was signed for $150 million, and under the contract, the company will provide engine maintenance, component requirements, repair, technical and training services, and set up a new aviation training center as a joint venture between Vietjet and SR Technics.
Similarly, MRO service providers are also expanding their presence in various countries to meet the growing demand for commercial engine MRO services. In this regard, in September 2021, S7 Technics announced plans to open a new engine maintenance center at Sheremetyevo airport (Moscow) for the overhaul of CFM56-5B and -7B engines and auxiliary power units ( APU) Honeywell 131-9A/9B. . The maintenance capacity of the new workshop is expected to reach up to 100 APUs and up to 42 engines per year.
Many of these service provider partnerships with commercial carriers extend well into the forecast period to ensure continued aircraft engine service is airworthy and safe for flight. It is through these partnerships that the commercial segment of the market is expected to dominate the market with the highest market share during the forecast period.
Asia-Pacific is expected to generate the highest demand during the forecast period
Asia-Pacific has witnessed significant growth in total aircraft fleet over the past decade, which has increased the demand for engine MRO services and is expected to lead the market over the forecast period. This has led several MRO service providers from the United States and Europe to establish their maintenance facilities in this region. Additionally, to reduce overseas maintenance costs, several airlines have partnered with engine MRO service providers to develop in-house capabilities. For instance,
Air China in September 2022 announced its entry into a joint venture (JV) maintenance, repair and overhaul (MRO) plant in China. The new facility, Beijing Aero Engine Services Company Limited, will provide MRO support on Rolls-Royce Trent 700, Trent XWB-84 and Trent 1000 aircraft engines. Air China and Rolls-Royce each hold a 50% stake in the joint venture with a contract amount of about 2.61 billion yuan (about $378.2 million).
Investments by manufacturers in the region are also generating high revenue and hence market growth in the region. Safran, a major international aeronautical engine manufacturer, announced in February 2022 the opening of a new MRO plant in Suzhou, China. The facility is being set up and is expected to be operational by the end of 2022. The company-owned 5,200 square meter repair station assists it in its strategic engagements, linking it to MRO facilities of the company across the Middle East and India facilities, making the company an optimal choice for MRO services for major airlines across the globe.
In July 2022, Safran also announced that it would invest up to $200 million to set up its largest MRO facility in Hyderabad, India. The facility will be capable of handling up to 300 engine shop visits per year, especially for the CFM56, Leap 1A and Leap 1B engines which dominate the Indian market. This large facility should also be used as an MRO facility for Safran’s Asian engine customers. Owing to several such investments, government incentives, and potential increase in passenger influx, the market is expected to witness significant growth rates in the Asia-Pacific region over the forecast period.
Major players in the Aircraft Engine MRO market are Lufthansa Technik, Rolls-Royce Holding PLC, Raytheon Technologies Corporation, General Electric Company and Safran SA. Major engine MRO providers are entering into long-term partnerships or forming joint ventures to grow their engine MRO customers. For example, in June 2022, ST Engineering announced that its Commercial Aerospace business had signed a five-year agreement with Safran Aircraft Engines, a world leader in aerospace engines, for ST Engineering to provide engine maintenance offload (visit in the workshop) of the CFM56. -5B and -7B engines. This multi-year agreement will allow ST Engineering and Safran Aircraft Engines to cope with the expected increase in engine MRO activities as air transport gradually recovers from the pandemic. Although they are a huge advantage for market players in terms of economic stability, the long-term contracts of players established with the armed forces and commercial airlines can constitute a barrier to the entry of new players into the market. .
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