The growing presence of original equipment manufacturers (OEMs) in the aftermarket continues to make MRO providers and airlines increasingly nervous, says a 2018 survey by consultancy Oliver Wyman.
Sixty percent of the nearly 100 aviation executives who took part in the survey identified “growth in OEM aftermarket presence” as the top “disruptor” in the MRO industry for the next five years. This is the second straight year that the issue has been identified as the biggest disruptor in the industry.
The other top industry disruptors, as per the survey, are aftermarket industry consolidation, the impact of game-changing technology, and labor shortage in the maintenance/technician field. The survey was released during MRO Americas, the trade show that concluded in Orlando today.
The survey also covered the issue of cybersecurity in the MRO industry and the lack of preparedness to deal with cyber-attacks. With the industry increasingly turning digital, it is imperative for the MRO industry to work together to strengthen its cyber security and risk management practices, the consultancy said. “Cyberattacks on aviation have moved from a possibility to a reality,” it added.
More than 75% of the survey participants said the stated ambition of OEMs to aggressively expand in the aftermarket is credible. They added that they expect OEMs to gain market share quickly over the next three years and to become the most dominant industry players within five years.
The leverage that OEMs have over intellectual property (IP) will help it corner more of the market, the respondents said. “This is primarily the case with engine and component manufacturers, but there is a fear that the aircraft OEMs may try to recapture more IP as they push into the aftermarket,” the survey added.
Ninety seven percent of the respondents reported increases in material costs, attributing it to the annual OEM material price increases and restrictions they place on the direct sale of OEM-designed parts because of their IP ownership. OEMs will continue to increase their market share through different ways, including joint ventures with existing MROs and suppliers, the survey added.
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