With demand for air travel surging globally, hangars are filling up again, but clouds are gathering on the horizon.
MRO spending, which had dropped alarmingly with the onset of the pandemic, is back up again and on track to get back to 2019 levels by 2023. The industry, which has seen digital transformation taking root over the last two years, is set to see growth over the next decade but could confront significant headwinds, the scarcity of skilled technicians being the main one.
If lack of work was what crippled MRO organizations over the last two years, many companies are having to deal with a temporary capacity crunch as airlines return more of their fleets to service. With most MRO companies deciding to go ahead with facility expansion plans as the industry recovers faster than expected, the longer-term capacity outlook is significantly brighter. Over the current decade, companies are set to deal with a new set of challenges around labor, inflation, and sustainability,” according to Oliver Wyman’s 2022 Annual MRO survey.
Steady Growth
MRO demand is expected to recover to pre pandemic levels by 2024 and reach US$118 billion by 2030, registering an annual growth of 2.5 per cent until 2027 and 2.8 per cent from 2027 until 2031. The growth will be uneven across regions and will be dictated by while Western Europe will not see demand recover until 2025, the Asia Pacific region will recover faster China While the growth signals a return to normalcy and marks a recovery from the pandemic, the projected total MRO spend is still 13 per cent below the pre‑pandemic forecast of US$135 billion.
With the Asia Pacific taking longer to recover compared to other regions and carriers deferring heavy maintenance, MRO companies in the region have seen their business dip more than their counterparts in other regions. With restrictions finally easing as countries open up borders, companies are finding themselves busy again as carriers reactivate aircraft in storage.
Among the companies investing in the region is Lufthansa Technik. Lufthansa Technik Philippines, which had held a ground-breaking ceremony in November 2019 for a new 9,000 square meter hangar in Pasay Bay near Manila, opened the US$40 million base maintenance facility in August this year. The facility was originally scheduled to be completed in September 2020. The new location will service Airbus A320, A330, A380 and Boeing 777 aircraft. The company plans to add up to 275 new staff at the location.
ST Engineering is another MRO major that is expanding; the company expects to complete work on a 177,000-square-foot hangar, the second phase of its MRO facility at the Pensacola International Airport, by September this year. Construction of Hangars 3 and 4 is scheduled to begin in October this year and be completed in June 2024.
Looming Crisis
According to the Oliver Wyman survey, the lack of enough skilled technicians is the top disruptor for the industry over the next five years. While about 80 per cent of North American respondents said that finding aviation maintenance technicians (AMTs) has become challenging, 65 per cent of respondents and a significant number from other regions concurred.
The shortage, which has been exacerbated by the spate of early retirements during the pandemic and members of the existing workforce switching to other industries, is most pronounced in North America. According to the U.S. Bureau of Labor Statistics, the projected growth between 2020 and 2030 in the number of jobs for AMTs is 11 per cent, compared to an 8 per cent average growth for all occupations. According to a 2022 forecast by the Canadian Council for Aviation and Aerospace, the country will see a shortage of 58,000 skilled workers by 2028.
Europe is also struggling, but not in as dire a situation. The shortage is not as pronounced in Asia currently but with the bulk of new aircraft going to the region over the next two decades, the situation is expected to change by the end of the decade as attracting new talent to the MRO industry has proven to be a challenge across regions.
According to Airbus, the aviation MRO industry will require 635,000 new maintenance technicians by 2037, with Asia requiring 44 per cent of these. Boeing forecasts that the industry will need 610,000 new technicians by 2041, with North America accounting for 22 per cent of the global demand. China will need 124,000 new technicians while the requirement for Europe and Southeast Asia will be 120,000 and 58,000 respectively.
“Recruiting mechanics has become noticeably more difficult compared to the pre-crisis period,” says Frank Bayer, Vice President, Human Resources at Lufthansa Technik.
At a panel discussion held at Embry-Riddle Aeronautical University earlier this year, top executives from several aviation companies highlighted the industry’s need for maintenance technicians. “For those of you who want to become an aircraft maintenance technician, and you’re qualified and certified, you can almost name your price,” said Steve Boecker, MRO sales executive at Delta TechOps.
According to Rick Hale, chairman and CEO of Winner Aviation Corporation, MRO companies are pulling out all the stops to woo fresh talent. “The segment is offering a lot of perks right now to (students) just coming out of school, with signing bonuses, tool chests and tools being offered, and other perks in the way of training.”
Another emerging trend in the industry is onshoring of capacity by airlines and aerospace manufacturers. Learning lessons from the pandemic and result supply chain disruptions, companies are moving to ensure a minimum amount of capacity to fall back on in the event of future obstacles such as travel restrictions and trade wars. Although the trend might fade once Covid-19 becomes a non -factor, domestic maintenance providers are expected to benefit in the short term.
Initiatives Galore
Many companies are doing their bit to grow the workforce; one among them is AAR, which has had success with the Eagle Pathway Program that is designed to meet the growing need for AMTs. The company recently announced a partnership with Aviation institute of Maintenance (AIM) by which its employees will receive a 10 per cent tuition grant towards an AMT program at any of AIM’s 14 campuses nationwide. In 2020, ST Engineering offered an entire class of AMT students at George Stone Technical College in Pensacola jobs at its facility.
In August, Hawaiian Airlines announced that it had teamed up with Honolulu Community College to expand the college’s Aeronautics Maintenance Technology (AERO) program. Two Hawaiian Airlines’ AMTs will turn instructors at the college, with the program expecting to double enrollment to 100 students by Fall 2023. Canada’s KF Aerospace, which does heavy maintenance and modifications for commercial aviation, is doubling the number of new recruits it trains.
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