Airlines show signs of recovery but challenges face MRO vendors
Thursday, December 10, 2009 at 01:41PM The troubled aviation industry is showing signs of recovery with the announcement that United Airlines has ordered 50 aircraft from Boeing and Airbus worth almost $10 billion, its first order for new aircraft in twelve years. The order is for twenty-five of Boeing's new mid-sized 787 Dreamliner jets, still in the testing stages, and twenty-five wide-bodied Airbus 350s. The Dreamliner's first flight could take place this month. Delivery is due in 2016.
This news comes as four of the US's biggest airlines—Southwest Airlines, United Airlines, Continental Airlines and Jet Blue Airway—report passenger number increases in November compared to November 2008. Global airline capacity rose in November as well, as are frequencies (up 1% over November 2008) with a total of 2.3 million flights for November 2009.
This is somewhat encouraging news for the MRO industry, which has had to adjust as airlines struggle with weak travel demands, rising fuel costs and tight money. In 2008, North American capacity fell by almost 800 aircraft, making it the largest capacity reduction on record. In that year, according to research by Frost & Sullivan, the North American MRO market, including heavy maintenance, engine maintenance, components maintenance and line maintenance earned $16.4 billion in revenues. Worldwide flight hours, have declined 3.8% this year, according to David Stewart of AeroStrategy, prompting a commensurate drop in MRO spend from $44 billion in 2008 to $41.8 billion in 2009.
As airlines continue to look for ways to cut costs and comply with environmental regulations that require greater fuel efficiency, MRO service providers will be expected to contribute cost-cutting solutions. At the same time, as the aviation industry becomes more and more technologically advanced, with next-generation aircraft like the Boeing 787 and the Airbus 350 replacing older fleets, MRO will have to keep pace with cutting edge electronics and advanced cockpit systems.
Besides the challenge of keeping up with technology and finding skilled workers, North American MRO vendors have to compete ore and more with lower-cost Asian and Latin American MROs. The unpredictability of fuel prices and the overall economic climate are two more challenges over which the industry has little control.
Yet another challenge for MRO vendors could be the trend among world airlines to cut into the MRO market by offering services to third parties. There are reports that airlines such as Lufthansa, Air India and Malaysian Airlines are moving into the Middle East. Lufthansa Technik, for example, has signed a contract with Qatar Airways to do cabin modification work on Airbus aircraft. Civil aviation in the Middle East is projected to grow more than 5.2 % compared to the international average of 3.9 % and the number of aircraft serving the region is expected to triple by 2028, increasing the demand for MRO services dramatically.
NOTICE - All Rights Reserved Except as Stipulated Below. PHOTOS MAY NOT BE REPRODUCED IN ANY FORM. Our reporters and journalists break or report stories and their sources and information are protected by the doctrine of free press as expressed in the First Ammendment, Reporters Privilege Statues, and also the Canadian Charter of Rights and Freedoms.This article if a feature or opinion piece is the opinion of the author or reports the news and opinions of others and is NOT INTENDED TO OFFER ADVICE. FOR OPINION STORIES: This story/article/ feature may be an opinion piece — and should be treated accordingly — or reporting on the opinions of others, and should never be considered as a sole source of information or as a suggestion, instruction or prescription. FOR CRIME STORIES: always read the word "allegedly" in any story mentioning "suspects" or "persons of interest". FOR BUSINESSS AND MONEY STORIES: For money/ trade and exchange stories, this magazine and its writers accept no responsibility for accuracy — always check with other sources for important decisions. FOR HEALTH AND LIFESTYLE STORIES: In the case of food/health stories, these facts have not been evaluated by the United States Food and Drug Administration (FDA). Information stated here should be NOT be considered as medical, health, psychological or behavior advice. All information in this story and on this site is provided for educational or entertainment purposes ONLY. Always seek the advice of experts, including doctors for medical opinions. Only a licensed medical doctor can offer medical advice. FOR EXPERT, ADVICE OR HOW-TO STORIES: Legal advice or other expert advice is best referred to experts in their respective fields. NO RESPONSIBILITY: The publishers and editors, authors, researchers, employees, heirs and assigns accept no responsibility whatsoever for any advice, facts, opinions in this story, nor for resulting actions of readers of this information. ALL READERS ACCEPT THAT THIS INFORMATION IS PRESENTED ONLY AS NEWS, EDUCATION, ENTERTAINMENT OR OPINION/INFORMATION AND AGREE IN READING THIS STORY OR THIS SITE THAT USE OF THIS INFORMATION IS SOLELY THE RESPONSIBILITY OF THE READER. Copyright by the byline author unless otherwise indicated. EXCERPTS from other magazines or media sources are posted under fair use doctrine, on the basis of no more than 5-10% of content with links and credit to source for the complete story. These are posted in the interest of providing interesting links (description as excerpt) with navigation to the source. Likewise, we encourage our many subscribers to excerpt with credit and links to our e-zines, up to 10% of content. To use more content than 10%, please contact the e-zine for permission. ALL RIGHTS RESERVED except as stipulated herein. IMPORTANT: this web content also includes a forum and comments function, which allows for posting from users not employed by this publication. We accept no responsibility for posts, content, language or accuracy of posts from outside parties but will attempt to correct any inaccuracies reported within the context of free speach. Where possible, spam, lewd or obscene comments WILL BE REMOVED.
Persona Corp. and Blogertize publishes several webzines, magazines, e-zines for news, entertainment and information, but cautions readers to read the NOTICE above:
* Secure Network News Sponsored Advertisers Jameson Bank – Canada's "It's Taken Care Of" Bank Amer.com – Technology for Life
Reader Comments