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By Judson Rollins

October 24, 2023, © Leeham News: In aviation’s topsy-turvy post-Covid recovery, one group of companies faces a near-perfect storm of positive developments: maintenance, repair, and overhaul (MRO) service providers and their suppliers.

Source: Maxim Commercial Photography via Aviation Week.

Last week, MRO providers and airline representatives met in Amsterdam for Aviation Week’s MRO Europe conference. There was an almost palpable sense of “it is what it is” resignation from airlines about costs and delays and from providers regarding labor availability and supply chain challenges.

However, the current balance of power clearly favors providers, who face almost unprecedented demand. The aforementioned constraints serve to limit MRO capacity further, giving providers almost unprecedented pricing power.

The biggest obstacle facing both providers and airlines is a growing gap between market demand and production rates of key components, especially for engines. This shortage is exacerbated by limited aftermarket supply, which in turn is driven by limited feedstock for part-outs.

Summary

• Long backlogs, high prices are a growing concern for airlines.
• Lessors are also facing strong tailwinds from MRO, engine market dynamics.
• Production and pricing strategies are being called into question.