Oliver Wyman’s survey points where MRO is going; Aviation Safety must drive that path

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The Maintenance, Repair and Overhaul industry has been vital to the safety and economics of the worldwide aviation industry. As ARSA would say “You Can’t Fly Without Us”. These important sources of capacity and MX knowledge have been creative in how they have served their customers for years. Oliver Wyman has issued its MRO Survey 2014 and its predictions as to where the business is moving are to be noted in every Part 145 organization strategic plan. As with all such internal exercises, SAFETY should be the 1st priority in making tough decisions.

The consulting firm’s prognostications define a changing MRO marketplace. Some of them include (safety points are in italics below):

· “Original equipment manufacturers won the market for high-value, aftermarket aviation services, leaving independent maintenance, repair, and overhaul providers scouting for paths to evolve and grow.”


· MROs have the capacity to move quickly to adopt new technology, but remember to be on the leading edge requires a budget for research and development.
· If pursuing a new service offering, spend time acquiring the necessary tools, support, etc. AND plan for adequate (not short) lead time which FAA approval will consume.

· There is interest in mergers between organizations and acquisition by 3rd parties.

· Merging cultures, policies, procedures and personnel must be carefully managed to assure safety
· Outside investors must be well educated on the importance of safety in measuring profits.

· “Survey respondents expect additive manufacturing or 3-D printing, could reduce the cost of replacement parts, but is less likely to affect higher-end spares.”

· Adopting of 3-D printing as an MRO will require major preparation and then an exacting approval process by the FAA.

· Leasing companies will be better targets for MRO collaboration.

· Leasing companies frequently have substantial internal knowledge of MX; whatever their maintenance manual requires must be followed as carefully as an airline’s.

· “While a few MROs are cutting jobs, most are hiring at least at the pace of turnover. Thirty-two percent of North American, and 18 percent of Western European, MROs are adding jobs.”

· The overall A&P market is shrinking and some of the airlines are creating alliances with schools that develop these skills.

· “Yes, the repatriation trend is clearly gaining momentum. In this year’s survey, 60 percent of airline respondents say they are willing pay up to 5 percent more for MRO services of a domestic provider, and 20 percent indicate willingness to accept up to a 15 percent deficit. Anecdotally, we are seeing investment dollars flowing into building domestic capacity.”

· This trend line may also include bringing the work back in-house; the unions have been aggressively pushing against outsourcing. Foreign repair stations have been the primary target of organized labor. If the work does not return to the airline, it is likely that their disdain will be directed to the independent, domestic Part 145’s.

A robust and agile MRO industry is a critical aspect for a safe and profitable aviation business, domestically and internationally. The Oliver Wyman insights provide some excellent observations where the business may be moving. Getting first to some of these strategic points may result in financial success. Aviation business planning involves finding a multivariate equation solution. That requires that marketing, finances, capital investment, personnel, operations, capacity and SAFETY, all be carefully considered. The last of those factors is not the least; it must be foremost.

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