Sharp rise in demand could create supply-chain bottlenecks, shortages of USM.
Sean Broderick
A jump in engine-related services will drive aftermarket growth in the coming years. Credit: American Airlines
A steady increase in global air transport activity throughout 2021 boosted confidence that commercial aftermarket spending would be back on its pre-downturn path as early as 2023. The recovery’s pace will vary by market segment and geography, subject to knock-on effects from new COVID-19 variants or other unforeseen issues that alter aircraft utilization or delivery trends. Overall, however, all signs heading into 2022 point to a year of increasing—dare one say “surging”?—demand for maintenance, repair and overhaul (MRO).
The reason is clear: Demand for lift is returning, and operators are responding by flying more aircraft more often. Global aircraft fleet utilization in October 2021 was 73% of October 2019’s figure as measured in flight hours, an analysis of Aviation Week Fleet Discovery data by consultancy Naveo shows. While the figure still lags pre-COVID-19 activity, it was better than both the year-to-date figure of 62% through Oct. 31 and the comparable 10-month figure of 52% posted in 2020.
The recovery’s uneven pace, particularly between domestic and intra-regional versus long-haul services, is favoring certain aircraft and engine types. Manufacturers and suppliers with significant narrowbody and cargo operations are benefiting, while those heavily weighted toward passenger widebody activity are lagging.
On the airframe side, 71% of the global commercial fleet was in regular service—flying more than two days per week—the Aviation Week data confirmed. The most active fleets were the newest Airbus narrowbodies. The A320neo fleet is leading, with 88% regular service, the analysis shows. The A220 is next-highest, at 86%. The Boeing 787, at 81%, was the only other model above 80%.
The bias toward current-generation aircraft is no surprise. They are the most efficient and the most likely to be under warranties or long-term care agreements that provide near-term cost relief. Most of the jump in aftermarket spending will come from previous-generation models—A320ceos, 737 Next-Generation (NG) variants and 777s—moving through regular heavy-overhaul periods.
Take the CFM International CFM56: Aviation Week’s latest forecast has the venerable platform accounting for nearly 25% of all engine maintenance demand in the 2022-31 time period, valued at about $113 billion.
The decade will start with a rapid ramp-up. Led by the CFM56-5Bs that power some AirbusA320ceos and the -7Bs found on all 737NGs, the CFM56 family generated 2,300 shop visits in 2019. The downturn’s hurricane-like headwinds reduced total engine inductions to a combined total of about 2,400 in 2020 and 2021, as operators put the brakes on all unnecessary work.
With narrowbody utilization climbing, engines with available green time dwindling and required maintenance looming, the trend is quickly shifting. Safran executives see shop visits totaling about 2,000 in 2022 and reaching pre-downturn levels by 2024 at the latest.
As flying activity increases, parts of the MRO supply chain such as component repairs could face short-term bottlenecks. Credit: Lufthansa Technik
Pratt & Whitney’s PW1000G-series geared turbofan, now largely past its early teething problems, is seeing both its total fleet size and per-airframe activity grow as operators deploy the aircraft it powers, including many Airbus A320neo-family models and the entire A220 fleet, to support network rebuilds. The PW2000 and PW4000’s presence on popular freighters, including the Boeing 757 and 767, combined with a surge in air cargo directly linked to the decline in passenger-flight belly capacity during the downturn has been a pleasant surprise for the engine-maker.
The combination helped push the Pratt-powered fleet’s October flying hours past the comparable 2019 figure by about 0.7%, Naveo found. Only CFM could make a similar claim. GE, Rolls-Royce and International Aero Engines hours each were within 5-10% of 2019’s figure.
Widebody passenger flying is recovering more slowly, but many service providers are benefiting from increases in cargo-only flying that is lifting some older-technology equipment. Delayed engine inductions also will soon lead to a bump in demand for work.
Rolls-Royce is projecting 400 major large-engine shop visits of engines under long-term agreements in 2022—nearly a third more than it saw in 2019. The increase comes after visits fell to 270 in 2020 and around 240 in 2021.
“Right now, we can anticipate a significant pickup in shop-visit activity,” Rolls CEO Warren East said in early December. “There are steps forward and steps backward. And the emergence of variants and things is a step backward, but the underlying trend is all forward.”
Several others, including CFM International, International Aero Engines and GE, are steadily moving toward 2019’s figures.
Projections pointing to broad recovery to pre-downturn figures within a few years set up 2022 as a transition year of sorts—not as lucrative as 2019 but markedly better than 2020 or 2021.
Engine maintenance will continue to generate the highest percentage of sales among the commercial aftermarket segments—a projected 44% of 2022 revenue, Naveo calculates, edging up to 46% in 2031. Its recovery will help push total maintenance spending past 2019’s figure in 2023, Naveo’s analysis concludes.
The projected 2023 total of $47 billion in engine services spending would be a 57% increase on 2021’s projected final total of $30 billion and a 27% increase over 2022’s $37 billion forecasted total. Modifications, set to increase 40% to $7 billion in 2021-23, is the next fastest-growing category.
In Naveo’s world, total MRO spending will rise 17% in 2022, reaching $84 billion. It then jumps another 15%, to $97 billion, in 2023, easily surpassing 2019’s $87 billion figure.
Updated figures from the 2022 Aviation Week Commercial Fleet & MRO Forecast show a similar upward trajectory. Total MRO spending in 2022 is pegged at $83.5 billion, increasing to $97 billion in 2023.
The rise in activity will challenge the supply chain, particularly in the engine space. Beyond the rise in shop-visit volume, per-overhaul material demand is increasing as well, as operators shift from as-needed workscopes to traditional, broader overhaul packages.
“We’ll be looking at the actual demand for components from shop visits, whether that’s paid on a time-and-materials basis or on a long-term-service-agreement basis,” Rolls-Royce’s East said. “As far as we’re concerned, the difficult bit is managing that load on our factories as the shop-visit ramp comes toward us.”
TAP Air Portugal Engine Shop Planning and Control Manager Ana Bidarra says the trend is already evident in her company’s shops.
“In the last year, the workscopes were very tailored. The demand was for quick turns—simple work just to fix the problem that the engines had,” she said at Aviation Week’s AeroEngines Europe in early December. “What we see now is that we have demand for [broader] CFM workscopes, performance restorations and [life-limited part] replacements for the next year.”
The demand for more material is not being met by used parts, however—another trend to watch closely. An initial slowdown in retirements early in the downturn, caused in part by operators waiting out the pandemic’s recovery prospects before making fleet-planning decisions, has created a gap between supply and demand on many platforms. While retirements are picking up, the lag between removing an aircraft from service and generating used serviceable material from a teardown—often a year or so—means many parts bins still need topping up.
A year ago, CFM executives were projecting a range of 250-400 teardowns in 2021. The reality has been different—Safran estimates only 80 CFM-powered aircraft have been officially retired in 2021, and that does not necessarily include the engines.
The combination of less used material plus rising demand for overhauls and parts going into each overhaul is leading to changes on the secondary market, CFM Materials CEO Rudy Bryce said at AeroEngines Europe.
“What I’ve seen that’s been really interesting this year is the best engines that we’ve been able to acquire that had good [life-limited parts], good core, good [high- pressure turbine] blades, something different happened,” he said. “We were actually able to work with partners and sell some of those unserviceable engines to get overhauled. Instead of tearing down an engine and creating the used material supply, people were investing in the engines and getting them back into service.”
CFM sees such moves as insurance if key aftermarket functions like parts-repair or basic overhaul shop capacity cannot keep pace with demand.
“There is going to be some stress in the system. We’ve actually invested in some engines to be ready for next year to support our customers,” Bryce said. “I told my team to hit the gas on repair several months ago—get inventory ready and get it serviceable,” Bryce added. “It may sit on the shelf for four or five months or six months or more, but there is going to be a need for it.”
