The global pandemic changed the business landscape for everyone, but it’s been a particularly challenging time for aviation maintenance, repair and overhaul (MRO) companies. While customer expectations and concerns have never been higher, keeping the market temperature balanced and productive has never been more difficult. However, there are green shoots of optimism, with the launch of new facility locations and services from the likes of United Rotorcraft and Constant Aviation.
Recovery of the global aviation sector means MRO difficulties
But whether ‘hot’ or ‘cold’, there’s no escaping that the MRO market is recovering from the greatest health crisis of modern times, as it looks to engineer diverse operational strategies and innovations for customers. One example of such an approach is from Parker Lord, which provides a substantial view of the global MRO market. Rodolphe Leroy, Director of Global Rotary Marketing, Aftermarket Sales and Business Development for the company, pointed out that people, places and products were all disrupted by the pandemic, alongside commercial processes and procedures. But the MRO market is in a recovery stage, and the temperature varies widely from country to country.
“For example, Europe is ‘lukewarm’ right now, while both Asia Pacific and Latin America are very cold,” Leroy said. “The US, however, is doing very well. It’s been hot for a while, with Canada grouped in the same market – primarily due to similar requirements. Combined with the fluctuating wildland
fires, there has been an uptick in demand for VIP and the Emergency Medical Services (EMS) markets. As responders work through the extended fire season, they are putting more hours on the aircraft and need to perform maintenance or replace parts
more frequently than before.”
The maintainers of mission-critical aircraft always face a difficult choice for ‘on-condition’ parts: “If the part is changed too early, the owner of the aircraft isn’t happy with the associated costs, but if the part isn’t changed, it causes significantly more vibration for the crew and passengers,” Leroy added, while emphasizing that safety should always be the priority.
Staff costs and new technologies bring challenges and opportunities
Jonas Murby is a Principal at AeroDynamic Advisory, a speciality consulting firm focused on the global aerospace and aviation industries. He spoke to AirMed&Rescue about the challenges the aviation sector is facing, including rising staff costs, the advent of new technologies and increasing use of second-hand parts.
He explained: “Salaries are on the rise, and will continue to be for a while. But this will not be enough – we are in a technological paradigm shift where there is enormous competition for labor across industries. The MRO sector has a step-shift ahead in its
entire modus operandi if it is to remain relevant for a young generation.” It’s worth noting that smaller, lower-tier parts manufacturers and repair providers have had greater difficulties retaining staff and that the impact is greater at places that require a high degree of specialization, he added. “Conversely, larger OEMs appear to have less of a challenge attracting personnel, probably because they are perceived as relatively stable options in a more uncertain time.”
Digitalization and automation of business processes are, he noted, ways to increase productivity and therefore somewhat mitigate the lack of labor. Covid accelerated
a lot of this, both at airlines and their suppliers. “Finally,” he added, “airline use of USM (Used Serviceable Material) will increase, as they try to address the spike in material (and labor) costs.”
A remote and automated future for aircraft maintenance and repair
One such digital innovation currently being explored by Parker Lord is the use of wireless sensors for remote monitoring: “With this technology, we would be able to see developing trends, helping us note specific behaviors to determine if the part needs to be changed prior to a visual inspection telling us,” Leroy said. “However, this is years in the future.”
Most services are still based on visual inspections, which can make it difficult for operators to know exactly when to change parts. “The sensors would allow us to monitor the behavior of the parts, providing the opportunity to conduct preventive maintenance as well,” he added.
On the topic of automation, Murby said: “To me, the automation of inspection technologies is among the most interesting developments, whether this is drones inspecting a fuselage or intelligent borescope inspection of engines. This saves labor hours, but also digitizes the results, which provides opportunities for further efficiencies in related business processes.”
Aircraft parts - using exchange pools
While maintenance services continue to be critical, the pandemic-induced supply chain disruption has created a situation where ‘everyone suffers’, Leroy said. “Some operators have stopped stocking parts because of cashflow issues, and also face problems with suppliers not being able to ship products on time,” he explained. But one solution appears to be collaborating with parts manufacturers.
The difference between purchasing from the Original Equipment Manufacturer (OEM) or aftermarket sector is the hard reality of grounding the aircraft when a specific part is not available from the OEM, whereas aftermarket parts may be more readily available.
“The key to successfully serving the operator on time is the exchange pool,” said Leroy. “Operators do not want to ground aircraft because they cannot get parts. They will turn to alternatives, including Parts Manufactured for Approval (PMAs), to keep on flying.”
The decision among aircraft owners (often lessors) to not use PMA is economic, based on their perceived impact on aircraft residual value
Leroy believes it’s critical to invest in an exchange pool if MRO companies are going to meet customer expectations: “We wouldn’t be able to turn the parts around fast enough to accommodate aircraft-on-ground situations if we didn’t have an exchange pool. It’s a great benefit to the operators, which don’t have to carry the large inventory themselves.”
PMAs can also offer cost savings compared to OEM-delivered new ones, plus can be a way to address poor market availability (in cases of long lead times from OEMs) – the latter was a major reason for the growth in demand for PMA back in the mid-2000s.
Some companies are hesitant to use even Federal Aviation Administration (FAA)-approved PMA parts, because the OEMs don’t have the inventory, which is a problem across the industry. Another area of conflict is operators shying away from using PMA parts, since the OEM wasn’t responsible for the manufacture: “They might think that the part must not be as high a quality product, but this is not the case for us,” Leroy said.
Murby noted: “In my view, the airline perception of PMA quality isn’t a major roadblock. Instead, the decision among aircraft owners (often lessors) to not use PMA is economic, based on their perceived impact on aircraft residual value.”
Supplies depend on aircraft type and geopolitical influences
The market today has been impacted by various factors, including personnel shortages and inflated pricing. And for operators, it depends on the fleet composition – some specific aircraft types are also experiencing challenges as they are ageing fast, and parts are harder to come by. “For some models, it’s hard to justify an exchange pool,” Leroy said. For instance, take the Bell 214 – a medium-lift helicopter derived from Bell Helicopter’s ubiquitous UH-1 Huey series. Leroy said the company is trying its best to help the legacy aircraft operators, ‘but sometimes there’s simply not enough of those models currently flying to justify keeping lots of inventory on hand’. However, other models like the Airbus AS350, Bell 206, 407 or 412 or the MD 500, with larger numbers in service, do make the cut, he added.
Some specific aircraft types are also experiencing challenges as they are ageing fast, and parts are harder to come by
Murby said: “The pandemic-induced lockdowns created issues in global logistics and supply chains which are still reverberating. This was further exacerbated by the Russia/Ukraine war. In addition, there were staff reductions at suppliers who are now struggling to adapt to both the aircraft production ramp ups and increased demand for aftermarket parts. It is very difficult for them to keep up, so airlines are seeing long lead times and have difficulties planning their MRO. The chaotic and expensive nature of global logistics that resulted from the pandemic led many to review their supply chain approaches.” And while solutions are on the table, these problems are going to take a while to work their way through the system: “There has been some re-shoring, dual sourcing, etcetera, which may remain in place despite transport costs now becoming more stable and less costly.”
Staff retention and pricing concerns
Another challenge for MRO providers, as well as operators and maintainers, has been retaining skills in house: “Several subcontractors lost key personnel, which has made it tough to train new people in those high-skilled areas, such as ‘plating’ and submachine work,” Leroy told AirMed&Rescue.
The pricing is out of control. Given the inflation situation, it’s not always easy for operators to increase prices
But there’s another problem, that doesn’t look to be resolving any time soon: “The pricing is out of control. Given the inflation situation, it’s not always easy for operators to increase prices, especially if they have long-term commitments with local government agencies or hospitals.”
But no matter what condition the industry is in, it is key that OEMs and maintainers remain committed to the market – and not ‘turn the supplier faucet off’ completely, warned Leroy. He added: “It is often difficult to get the flow back to a healthy level if you have to shut down supply chain sources. We were there during the tough times for our customers and keep a lot of aircraft flying, thanks to our stocking position.”
Overall, said Murby, airline engineering and purchasing organizations have gotten smaller and have lost senior expertise as a fallout from the pandemic.
Diverse fleet means diverse services
Diversifying their platform of services was another strategy that Parker Lord implemented to survive, and indeed, even thrive, during the pandemic and in its aftermath. “Mostly, it was a market pull,” Leroy confirmed. “We’re well known for servicing Bell and the McDonnell Douglas fleet. Customers wanted us to help them with other platforms too. We opened ourselves up to those and it’s had a very positive impact. We now provide products and services for more than 27 platforms.”
Murby concluded that the onus is on MRO companies to deliver products on time and in such a way that they are exceeding, not just meeting, customer expectations: “More will be expected from MRO providers in terms of taking on risk, broadening their portfolios and packaging their services in ways that minimize the administrative burden of their customers.
In short; providers that think ‘solution’ will be very welcome.”