GLOBAL FLEET & MRO MARKET SCENARIO AND FORECAST 2022-2032

With air travel forecast to steadily grow over the next few years, airlines are expected to keep the industry of Fleet and MRO (maintenance, repair, and overhaul) stable with spending for upkeep conservatively forecast to grow 4.6% year-on-year. The aggregate value of MRO activity will be more than US$1.8 trillion by 2035. It estimated the annual industry MRO spend to grow 4.6 percent year-on-year from US$53 billion to US$132 billion annually. As per the global management consulting firm Oliver Wyman, aviation industry now appears to be poised for a decade of growth. Unlike the last decade, which enjoyed steady annual increase in demand, the next 10 years are apt to be filled with a multitude of challenges that will test the industry’s resilience. The report also highlights the impact of the rising demand for air travel as the major contributing factor in keeping production lines at aircraft, engine, and component manufacturers busy.

 

Global Fleet Forecast Aviation Sector
Aviation industry now appears to be poised for a decade of growth

While COVID-19 continues to torment global economy in general despite effective vaccines, a significant portion of domestic air travel demand around the world has recovered and the fleet is growing again. The unpredictable nature of COVID-19 and its variants remains the industry’s biggest immediate obstacle to business as usual. Excerpts from Oliver Wyman’s reports states there is optimism that the industry has turned the corner and is now on an upward trajectory; but the next 10 years will be filled with a multitude of challenges that will test the industry’s resilience unlike ever before.

By the early part of 2023, global demand for domestic travel is expected to exceed and the outlook is for steady growth through the rest of the decade at rates that even exceed expansions in gross domestic product. Business and international travel segments will take longer to recover, with restrictions from corporate and government policies which seems unlikely to be fully lifted until COVID-19 transitions into an endemic disease.

But is it just restrictions that took a bite out of corporate travel? With people conducting business without face to face has contributed to the impact. In future slow business recovery is apt to put a cap on airline profitability and growth, but the potential for lower long-term corporate demand exists. For international travel, the biggest barrier will be the disparity between cross-border rules and vaccination coverage. Globally, a slow recovery in this segment will limit the number of aircraft in the fleet for years.

“As unimaginably bad as COVID-19 has been for aviation, the challenge of the next decade may be almost as disruptive. The industry needs smart strategies to get itself in a better position by the 2030s”- Oliver Wyman

 

For the maintenance, repair, and overhaul (MRO) sector, the market is being redefined by a fleet in transition, in part because of higher numbers of retirements of aircraft due to enter a period of intensive MRO expenses. MRO demand should recover to pre-COVID levels by 2024, but annual growth in the second half of 10-year forecast period will be 2.8%. By 2030, MRO demand is expected to reach $118 billion, 13% below the pre‑COVID forecast of $135 billion. By 2028, forecast projects the worldwide fleet will total 37,978 aircraft and MRO spending to US$91.9 billion by2023.

Narrow-body aircraft will be the biggest beneficiary increasing from 66 percent in 2028, thanks to operating costs, range, and capabilities. To say, the slower growth projections won’t be applicable everywhere. For instance, China-based fleet and its MRO demand had already exceeded pre-pandemic levels by the end of 2021. Other regions like Western Europe may not see MRO demand recovering until 2025.

FURTHER CHALLENGES

The industry challenge with climate change may increase pressure on the industry. Even though aerospace manufacturers have been relentlessly driving for more fuel efficiency, there is no existing technological solution for substantially cutting emissions for the time being. While research is underway on the use of hydrogen or electric engines to power aircraft, the commercial production of such revolutionary aircrafts is probably 15 to 20 years off.

Reference: Oliver Wymann

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