MRO Management

Boeing 737 MAX grounding: How events have affected the MRO market

Boeing 737 MAX, flight deck
photo_camera 737 MAX Flight Deck Artwork K65930

The demand for MRO of the Boeing 737 family is huge, but how have recent events affected the market? Bernie Baldwin caught up with one consultancy to find some answers.

No one with the slightest interest in commercial aviation could have failed to register the tumult caused by the grounding of the Boeing 737 MAX following two crashes in which all on board each flight perished.

Although Boeing steadfastly refuses to confirm whether there was a design fault in the manoeuvring characteristics augmentation system (MCAS), which has been identified as playing a major role in both accidents, efforts are underway to make the system ‘better’.

At the time of writing, the grounding of the worldwide fleet looks set to continue well into the third quarter of the year, with no further deliveries until the recertification and revamped pilot training had been completed successfully.

The grounding is certain to affect the demand for maintenance of the 737NGs in the global fleet. Joost Groenenboom, principal at consultancy ICF International, has been assessing the MRO market for the type.

“We estimate that the global MRO market for the 737NG will be around $16 billion in 2019,” he remarks. “The NG fleet is expected to reduce by around 2,000 aircraft over the next 10 years and by 2028, due to the higher average fleet age, the 737NG MRO spend will decrease by only 9 per cent compared with today.

“Boeing has advised that they are reducing the production rate of the 737 line from 52 to 42 per month for now. However, keeping in mind the high commonality between the MAX and the NG (engines aside), the 737 market as a whole should increase significantly over the next 10 years, only the split of MAX versus NG may look a bit different with the current delays.”

Once the immediate imbalance has settled, therefore, ICF expects little change in the demand. But how has the way in which Boeing itself has developed its support services, affected the way in which the global fleet is maintained?

Boeing 737 MAX grounding: maintenance market

“We wouldn’t say that the way the global fleet is maintained has changed, just that with the increased focus of Boeing on the aftermarket, MRO is an ever more competitive environment,” Groenenboom observes.

“Boeing bought KLX last year (increasing their parts distribution activity), they recently partnered with SR Technics to compete on the Airbus component support market and, like most OEMs, they also aim to provide digital services to airlines. Service providers, whether an OEM or independent MRO, need to make use of the aircraft’s increased capability to transmit and analyse valuable maintenance data in a timely manner.”

Just because the OEM is upping its game in the aftermarket, does not mean it will have things all its own way. There are many big players; Lufthansa Technik, Delta TechOps, SR Technics and so on. With such a large 737 fleet across the world, some of the newer players are making waves in 737 MRO, too.

“The 737 maintenance market is a relatively mature market, which means that maintenance providers need to offer innovative solutions to distinguish themselves,” Groenenboom points out.

“This has resulted in new digital products, such as ‘Prognos’ by AFI KLM E&M and ‘Aviatar’ from Lufthansa. However, the MRO spend is largest in Asia and there have been quite a number of announcements on partnerships and new facilities. Airbus and Thai Airways signed an MoU last year to develop a major MRO facility in U-Tapao, while China Southern (GAMECO) has started construction of a large new hangar in Beijing, capable of 12 aircraft.”

Many of these new products have been developed with the reengined 737 in mind, and it’s important not to forget there are more than 4,600 Boeing 737 MAXs on order. Most of the MRO providers have their Boeing 737 MAX maintenance plans already in place or even underway. How long it will be before they put them back into action remains to be seen.

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