ATS's own analysis of outsourcing trends is positive enough to convince the company to add hangars and expand its component business.
“Prior to 2012, some 30% of all North American airline heavy maintenance and modification hours were generated internally,” Yerbic points out. For 2013-14, ATS predicts this will drop to 22%. Two events driving this trend are the Aveos closure and the phase out of American's Fort Worth-Alliance Airport maintenance facility, which Yerbic believes will prompt more outsourcing.
The uncertainty of the new American Airlines' maintenance plans is a wild card for MRO providers. “We don't know what American, or a merged American and US Airways, will do about maintenance outsourcing,” says William Swelbar, a research engineer with the Massachusetts Institute of Technology (MIT) International Center For Air Transportation. “It is very likely that they might bring some contracted-out maintenance back in-house if they can make the case that it will be more affordable. That would also mitigate labor concerns with respect to the merger.”
American declined to comment. The carrier's silence is not dampening enthusiasm from service providers, however. Flightstar Aircraft Services COO Tucker Morrison considers the proposed merger an opportunity for new business. “AMR is high on our list of prospects, and we are talking with them about getting some of their narrowbody work,” says Morrison, whose Jacksonville, Fla.-based company specializes in narrowbody airframe maintenance and modifications.
Flightstar has 11 maintenance lines in two hangars at Jacksonville's Cecil Field, and plans to add four to six more in a new hangar at that location by 2014, Morrison reports. That expansion, he says, is driven by demand from existing customers, which include operators and leasing companies such as Southwest, AirTran, Delta Air Lines, FedEx, DHL, Allegiant Air, Boeing and Aviation Capital Group.
Besides demand, changes with airline pilot scope clauses could impact some North American MROs going forward, particularly those that have serviced the 50-seat jet market, points out Rob Cords, StandardAero senior vice president of airlines and fleet.
“New labor agreements are permitting pilots at regional affiliates to fly larger aircraft, and consequently, we are seeing a shrinking fleet of 50-seat jets,” Cords reports. “Planning for our capacity needs is predicated partly on a projected reduction in the number of 50-seat jets between 2015-20. As we determine the numbers, we will decide what capabilities we will need to keep in place.”
For that MRO market, Standard Aero's specialty is the GE CF34-3, which powers the Bombardier CRJ100/200, and the Rolls-Royce AE3007 used on the Embraer ERJ 135 and 145. As the 50-seat jet fleet shrinks, the MRO's marketing strategy “will have to address a more [globally] fragmented market, in which operators fly just a few,” Cords says. “We see an opportunity to work with those operators to optimize the remaining life on the engines. That includes helping them take a more aggressive stand in the surplus market for their parts acquisition planning, based on how long they plan to keep the aircraft.”
While demand for CF34-3 work may be declining overall, Standard Aero sees expanding MRO opportunities with the GE CFM56-7 and the CF34-8. “We are also seeing some growth opportunities on the Pratt & Whitney-Canada PW127M, which powers the ATR 72-600,” says Cords.