January 22, 2013
The Middle East air transport market may be among the fastest-growing in the world, but whether that translates into an equally fast development of the region’s maintenance, repair and overhaul (MRO) business remains to be seen.
Because the average fleet age will decline in the next 10 years, demand for MRO might only kick in with a “time lag,” Yen-Pu Paul Chen, Aviation Week’s director-forecasts and analytics, told delegates today at the MRO Middle East conference in Dubai.
According to Chen’s 10-year market forecast, the average age of Middle East-based aircraft will decline from the current 10.8 years to 9.4 years. The current figure already compares favorably to the world average of 11.1 years, and that advantage is set to widen even further.
Almost half of the current Middle East fleet is less than seven years old, meaning they have not been in heavy checks.
Still, when compared to other regions, the pie is getting bigger faster. The share of the Middle East MRO market is set to increase from the current 3.5% to 6.1% within the next 10 years; only Latin America is expected to grow faster.
David Stewart, VP at consultancy ICF SH&E, told attendees at the Aviation Week conference that the Middle East MRO market is expected to grow 8.5% annually in the next few years. But he cautions that a large part of that market may be locked in with large airlines, such as Emirates Airline, which do most MRO work in-house.
The share of freely available business may therefore be smaller than anticipated.
Global trends also may play a role. According to Stewart, aircraft have started to be retired earlier, and the total number of aircraft being retired is likely to double in the next few years. His question is whether the earlier retirement is a structural change or a short-term opportunistic movement caused by high fuel prices, low financing costs and high production rates.
As Yavuz Cizmeci, CEO of Mytechnic Aircraft MRO Services, points out, the outsourcing decision is not always rational. Many national carriers in the Middle East believe they should have their own MRO division, regardless of the economic viability, he adds.