September 25, 2013
Stagnation in Europe’s airline industry will be a drag on the region’s aircraft aftermarket, which will grow slower than the world average over the next decade despite measurable expansion in Eastern Europe, forecasts revealed at MRO Europe Tuesday show.
Europe’s MRO market - what’s generated by operators, as opposed to what’s done in the region - will grow at 2.9% annually, climbing from $16.9 billion this year to $21.8 billion in 2023, says TeamSAI President and CEO Chris Doan. The growth is a few ticks below the global expectation of 3.1% per year average through the decade, from $56.2 billion to $76.0 billion, he says.
Western Europe’s spend will be even slower. Early returns from Aviation Week’s 2014 Fleets & MRO forecast shows that Western Europe’s 2014 MRO market will be $11.7 billion and will climb to just $15.2 billion by in 2023, a compound annual growth rate (CAGR) of 2.7%. Engine maintenance is expected to grow fastest, but still won’t get past 4% CAGR in the decade, says Aviation Week’s Senior Director, Online Editorial & Data Jim Mathews.
Airbus and Boeing will continue to dominate the European fleet mix, accounting for 82% of all deliveries to Western Europe through 2023, Mathews says. Many of those aircraft are replacing older technology, with 737 Classics, early 737NGs, and early A320s joining four-engine aircraft like the Airbus A340 and Boeing 747 leading the retirement parade, the Aviation Week forecast shows.
While Western Europe market shows signs of maturation, Eastern Europe is growing. The region will nearly double its MRO spend in the next 10 years, from $2.8 billion in 2013 to $5.0 billion in 2023, largely to support a growing fleet, Doan says.
Despite the European MRO market’s slow organic growth, the region continues to handle more MRO than any other region, primarily due to heavy engine overhaul presence.
Europe handles about $10 billion in engine work annually, while the region’s fleet produces only $5.7 billion in yearly work.
European engine shops handle about $2 billion in North American operator engine work a year, and $1.5 billion worth of work for Asian operators, ICF SH&E Principal Richard Brown estimates.