Middle East airline fleets are expected to generate Maintenance, Repair and Overhaul (MRO) demand of 4.4 per cent average annual compounded growth over the next 10 years, according to a top aviation consultant.
"The 10-year MRO forecast is robust despite the global economic situation. Looking back through the past three or four decades, world airline growth has remained solid despite interruptions every eight to 10 years due to global economics," said Chris Doan, President and CEO of TeamSAI, an aviation business innovation consulting firm.
According to TeamSAI's 10 year forecast, the regional MRO sector will swell from $2.2 billion (Dh8bn) in 2008 to $3bn in 2018, representing an overall growth of more than 70 per cent. "While MRO demand is likely to fall in the near future, due to increasing global economic pressures, MRO providers need to address certain opportunities in readiness for when the airline industry recovers," said Doan, who will be speaking on the first day of next week's inaugural MRO Middle East Conference and Exhibition in Dubai.
"After each slowdown, there has been a surge of growth responding to pent up demand," said Doan.
"The obvious immediate issue is that MRO demand is trailing off as airlines rationalise fleets and schedules due to decreasing passenger and cargo demand in the midst of the worldwide economic crisis. With MRO requirement set to grow as the airline industry recovers, there are longer-term opportunities that must be addressed to ensure post-recovery success".
Doan outlined three major areas that MRO companies need to focus on over the 10 years to make sure their market propositions continue to be worthwhile; outsourcing, human resources and speed and quality.
"Outsourcing will remain a priority among airlines if there is an appealing value proposition for doing so. While each MRO business must make some careful strategic decisions in this regard, certainly one of the major trends points to 'integrating services' i.e. less complication for the airline customer in dealing with the significant MRO requirements and more real value in the outcome as a result," he said.
"In addition, MRO providers need to develop a strategy for dealing with the worldwide human resource shortage that threatens to constrain the business if not adequately addressed. The supply/demand theory would also indicate that salary and labour costs will be escalating which will, in turn, impact the value proposition for outsourcing.
"Speed and quality are two attributes which can be leveraged to increase the value proposition. Faster and more predictable turn around-times coupled with improvements in quality are easy to say but hard to do. More and more MRO providers are turning to lean strategies to improve, some with impressive results."