AviTrader_Monthly_MRO_e-Magazine_2015-06

ICF Opinion
29
Aircraft Spares – Demand, supply and value trends
Analysis by John Mowry, Global Managing Director - Aviation Consulting & Services – ICF International.
ICF estimates that airlines, distributors, MROs, OEMs, and traders in the commercial aviation industry hold approximately $50
billion in spare parts inventory, which compares to a commercial jet fleet valued at around $600 million. The majority of the
inventory holdings, as measured by value, are held in the rotable/repairable part classes..
In this article, ICF explores the factors affecting supply and demand, and resultant value trends, for various classes of spare parts.
Aircraft Spare Parts Demand & Supply
Spare Parts Demand
Demand for aftermarket aircraft parts is tied directly to the utilisation of the aircraft that the spare parts support: the greater
the utilisation, the greater the wear on the components, resulting in more frequent part replacements, repairs, and overhauls.
John Mowry,
Global Managing Director -
Aviation Consulting &
Services, ICF International.
ICF projects the global fleet of commercial aircraft is set to grow from nearly 27,500 at the end of 2014 to nearly 38,000 by 2024 at an annual growth rate of
3.2%. As this fleet grows and aircraft continue to age, global maintenance, repair and overhaul (“MRO”) spending is forecast to increase at a slightly faster
rate of 3.8% per year: from USD $62.1 billion at present to $90.1 billion by 2024 (in 2014 USD).
MRO Segment Assessment
Engine maintenance accounts for the largest
share of MRO expenditures, at approximately
40% of the total, followed by components at
23%. Line and airframe maintenance account for
18% and 14% of MRO expenditures respectively.
Engine overhaul is a material-intensive activity
(principally repairable and expendable parts),
whereas line maintenance and airframe heavy
maintenance are mainly labour-driven, supported
by expendable parts. The cost structure for
component MRO varies by technology and ATA
chapter, but is on average 50% material, 35% labour
and 15% outside services. Projected growth
rates over the next decade are anticipated to be
robust across the largest volume and materialintensive
engine and component segments.
Aircraft Generation Assessment
Current MRO demand is largely generated by
new (e.g. Airbus A320 Family / Boeing 737NG)
and mature generation aircraft (e.g. Boeing 747-
400, 757, 767). However, as next generation,
models are delivered (e.g. Airbus A380, A350X-
WB, A320neo, and Boeing 787,737 MAX) and
older models retire, the MRO demand will shift.
Spare Parts Supply
Trends in the supply of spare parts differs materially
depending upon the part class.
AviTrader MRO - June 2015