MRO Review 2023: China drags aviation over goal line

Feb 20, 2024 | By Satair | 6 min read

But the supply chain hasn't quite reached pre-pandemic levels: a lack of collaboration is holding it back

While most countries fully eradicated their COVID-19 restrictions in 2022, China went in the opposite direction with its strict zero-COVID policy. 

Only in December 2022 did it broadly rescind its policies, making 2023 the first full year since 2019 in which Chinese passengers returned to the skies in heavy numbers. And return they did.

As of the close of November 2023, fully 90 percent of Chinese planes were in service – compared to a global average of 79 percent – and even more Chinese passengers are expected to travel in 2024. 

As an increasingly urbanite society, they can afford to. According to 2020 figures, China has 113 cities with a population in excess of 1 million people. Combined, the US and EU only have one more.

It’s a significant return to travelling that partly explains why global flying hours in October 2023 accounted for 101 percent of those flown four years earlier in 2019 – the return to pre-pandemic levels eyed for so long by the industry.

So, 2023 will go down in history as the year in which aviation finally caught up with 2019, but what about its supply chain in the Maintenance, Repair and Overhaul (MRO) sector?

MRO increases are yet to come

MRO figures have nearly caught up too, but it will take until 2025 for air transport aircraft deliveries to exceed the record levels seen in 2018, according to Naveo’s monthly Air Transport Traffic, Fleet & MRO Update report for November 2023.

With 21,581 forecasted new deliveries leading up until 2032 – worth a total of 1.536 trillion dollars – the future looks bright for the sector, but for now supply chain challenges continue to hold it back, despite strong demand.

The Naveo forecast chimes with Airbus projections made in November 2023 that predict the commercial aircraft services market will nearly double in value from an estimated $130 billion in 2023 to a projected 255 billion by 2042. 

Broken down into the market’s main sectors, Airbus' Global Services Forecast eyes large jumps in revenue for Maintenance (from 108 to 210 billion) and Enhance (from 11 to 28 bn), along with a more modest increase for Train & Operate (from 11 to 17 bn).

Labour shortages: today and in the future

Airbus attributes the expected revenue increase to resurgent air passenger numbers and the demand for more digitally-enabled and connected aircraft.

Figures cited by Naveo reveal that 19,445 aircraft have been ordered – a boon for Used Serviceable Material (USM) businesses that reuse, repair and recycle retired aircraft.

But the growth, which will most acutely be felt in Asia (namely China, South Asia and the Middle East), will require over a million highly-skilled workers – 680,000 new technicians and 590,000 new pilots – along with 920,000 cabin crew.

That's a future worry, but it's also a current one, as the industry is feeling the punch of a pandemic that deprived it of legions of vital workers, notes Naveo. The exodus of talent has caused a severe shortage of engineers and mechanics.

The skilled workers departed with know-how that can’t be easily replaced. Their replacements, meanwhile, need training and are less productive. The knock-on effect is that the MROs are battling supply chain bottlenecks. In some cases, capacity is so tight they are selling it years ahead.

A drive to attain and retain top talents from increasingly diverse backgrounds, and also upskill existing employees, is vital to the industry’s future.

Nevertheless, the use of augmented reality (AR) to train personnel remotely is getting so popular it’s predicted 72 percent of all MRO operations will use AR in at least one application by 2030. It’s credited with reducing downtime, making MRO processes more efficient and reducing the carbon footprint incurred by technicians travelling from airport to airport. 

Challenges ahead for industry

The labour shortage is one of the key challenges facing the MRO market, according to the experts who took the time to speak to the Satair Knowledge Hub at MRO Europe in Amsterdam in late October, and not enough is being done to address it.

The experts tended to agree that the industry faces a myriad of challenges – from not having enough spare parts and high prices, to poor traceability and not enough collaboration – but concurred there was still room for progress in 2024.

Not only is the industry taking huge strides in the area of sustainability, but it is shaping up to fully take advantage of AI-driven innovations such as predictive maintenance. 

Read on for our comprehensive overview of 2023:

1/ Progress in sustainability: the ongoing journey

2/ Supply chain disruption: transparency, flexibility and partnerships needed

3/ Digitalisation: the simple things first

4/ AI-powered tech to leverage data

5/ Other tech advancements

1/ Progress in sustainability: the ongoing journey

Aviation is ably facing up to its commitment to offer zero-emission flights by 2050 – and governance is also moving in the right direction. Earlier this year, Denmark set itself a zero-emission target for all domestic flights by 2030, while Norway has targeted 2040 – signs that governments are taking sustainable aviation seriously too.

But it’s not easy. While other major industries are starting to make serious inroads by simply switching from fossil fuels to alternative energy, transport does not yet have a large supply of green fuel it can count on. Most of the technology that will enable it to reach zero emissions by 2050 hasn’t been invented yet, but confidence is high that it is an achievable goal.

As far as the supply chain is concerned, the pre-pandemic excitement generated by new-gen aircraft is already subsiding in an aftermarket now more preoccupied with sustainable options, and 2023 provided more evidence that the chain is committed to reducing its environmental footprint.

But it’s not enough that MRO by nature extends the longevity of in-use aircraft – environmental responsibility must be paramount, and it’s encouraging to see that major players in the industry are no longer regarding sustainability as a mere trend but a moral and strategic imperative.

Furthermore, they know their customers increasingly want sustainably-acquired products with transparent footprints.

There have been a number of notable 2023 highlights in the area of sustainability, including maiden flights for both electric and hydrogen planes, in both the US and Europe, but three stand out more than others:

  • the ongoing success of the Sustainable Aero Lab program, which has mentored more than 50 startups since its launch just two years ago
  • the unveiling early in the year by Red Arrow Technologies of its HeronFan prototype engine for drones and small jets that runs on hydrogen or SAF – “the perfect engine” for the air taxis and logistics drones that many predict will soon be filling the skies
  • the advances made by AI-driven software and autonomous vehicle supplier Moonware – particularly its solution Halo, which optimises arrivals and departures at vertiports whilst reducing fuel consumption

2/ Supply chain disruption: transparency, flexibility and partnerships needed

The percentage of the world’s planes stored for more than 90 days stands at 10 percent – three percentage points short of pre-pandemic figures.

While China has 90 percent of its planes in active service, Europe (77 percent) and North America (78) lag behind.

And even more crucially, there is a global shortage of parts. As of late November, fewer than 400 aircraft had been retired worldwide in 2023, although adjustments will most likely lift the annual figure above the 503 retired in 2022 and 463 in 2021. 

The industry remains a long way off fulfilling the huge pre-pandemic projections. The 2022 retirement rate equates to 1.7 percent of the global fleet, compared to an all-time average of 2.5 percent.

This perfect storm of grounded aircraft and parts shortages could result in a worst case scenario that sees current fleets in Europe unable to fulfil the demand of the summer holiday season.

The shortage of parts can be attributed to several causes:

  • Retirements have been slowing down since the pandemic, along with new plane purchases, and the dismantling rate is rapidly decreasing 
  • The cost of storing a plane is relatively cheap – in these times of uncertainty it can make good financial sense to wait it out

Some blame a lacking predictive capacity of the MROs and the weakness of the supply chain as a whole. One thing is for certain, the quicker-than-expected ramp-up in demand is an amplifying factor for all of these challenges.

Measures that could alleviate the challenges heading into 2024 include:

  • Increased transparency, flexibility and adaptability 
  • Exploring alternative sourcing and logistics options 
  • Promoting the use of digital tools and technologies for better visibility and control over the supply chain. For example, the use of IoT, blockchain and data analytics can increase resilience and efficiency
  • Long-term planning that accounts for potential future disruptions, integrating strategic planning and investments in supply chain resilience

3/ Digitalisation: the simple things first

The supply chain is a long way off the pace of the rate of digitalisation seen in the aviation industry in general – for example, in the area of passenger interaction to enhance customer experience.

Parts traceability is a big hurdle – while more parts today come with digital records than a decade ago, paperwork remains a complication. There are instances where the relevant details concerning a part will either be lost or loaded onto an inaccessible file, rendering it worthless.

Until parts traceability information is shared as a rule within the industry, the digital journey of the supply chain will always encounter obstacles.

The use of blockchain is one obvious solution, but there were no significant milestones in 2023 in this area following a breakthrough traceability solution in 2022 that makes it easy to detect fake parts. 

Simplifying the ordering experience is another priority, and here, at least, there is steadier progress – most notably in the case of Satair Market, which enjoyed a stellar year in 2023.

Since the summer of 2022, the number of approved third-party sellers at Satair Market has more than quadrupled from 10 to 50, while the number of available spare parts has jumped from 75,000 to 350,000.

The marketplace feature on Satair Market was launched after an early 2022 survey by Satair revealed that roughly one in five sellers of USM and surplus aircraft parts weren’t taking advantage of digital marketplace solutions due to a lack of resources.

The lack of resources were to blame for 68 percent of sellers relying on traditional selling methods instead of online platforms (40 percent: third party brokers; 15: tenders or RFPs; 13: connections).

Digitalising processes in the supply chain brings many benefits:

  • Enables greater agility and efficiency – an overall competitive advantage
  • Reduces costs and administrative overheads
  • Real-time monitoring and tracking of sourcing activities, which guarantees compliance and improves visibility of potential issues
  • Accommodates needs of both large and small businesses
  • Enhances data-driven decision-making based on insights into supplier performance, market trends and cost optimisation opportunities (see below )

4/ AI-powered tech to leverage data 

Increased digitalisation enables data-driven decision making through the leveraging of data analytics to yield insights to enable informed decisions, improve operations and enhance safety.

In other industries, this has already had a huge impact, but again the aviation supply chain has been slow to cotton on, despite a glaringly obvious utilisation: the predictive maintenance of parts.

It should be easy to leverage data to predict when an airline needs a part, thus enabling the USM supplier to have the right part in their inventory ahead of time – but all of this needs data.

And while nobody disputes the potential of its real-time quality prediction, so far not enough data is being shared – and 2023 didn’t bring much optimism that major developments are on the cards anytime soon. Furthermore, large amounts of parts data are simply not digitalised, non-integrated, or unobtainable.

The worst case scenario is that the industry continues to not share data, and that it has to wait until the next generation of aircraft before it can fully utilise predictive maintenance – so some time in the 2030s.

In the meantime, thinking outside the box and faced with a decline in traditional demand for spare parts, new startups are leveraging data and AI-driven technology to enable savings the airlines didn’t think were possible. 

5/ Other notable tech advancements

It was noticeable that very few people were talking about robotics – the favourite topic of yesteryear – at MRO Europe 2023.

More often than not today, automation simply aids labour with routine or precision-orientated tasks, and it is no longer considered a potential threat to jobs, even if they do promise to save labour resources.

In some cases, they can even be used to take on labour-intensive work that could pose a safety risk for humans. And this is still very much the direction outlined for the use of robots in the supply chain.

Drones have also taken a backseat, although EasyJet continues to effectively employ Remote Automated Plane Inspection & Dissemination (RAPID) to spot imperfections on aircraft exteriors as small as a square millimetre. 

However, 2023 did bring one bright spark in the area courtesy of Irish company Shift Aviation Solutions, which has developed predictive management software for air traffic control to enable ‘Smart Slots’ to radically shorten flight times, make scheduling more predictable and reduce CO2 emissions by as much as 35 percent during the approach stage.

Its other environmentally-friendly solutions include the Active Noise Suppression System, which enables airlines to circumvent noise restrictions and fly 24/7 anywhere in the world. Today, it promises potential clients a 33 percent reduction in HR and total operational costs, and a 34 percent decrease in fuel costs – all for zero upfront costs.

In brief, 2023 showed significant progress but also hurdles in commercial aviation, particularly in MRO. Despite air travel rebounding, challenges like labor shortages and supply chain issues linger. However, optimism remains fueled by sustainability ambitions, efficiency-focused tech advancements, and an undeniable upswing in demand. Collaboration and digitalisation are vital for overcoming obstacles and unlocking industry potential.