Maintenance backlog causes surge in MRO demand, but is there capacity?

Maintenance and repair | Apr 12, 2023 | By Satair | 3 min read

As the 2023 summer travel season approaches, the global maintenance, repair and overhaul (MRO) industry is on the verge of an important milestone.

The consultancy Oliver Wyman predicts that the MRO market will nearly match its 2019 peak at some point this year before surpassing it in 2024.

In its Global Fleet and MRO Market Forecast, Oliver Wyman writes that the growth in the MRO sector is driven by two related factors: the aviation industry’s strong overall post-pandemic recovery and a backlog of deferred maintenance that is creating a surge in demand for MRO services.

Financial motivation to defer maintenance

While deferred maintenance is a common practice in the aviation industry, the COVID-19 pandemic made the delay of certain maintenance tasks an appealing – if not flat-out necessary – option for airlines that were looking to reduce costs to ride out the storm.

When the demand for air travel plummeted, many airlines were struggling to stay afloat. Putting off expensive maintenance tasks became a way to reduce costs and offset some lost revenue, Satair Market Product Manager Andreas Dik explained.

“When the pandemic came, of course, many aircraft stopped flying. Some of these parked aircraft may have had engine overhauls and other maintenance due but because the airlines were not able to fly, they weren’t able to bring in any cash,” Dik told the Knowledge Hub. “The airlines were in a very tight position so many of them chose to postpone whatever they could.”

The return of travel demand meant that those once-parked aircraft were able to get back into service, which in turn meant that deferred maintenance needed to be carried out. With the aviation industry expected to return to pre-pandemic levels this year and most of the global fleet back in service, there has been and will continue to be a lot of maintenance to catch up on.

From non-essential to engine overhauls

Some of the maintenance deferred during the pandemic were tasks that were not deemed critical or not required by regulations, such as cosmetic repairs, minor component replacements, or non-essential equipment upgrades. These types of projects are likely part of a minimum equipment list (MEL) that provides guidelines for how and when an airline can defer various errors.

“If you have, for example, a sensor that is broken, you may be able to put it on MEL for x amount of flight hours, days or cycles,” Dik said. “This is something that the OEM [original equipment manufacturer, ed.] has concluded is not critical for safety. But sooner or later, of course, you need to address it.”

While those non-critical tasks are quick and easy to catch up on, bigger deferred maintenance projects like engine refurbishments are a lot trickier.

Not only can they cost millions of dollars, but they also require multiple parts and significant manhours. Catching up on this type of maintenance can prove difficult given the supply chain and labour shortage challenges in the industry.

Two major capacity constraints

The Oliver Wyman forecast notes that the labour and supply chain problems mean that the MRO sector will have to contend with “two major capacity constraints just as deferred maintenance comes due on fleets back in service.” The consultancy predicts that the long-feared mechanic shortage will become a reality this year, at least in North America, where it predicts a shortfall of some 12,000 mechanics by the end of 2023. Other regions, it writes, will soon also “feel the squeeze [...] when the fleet and demand surpass previous peaks.”

Dik said there are different ways the industry can catch up on deferred maintenance even with labour and supply chain challenges. Airlines can proactively remove their aircraft from storage and get them into standby mode so that when the financial conditions are right to return to service, it will need fewer parts and manhours than if it remained in deep storage. The constraints also have many airlines looking into used serviceable materials (USM) as a way to shorten lead times.

Deferred maintenance presents balancing act for airlines

Although he agrees that the labour shortage is cause for concern, Dik said the most pressing challenge the industry will face in trying to catch up on deferred maintenance is the supply chain.

“Short term, I think we should be more worried about the supply chain issues because that's very critical at the moment and is causing long lead times that can potentially postpone whatever maintenance activities need to be performed soon,” he said. “I think the industry has done a good job of warning that we have a labour shortage and that it may have a long-term impact. The worst scenario is that aircraft are grounded because no one can maintain them, but as of right now, I believe that the chances of this having a major impact are quite low."