Aviation Maintenance Industry Climbing into Workforce Headwind
WASHINGTON – The aviation industry is poised for another positive year with global spending on maintenance, repair and overhaul services expected to grow by more than $30 billion over the next decade, according to a new report prepared for the Aeronautical Repair Station Association by global consulting firm Oliver Wyman.
The new findings were presented by Oliver Wyman’s CAVOK Vice President, Steve Douglas, at a March 13 event on Capitol Hill in conjunction with ARSA’s 2019 Annual Conference.
Rising incomes and consumer spending are pushing passenger air travel to record levels and fueling the largest year-over-year increase of the in-service aircraft fleet since 2008. With 200 million people entering the middle class worldwide, growth in revenue passenger kilometers (RPK) is anticipated to exceed the annual expansion of gross domestic product (GDP) in most economies over the near term, the Oliver Wyman report said.
Cargo volume is also growing, driven primarily by the recent double-digit expansion of e-commerce sales. Air cargo demand as measured by freight tonne kilometers (FTK, which measures metric tonnes of cargo per kilometer) saw an estimated 3.8 percent increase in 2018, while cargo capacity, measured by available FTK, saw an estimated 4.4 percent increase, after a slight contraction in 2017.
The expansion of business in the commercial aviation industry leads to continued growth in the Maintenance Repair and Overhaul (MRO) market. Total global MRO spend is expected to rise to $116 billion by 2029, up from $81.9 billion in 2019. Aside from the growth in the fleet, the increase will be driven by more expensive maintenance visits and technology enhancements.
According to the report, the U.S. civil aviation maintenance industry employs more than 288,000 technicians and generates $50.4 billion in annual economic activity. The top five states for maintenance industry employment are California (33,196), Texas (24,019), Georgia (22,040), Florida (21,614) and Washington (18,518).
Pressure on wages is expected to escalate as the gap grows between the number of pilots and trained aviation maintenance technicians available and the number required for efficient productivity. Labor and fuel are the industry’s two largest operating expenses, representing almost half of total operating costs. According to the analysis, the industry continues to face a looming shortage of technicians – demand for skilled personnel will outstrip supply by more than nine percent in the second half of the next decade if current trends aren’t reversed.
“Long-term trends for fleet growth are strong and with that, future MRO demand is robust. While the competitive dynamics of the MRO industry continue to evolve, there is still a place in the aftermarket for very well positioned, efficient and cost-effective independent MROs.,” Douglas said in his presentation.
An executive summary of the report and state-by-state breakdown of the industry’s economic impact is available at arsa.org/news-media/economic-data. The full report is available only to ARSA members.
Keep up to date on ARSA’s Annual Conference, which runs through March 15, atarsa.org/conference.
ARSA is the only association devoted to the unique needs of the global civil aviation maintenance industry. It is dedicated to helping member companies operate more efficiently and effectively, while continuing to ensure the safety of aircraft worldwide. To learn more about the association’s work on behalf of both industry stakeholders and the flying public, please visit ARSA.org.
Oliver Wyman CAVOK is the transportation industry focused technical consulting and services division within Oliver Wyman, a global leader in management consulting and a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit cavok.oliverwyman.com.
