The global aviation maintenance, repair, and overhaul (MRO) industry is projected for steady over the next decade to new record highs, but the ride may be bumpy at times thanks to market disruptors such as cost management, labor shortages, and lingering inflation.
“The MRO market has made considerable progress in recovering from the impact of the COVID-19 pandemic, reaching 98 percent of the pre-COVID 2019 spending peak in 2023,” reports aviation MRO analysts Oliver Wyman. “MRO spending is expected to set a new record of $104 billion [in 2024] and looking ahead, we predict the MRO industry will expand by an annual rate of 1.8 percent through 2034, reaching $124 billion.
A deep dive from Precedence Research put the global aviation market size at $89 billion in 2024 – slightly lower than Oliver Wyman’s target but anticipates even healthier growth at 5.2 percent annually to reach $148 billion by 2034.
Market Drivers of Aviation MRO Growth
Precedence Research found several aircraft MRO market growth factors and market drivers:
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Compliance Requirements: Stringent safety and regulatory requirements imposed by aviation authorities worldwide are creating a robust market for MRO services, as compliance requires meticulous maintenance procedures.
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Tech Integration: Technological advancements in aviation, including the integration of more sophisticated avionics systems and fuel-efficient engines, are prompting airlines and operators to invest in MRO services to ensure the continued airworthiness and efficiency of their aircraft.
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Rising Air Travel: Traditional MRO market driver is the demand for air travel for air transport of both people and freight. Air travel is on the rise as it becomes increasingly more accessible and inexpensive for a wider segment of the world’s population as economies grow and disposable income increases. Also, rapid urbanization is driving demand as countries become more connected. Airlines will grow their fleets to meet these demands and the need for MRO services rises as more operating aircraft take to the skies.
Top Aviation MRO Market Disruptors
For the third straight year, Oliver Wyman found cost management and labor shortages to be the top two aviation MRO market disruptors. Fittingly, rising to third was a newly added category: inflation and/or economic slowdown.
“After three years of rapid post-pandemic recovery, the industry is concerned about future growth and returning to historic cost increases,”Oliver Wyman said. "Overall, we see an ongoing “back to basics” shift in industry concerns – more focus on cost management and less on emerging technologies.
Here were the top disruptors as ranked by survey respondents (2024 ranking: 2019 ranking):
- Labor/Material Cost Management: No. 1 in 2024 (No. 5 in 2019). Up 4 spots.
- Maintenance Technician Labor Shortage: No. 2 (No. 2). No change.
- Inflation and/or Economic Slowdown: No. 3 (not ranked).
- Changes to Fleet Plans/Strategies: No. 4 (No. 4). No change.
- Growth in OEM Aftermarket Presence: No. 5 (No. 1). Down 4 spots.
- Aftermarket Industry Consolidation: No. 6 (No. 3). Down 3 spots.
- Game-Changing Technology Advancements: No. 7 (No. 6). Down 1 spot.
- Carbon Emission Reductions and Reporting: No. 8 (not ranked).
- Business Impact Due to Rising Oil Prices/Interest Rates: No. 9 (No. 7) Down 2 spots.
MRO Labor Costs and Attrition Rates
MRO labor costs are currently triple those rates from the pre-pandemic surveys – skyrocketing 7.3 percent worldwide in 2023 – up from historic increase rates that hovered between 2 and 3 percent.
“For 2024, survey respondents expect overall labor costs increases to slow to 5.8 percent. This is still high compared to pre-pandemic labor rate increases,” said Oliver Wyman. “Despite wage increases, the industry is having trouble holding on to the talent it needs.”
Indeed, more than half of the survey respondents saw frontline labor attrition of 5 to 10 percent with North America experiencing 11.5 attrition rates.
One of the challenges to replacing experienced MRO workers is a shortage of qualified instructors to ready the next generation for the field.
“The aviation industry has launched plenty of initiatives in recent years to boost the pipeline of future aviation maintenance technicians, but even if these efforts succeed in growing the number of students pursuing their airframe and powerplant certificates, another hurdle remains: finding enough qualified instructors to train them,” reported Aviation Week.
The Aviation Technician Education Council (ATEC) has launched a new ATEC Academy initiative which is a three-month course designed to provide comprehensive training in active teaching strategies, student behavior management, assessment and evaluation methods, lesson planning, and current trends in higher education, with a specific focus on teaching technology.
“While the course was built with the new educator in mind, it can also be a resource for industry training personnel and seasoned instructors that want to learn new techniques or take information back to staff and colleagues,” says ATEC.
Combating MRO High Costs and Scarcity of Labor
Oliver Wyman found a multitude of strategies to combat the MRO high costs and scarcity of labor including:
- Better planning and workforce allocation.
- Eliminating paper from operations.
- Optimizing maintenance programs.
- Increasing focus on continuous improvement.
“Operators are looking to make use of Integrated Aircraft Health Management (IAHM) – which is likely to be adopted as an industry standard in the future – to improve maintenance programs,” noted Oliver Wyman.
MRO Rising Material Costs and Supply Chain Issues
While labor costs and shortages are top of mind, the MRO industry is also keeping a tab on rising material costs and continued supply chain issues.
“Material costs climbed by about 8.3 percent last year, according to survey respondents, well above pre-pandemic inflation of 3-4 percent a year,” said Oliver Wyman.
The forecast for MRO material costs to lower to around 6.5 percent for 2024 – still about double from pre-pandemic times.
The expectation is that supply chain issues will take years, not months, to fully work out. The survey found supply chain strategies to combat problems include:
- 1 in 5 are looking towards insourcing more, including airframe and component maintenance.
- 2 in 5 are looking to outsource more, particularly components and engines.
- Almost 1 in 3 operators and half of all OEMs/MROs expect to nearshore more, especially airframe and components.
Technology Adoption in MRO is at a Slow Pace
Global aviation MRO continues to take a measured approach to new technologies, but investments are being made.
“The speed of technology adoption is slower in the MRO industry than in other areas of aviation and comparable industries,” said Oliver Wyman.
Some 85 percent of operators and almost half of MRO are investing in artificial intelligence (AI) in the following areas as seen most useful:
- Inventory Forecasting: 46 percent.
- Repair/Reliability Analysis: 37 percent.
- PO Creation, Invoice Verification/Analysis: 36 percent.
- Write-Ups/Decision Guidance: 24 percent.
- Creating Engineering Orders, Writing/Rewriting Task Cards: 23 percent.
- Receiving/Shipping (Warehousing): 23 percent.
- Frontline Research/Part Identification: 22 percent.
- Hazard Identification/Warning: 17 percent.
- Auditing/Supplier Management: 14 percent.
- Frontline Inspection: 12 percent.
“Respondents recognized the potential for widespread application of AI, including in inventory forecasting, engineering, and supply chain functions,” concluded Oliver Wyman.
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