This week as part of my duties with the Airline Division, I attended the MRO America's Conference in Miami. I am working on a detailed report but would like to quickly share some items with you.
My first initial thought upon entering the trade show was that the amount of vendors and the scope of work they perform were truly overwhelming. Literally every part or aspect of any aircraft had some provider offering maintenance services or repair to the operators. I say this not to scare anyone; rather this is to inform because we need to know the competition we face so we can develop sound strategies on how best to counter these potential outsourcing attempts.
This was the 16th year of this conference and there were over 400 vendors with over 8000 attendees. By all accounts, worldwide, annually this is an over $50 billion dollar industry. Most MRO providers were expecting an increased workload over the course of the next five and ten years. The one caveat was oil and a speaker from Aerostrategies stated that with oil at $110/bbl airlines would remain flat as far as profit was concerned however the losses would accelerate exponentially the higher oil climbed. The purpose of his report was to outline the potential challenges MRO providers may face and should take into account. The speaker told the audience with oil over $120/bbl in his opinion "all bets were off".
As far as the MRO providers were concerned they were encouraged as several airlines indicated they were willing to entertain nose to tail airframe maintenance contracts. This trend could lead to a windfall for the OEM group. That trend could also work to the benefit of other MRO providers as they work to become contractors for the OEM manufacturers. For us this means we have to be very careful with the scope clauses of our agreements as we move forward.
When my detailed report is complete I will post it here.
Bob
