Temporary capacity crunch seen in MRO industry

Once more aircraft return to service

MANILA, Philippines — A temporary capacity crunch is expected in the aircraft maintenance, repair and overhaul (MRO) industry in Asia-Pacific once airlines reawake more of their sleeping fleet post-pandemic, aviation think tank CAPA-Center for Aviation said.

CAPA said major MRO companies in the region have seen significant decline in business due to airlines parking large numbers of aircraft and deferring heavy maintenance.

However, it said demand could spike quickly when restrictions ease, with many airlines in the region returning more of their fleets to service.

Carriers would be needing MRO providers to reactivate aircraft that have been in storage for several months.

Philippine Airlines head of engineering Romulo Raras said in the CAPA report that there is currently no shortage capacity as majority of the scheduled maintenance has been pushed back.

“But the question will be whether there is enough capacity as we exit the pandemic to cater to all the aircraft coming out of storage, considering some MROs might have reduced their (workforce) to survive,” Raras said.

“I think we should be preparing for that already. We have to urge the MROs to start preparing... (airlines) should probably be planning it with them ahead of time, so as we exit the pandemic we’re ready to open up travel again,” he said.

The capacity shortage, however, is seen only as short-lived, with the longer term outlook appearing brighter as MRO providers are keeping facility expansion plans largely on track, according to CAPA.

“While it appears there will be adequate MRO capacity once airline operations settle into a new normal, other challenges will remain. Chief amongst these could be workforce shortages--a potential problem for many parts of the aviation industry, but seemingly a particular headache for MRO,” CAPA said.

“In cases where employees were furloughed or had their hours cut, it may be hard to attract them back – let alone finding additional staff for expansion,” it said.

CAPA said while most of the region’s major MRO organizations have seen workload and revenues start to rebound, full demand recovery is expected to take years.

It said decline in heavy maintenance for passenger aircraft has been offset by a rise in freighter conversions, as well as in the number of lease returns, which often require pre-return maintenance visits.

Last week, Lufthansa Technik Philippines (LTP), a leading provider of MRO services in the Philippines, announced plans to complete its $40-million hangar expansion in Pasay City, as well as return its workforce to its pre-pandemic level by next year.

“The demand is not back to pre-pandemic levels. Our customers, the airlines, still see reduction in their flights and passenger numbers depending on the region. It is still depressed. But the community thinks that we will come out relatively soon with the help of the vaccination drive, that’s why airlines are bringing back their aircraft from storage,” LTP president and CEO Elmar Lutter said.

“We think that the indication, which we have from the industry and from the world now, is that we will see a recovery coming strong and even in the first phase, as airlines come out from parking, there’s more demand,” he said.