The Big Challenge: Money Not surprisingly, the frail world economy remains the most pressing issue for MROs and their aviation customers. “The financial and economic crisis from 2008/2009 hit the aviation business worldwide, but the impact differed in the different regions,” says Walter Heerdt, Lufthansa Technic’s SVP of Marketing & Sales. “In 2010, aviation recovered from the international economic and fiscal crisis ... the continued recovery of aviation also resulted in a (delayed) recovery in worldwide demand for technical services in the aviation industry.” Heerdt adds that the world MRO industry earned about $45 billion (U.S.) in 2010, “mainly driven by increasing activities in Asia and the Middle East.”
As for 2011? “Although maintenance volume has picked up over the last year, it is still not at a level where we would like it to be,” says Bombardier spokesperson Mark Masluch. “The business aircraft MRO industry, in general, is still on the road to recovery from the Great Recession.” When the Great Recession hit, airline and business owners coped with depleted cash flows by deferring maintenance, pulling parts from grounded aircraft, or using whatever components they had in inventory. Three years on, these options have largely run out, forcing aircraft owners to return to more normal maintenance routines. “[Still] Although we have seen positive signs in aircraft utilization and pre- owned aircraft inventory over the past year, demand for discretionary items such as avionics and aircraft interior refurbishment are still lagging,” says Jim Zielger, president and CEO of Greenwich AeroGroup. “Reduced demand for new aircraft completions is further impacting
the OEMs and several independent shops. OEMs are increasing their grip on MRO services to increase their revenue streams, further adding to the dilemma.” Unfortunately, other clients are not coming to the rescue. “The factors that challenge our government/military MROs remain the same as last year,” Zielger says. “Domestic and international government research and development as well as procurement budgets are being cut, while maintenance and operations budgets remain flat.” The bottom line: When it comes to the global MRO business, times have been tough, and remain tough.
Responses to Challenges The Giants of MRO didn’t earn their success by collapsing in the face of crisis, be it economic or political. Instead, they succeeded by assessing the problems facing them, and developing strategies to meet these challenges head-on. Here’s what they did in 2011.
The first and most important response to the current economic challenge? Stay calm and don’t panic. That’s what they did at Lufthansa Technik. Recession notwithstanding, “We continue to evaluate business opportunities in relevant regions,” says Lufthansa Technik’s Walter Heerdt. “We continue to invest in our facilities, training, processes, new products and further product improvement ...We have kept [to] our development path, even during the crisis.”
Staying cool helps MROs stay focused on the fundamentals of business success, which are founded in keeping their customers happy and coming back. This is why AFI KLM E&M is “widening its scope of services in order to better answer the airlines’ needs,” says Sébastien Weber, the company’s VP of Marketing, Product
Aviation Maintenance |
avm-mag.com | December 2011 / January 2012 19
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