Defence budget cuts as well as large scale aircraft procurement programs will have a positive impact on the global market for aviation maintenance repair operations (MRO), finds new report from Strategic Defence Intelligence. The global military aviation MRO sector is booming, despite the global defence industry is facing its toughest times since 1991. The stabilisation of global economic conditions and the opening up of new markets in regions such as Latin America and Asia Pacific, in addition to significant contributions from traditional military strongholds like the US and Europe, are driving new aircraft procurements across the world. As a result, the demand for related MRO services has witnessed an enormous surge with robust spending forecast for the next 10 years. The need to replenish and maintain an inventory of spare parts for large fleet sizes is anticipated to attract the largest chunk of investment among the wide range of MRO activities such as overhauls, upgrades, logistical support etc.

Another major factor propelling related demand is the cutting down on new procurements by countries such as the US, the UK, Germany and France and diverting the money towards upgrading and repairing existing platforms, leading to significant cost savings. Strategic Defence Intelligence (SDI) expects that such new cost saving defence policies will result in extensive outsourcing of MRO functions in the coming years. More militaries will outsource tasks which were previously performed in-house. This is great news for private suppliers who will find more contracts coming their way. Given these conditions, the market for the global aviation MRO industry is estimated at US$28.9 billion in 2014 and is expected to value US$40.2 billion by 2024, representing a Compound Annual Growth Rate (CAGR) of 3.35% over the period.

Aging global fleet of military aircraft and rapid technological developments to further demand for MRO services

The market for aviation MRO will also be influenced by other major trends such as the aging of military aircraft fleets worldwide. Procurements world over will be large in terms of sheer volume. Most major defence spending countries are not expected to retire older aircraft completely and new inductions will take place over an extended period of time (8-10 years in the majority of cases), which will make consistent investment in MRO activities necessary. Another factor influencing the demand for aviation MRO services is the rapid technological development in the military aircraft industry. Technological innovations such as the integration of a complex combination of surveillance and communication systems, advanced avionics, helmet-mounted sights, enhanced radars, vertical takeoff and landing capabilities, electronic warfare (EW) jamming functions and the use advanced materials like composite and stealth alloys have necessitated specialised assets required to manage advanced MRO operations, thus ensuring increased investment in the sector.

It is anticipated that in the future the demand for aviation MRO services will also be driven by the need to make common MRO services available closer to the battle frontline. This in turn will deliver a further boost to the military aviation MRO industry by generating more and more logistical support and performance based logistics contracts. Given the execution of large scale procurement programs along with factors such as austerity measures, induction of UAVs, technological innovation and the cost savings provided by MRO outsourcing, the future looks promising for aviation MRO suppliers.

 This information is based on the SDI report: ‘The Global Military Aviation MRO Market 2014–2024.’ The report was published on the 3rd of April 2014.