The military aviation MRO market is anticipated to register a CAGR of 2.81% during the forecast period.
- Military aircraft are more complex compared to commercial aircraft due to the increased amount of additional technical military equipment and the level of expertise required for MRO services.
- With the dynamic nature of the security landscape and the continuous upgrade and procurement of newer generation military aircraft, the market is constantly evolving and experiencing growth.
- The in-service military fleet is expected to grow very rapidly in the coming years, and the MRO industry may need to evolve significantly to meet this challenging demand.
- Older aircraft require frequent maintenance checks, as, with age, the reliability of the aircraft decreases. Also, the necessary upgrade extends the service life of an aging aircraft.
- As the market comprises several players, the competition for the most efficient and cost-effective MRO service is increasing. Also, innovation and technological advances have fueled the competition in the market.
Key Market Trends
The Engine MRO Segment to Record the Highest CAGR During the Forecast Period
Engine MRO is an extremely important part of MRO and also the most expensive one. The increasing complexity of the engine parts and the increased number of military aircraft crashes, due to engine failures, have made militaries focus on frequent engine maintenance and periodic checks. Moreover, the engine is one of the components of the aircraft, which has to be maintained regularly irrespective of whether it is flying or on the ground. The current aging fleet of aircraft in service is generating the need for engine maintenance from various military forces in the world. Further, the induction of newer, advanced aircraft models, like F-35, Rafale, and Eurofighter Typhoon, is anticipated to enhance the prospects for the MROs for those engines in the future. For instance, Rolls-Royce was selected by the UK Ministry of Defence (MoD) in August 2019 to provide the maintenance and repair support for the EJ200 engines of Typhoon fighter aircraft fleet in service of the Royal Air Force (RAF) until 2024. The engine support contract (EJISS) was worth USD 431.06 million, a follow-on to the ten-year Partnered Support Operational Phase arrangement. Such factors are expected to increase the revenues for the engine segment in the years to come, thus, making this segment register the fastest growth during the forecast period.
North America Accounted for the Largest Share of the Market in 2019
Currently, North America has the highest military aircraft fleet in the world, with the US having more than 13,000 military aircraft. The major driving factor for MRO in this country is the significant demand to upgrade the existing fleet with the latest technologies and systems. The majority of MRO expenditure is on the nation’s large fleet of multi-role aircraft, transport aircraft, and surveillance aircraft that require high maintenance for engines and airframes, along with field and component maintenance services. The US Air Force is slowly addressing its aging aircraft problem, as it takes delivery of newer generation jets. Total aircraft numbers have declined since 2000 despite the increasing budget. As inventories decreased, average aircraft age increased over the past decade. The average age of the US Air Force fleet is over 25 years and the bombers have an average age of over 50 years. This necessitates upgrade and regular maintenance to keep the aircraft at par with the newer generation aircraft and extend their service life. The US is planning to achieve an 80% readiness rate for all military aircraft in the near future. Such initiatives are expected to propel the growth of MRO activities in the near future in the North American region. However, the market is expected to witness the highest growth in the Asia-Pacific region, with most of the demand being generated from countries, like China, India, Japan, and South Korea.
Lockheed Martin Corporation, The Boeing Company, Pratt & Whitney (Raytheon Technologies Corporation), BAE Systems PLC, Safran, and Northrop Grumman Corporation are some of the largest players in the market studied. The market is fragmented, with numerous local and international players providing various MRO services to the existing military aircraft fleets. Strategic partnerships between the players may help them gain more contracts while expanding their reach to the untapped markets in the long run. As most of the MRO contracts are of the long term, it could be a time taking process for new players to establish themselves in the market, by competing with the existing ones. The COVID-19 lockdown situation across the world is expected to delay some of the existing maintenance programs and planned projects at least by half a year, as players face issues with the supply chain, mainly due to the temporary shutdown of the aftermarket parts manufacturing industry. The impact of the same will be visible directly on the aftermarket parts logistics as well. In situations like these, players should adopt novel strategies in order to keep the business running with the existing inventory, which can help them reduce losses.
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