Engine Aftermarket Outlook Bright As Utilization Rises
A steady increase in global air transport demand has some big-picture aftermarket metrics approaching pre-pandemic territory, while a projected jump in engine maintenance will help total commercial MRO revenues surpass 2019 levels in 2023, a Naveo analysis shows.
Global aircraft fleet utilization in October was 73% of October 2019’s figure as measured in flight hours, the analysis of Aviation Week Fleet Discovery data shows. While the figure is notably short of pre-pandemic activity, it is better than the year-to-date figure of 62% through Oct .31, and the comparable 10-month figure of 52% posted in 2020.
The recovery’s uneven pace, particularly comparing domestic and intra-regional flying with long-haul services, is favoring certain aircraft and engine types. Manufacturers and suppliers with significant narrowbody and cargo-operations exposure are benefiting, while those heavily weighted toward passenger widebody activity are lagging.
Pratt & Whitney is a prime example of the former. Its flagship engine, the PW1000G-series geared turbofan, now largely free of early teething problems, is seeing both its total fleet size and per-airframe activity ramp up as operators deploy aircraft it powers—including many Airbus A320neo-family models and the entire A220 fleet—as part of their network rebuilds. The PW2000’s and PW4000’s presence on popular freighters including the Boeing 757 and 767, combined with a surge in air cargo directly linked to the decline in passenger belly capacity during the downturn, has been a pleasant surprise for the enginemaker.
The combination helped push the Pratt-powered fleet’s October flying hours past the comparable 2019 figure by about 0.7%, Naveo found—the only enginemaker than could make such a claim. Several others, including CFM International, International Aero Engines, and GE, are steadily moving toward 2019’s figures.
On the airframe side, 71% of the global fleet was in regular service—flying more than two days per week—as of mid-November, Naveo’s analysis found. The most active fleets are the newest Airbus narrowbodies. The A320neo fleet is leading the way, with 88% of the fleet in regular service, the analysis shows, with the A220 next-highest, at 86%. The 787, at 81%, is the only other model above 80%.
The 737 MAX fleet, at 65% active, is an outlier among current-generation models. Ongoing operational restrictions in several countries, notably China, stemming from two fatal accidents means aircraft that might otherwise be used in place of older narrowbodies are sitting idle.
Increasing utilization and confidence that long-haul flying will rally as travel restrictions ease points to commercial aftermarket spend exceeding 2019 levels in 2023, Naveo projects. The consultancy sees revenue from engine, airframe line and component maintenance plus modifications totaling $97 billion in 2023, 11% higher than 2019’s $87 billion figure.
Engine maintenance will continue to generate the most of any category and be the fastest-growing segment. The projected 2023 total of $47 billion would be a 57% jump on 2021’s projected total of $30 billion, and a 27% increase over 2022’s $37 billion forecasted total. Modifications, set to increase 40% to $7 billion, is the next-fastest growing category.
Naveo’s updated retirement figures point to fleet strategies normalizing. Retirements in 2020 have been revised upward slightly since its last analysis, to 697—a product of long-stored aircraft being permanently parked and likely parted out. The figure represented 2.7% of the active fleet, slightly above the 2.5% annual figure over the last two decades. In 2021, about 360 aircraft have been formally retired, Naveo calculates, pointing to another average to above-average year.
Steady retirement rates are evidence of routine fleet churn as older aircraft are parked and supplanted by newer ones. Retirements also help feed the used serviceable material market via teardowns. Early on in the pandemic, many operators were taking a wait-and-see approach with older assets due to several factors, including the recovery’s pace, manufacturers’ struggle to deliver new aircraft when promised, and the perceived depressed value of excess assets. The revised 2020 retirement figure and growing 2021 total suggests aircraft owners’ fleet plans—and retirement schedules—are firming up.