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The global and labor-intensive business of base maintenance is hardly immune to geopolitical and economic shifts.
“In recent years, the global operating environment has been shaped by continuous disruption,” from the COVID-19 pandemic starting in 2020 to the volatile U.S. tariffs rolled out by the Trump administration in April, says Juozas Lapeika, FL Technics deputy CEO for base maintenance. As a result of those disruptions the past five years, “adapting to volatility has become part of our day-to-day operations,” he adds.
Because numerous geopolitical or geographical challenges, including tariffs, can adversely affect businesses, Holger Beck of Lufthansa Technik Philippines says companies must derisk themselves.
“Don’t put all of your eggs in one basket,” he says, noting that the “basket” could be one facility, one geography or one customer. Any of those could be upset by tariffs, duties or trade relationship challenges. “[Which is why] we are also looking to derisk our customer relationships,” he adds.
Lufthansa Technik considers derisking every day. “As an example, we no longer look into a megafacility to ramp up to get scalability effects,” Beck says. “We are looking more into midsize facilities to have a broader footprint in order to protect ourselves.”
Correlated to that is a shift in geography as MROs and airlines evaluate risks of location.
In the early 2000s, widebody aircraft maintenance shifted east as Western airlines sought to reduce operating costs, including labor and facility expenses, and such governments as China offered incentives. Now MROs are again looking toward bases closer to customers that seek nearshoring options. Aeroman in El Salvador has benefited from this trend.
The “tariff wars” vary by country. The European Union and the UK forged agreements with the U.S. a few months ago that restore previous tariff exemptions.
While U.S. tariffs “are not currently a major factor [that] directly impact our sector,” Lapeika says, “the cumulative effect of broader global trends—including inflation, supply chain instability and regional conflicts—continues to influence cost structures and planning across the industry.”
Caerdav sees the U.S. tariffs imposed by the Trump administration differently. Phil Swanson, business development director at the Wales MRO, says the tariffs have depressed demand in its domestic market because of new OEM parts pricing and opportunities to provide maintenance on U.S.-registered aircraft. “Any tariffs imposed by the U.S. have the potential to impact the work we do in South Wales, although discussions between the UK and U.S. have calmed the waters somewhat in relation to aerospace products and associated tariffs, which will help to keep things competitive across the Atlantic,” Swanson says.
The bigger squeeze affecting the MRO industry is hangar capacity, Swanson says, particularly in Europe and the U.S. “The complexity of doing business in these regions compared to other areas in the world forces costs to be relatively higher, which is a barrier for new hangar developments, for example,” he says.
Regulations on safety standards exist worldwide, but Swanson says the Asia-Pacific and Middle East regions make it easier for aviation maintenance businesses to grow. “This means the MRO market in these regions is booming, which will certainly continue to be the case over the next 3-5 years,” he notes. “This increases our competition, which has obvious impacts on our business moving forward. But that’s simply something we will need to work hard to counter.”
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