Listen in as James Pozzi and Alex Derber discuss the lay of the land in the engine aftermarket.
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James Pozzi: Welcome to the MRO Podcast. I'm James Pozzi, MRO editor for the EMEA region. And joining me today to talk about the newly released Engine Yearbook 2026 is Alex Derber, who is a longtime contributor to Aviation Week, writing predominantly about the aftermarket, but also plenty of articles linked to that on things like leasing and finance and whatnot. Of course, Alex oversaw the Engine Yearbook. I don't know how many he's overseen to date, probably maybe into double figures now. I'm not too far off myself actually working on this. But Alex, thank you for joining me today.
Alex Derber: Thank you. I'm just looking at my pile of Engine Yearbooks and it's a mini step ladder.
James Pozzi: I'm with you there. Ever growing, actually. I've got mine just in my eyeshot and seems to nearing 10 now at least, I think, but maybe I should get them all framed, get them all framed maybe. Excellent. No, great to have you on today and thank you for joining us. So yeah, just starting really, I guess, a kind of broad question. Having edited the Engine Yearbook for 2026, what do you see, I guess, overall in terms of the industry, its overall health of the sector, which I guess has seen many ups and downs, especially over the last five years?
Alex Derber: Yeah. I mean, I suppose the health of the engine sector depends on your perspective. If you're an airline and you're not getting the new aircraft you want and all the new engines you want and not in big enough numbers as you were hoping for. The new engines you do have are having to be taken off wing more often than you want. And when they're taken off wing, they're taking a year to get back and the price of parts is rising all the time. If you're from that perspective, you'd probably say the engine market's in terrible health. But then if you're an aftermarket provider, a lessor or a maintenance provider or a parts provider, you probably think it's brilliant. The demand is huge. There's no end to demand out there for your services. It's I suppose it's which position you pick out of the two. From my perspective, I'd probably say it's in good health.
Some of the problems seem to be, they seem to have peaked in terms of reliability problems and the inspections. And most airlines, when they're guiding now for how many aircraft they can have on the ground due to new gen engine inspections or hospital visits seem to be guiding for lower numbers this year than they did last year and then trending down in maybe two years time, not having any more on the ground, barring any new unforeseen problems.
James Pozzi: Yeah, absolutely. And a good point actually. It all depends on your perspective. Going back amazingly, six years nearly since the COVID pandemic, I mean, it just seems like a lifetime ago. But quite an interesting thought is, how does today's engine market differ from that kind of pre-2020 cycle? Immediately, I would say some of the work scopes have certainly changed and what customers are wanting in terms of the work scopes and what the shops are undertaking off the top of my head. But what comes to mind for you, Alex?
Alex Derber: So looking at it broadly, obviously there's capacity problems now and we're still in that sort of world of post-pandemic recovery where people are struggling with labor still. But then in other ways, there's maybe a bit more similarity than you would've expected six years ago because a lot of six years ago, there was relatively few new gen engines in the market. It was CFM56 dominating. And while people would've still expected that to be dominating in the aftermarket this year, they might've expected fewer shop visits to be happening than they are and are going to happen because of the trend of aircraft being older aircraft being operated for longer. Well, obviously there has been a trend for heavier work scopes and there's also been a trend for alternatives to overhauls. Demand for that has shot up with things like module exchanges. While there have been heavier workscopes, some people are also building for shorter hours than they used to.
So yeah, I'd say there's some key differences there.
James Pozzi: Absolutely. Yeah. I also think it's quite interesting how airlines in some regions, depending on where they're based, seem to go about maintaining their fleets. Seems to be a belief that the way they do that is different, not just in terms of getting life out of the older engines. I heard something very interesting that Air Canada was doing with some CFM56-5As and their -5Bs actually in terms of how they are doing it on a case by case basis and kind of seeing out the final years of one of those programs, but the other one, they're kind of taking new approaches to maintenance in terms of builds and shop visits. That was very interesting to me. And I guess airlines are managing them generally that mix of OEM types, of course, maybe pooling agreements for parts, but also leaning on those independent shops a lot more maybe to add some or to gain some of that extra capacity and get some of those assets repaired wherever they can.
Certainly in Europe, that seems to be happening with some of the low cost airlines. They've got a very diverse mix of MRO partners that they're working with at the moment. So let's go onto the Engine Yearbook then. Which articles, of course your eye, of course, you've edited probably maybe near a dozen articles in the year, but this year it's kind of bigger than ever in terms of volume and size. But what are some of the features the listeners should be looking out for when they pick up their copy of that beautiful looking book?
Alex Derber: I write this one, so I don't want to appear to be blowing my own trumpet, but I do think it's not really me. It's based on the work of the data team, and I just try and analyze it a little bit. That's the first article every year now. We look at narrow body engines, wide body engines, and regional engines. Looking at the numbers, just first of all, the fleet numbers, how that's changed and how it's going to change over the next 10 years. So for instance, when the inflection point's going to happen between new gen and old gen engines, and then doing the same for the maintenance market, seeing where the money's being spent now and where it's going to be spent over the next five, 10 years, looking how different engines within each category, and so narrow body, wide body and regional, how their importance will change to air within the global fleet and to the aftermarket.
And then you also look bringing into that things like retirement. So you can make some estimations about the USM market and tear down market to see where materials like to come from and where suppliers likely to be tight. In that vein, another article that caught my eye, which is a sort of an amalgamation of a few articles that were written over the year about PMA and how that's making increasing inroads into the engine. When we started reporting on PMA, everyone always said, oh, there's only going to be a few plastic bits in the cabin. But now that people are trying to eke as much life as they can out of current gen engines, it's really you've had this sort of perfect meeting of circumstances where there's engines being operated for much longer than they would've done before and companies now willing to build, and it's taken some development as well to build these PMA parts for popular engines.
And yeah, we're going to see the use of PMA in CFM56 and the V2500 increase a lot, I think, over the next few years.
James Pozzi: Absolutely. And Chromalloy, of course, playing a big role in that based on the article in the yearbook.
Alex Derber: We always split a yearbook into three sections, one on maintenance, one on new technologies or current technologies, but usually new technologies, and then the finance section, engine asset management. And within that, we've got an interview with Darren Warmold, the chief operating officer of ELFC, who has a lot to say about the industry. I asked him if he thought that the new gen engines would ever, obviously they're not going to at the moment either reliability of their predecessors or come anywhere near the reliability of their predecessors. And he just basically gave a flat no to that. Although he said it, they would still be cost effective, but yeah, I was expecting him to most people sort of hedge their bets on that and say, "Oh, we'll see the predecessor engines at this stage in their life also weren't that reliable." He was just like, "No." So that's quite interesting.
And he's got a lot more to say on the engine leasing market as well. How
James Pozzi: About you? I agree, Alex. And what Darren said seems to echo, especially at the engine events I attend and even the engine leasing event we do every year in London, he seems to echo a pretty popular opinion now. I think PMA was one of the best articles last year on the engine industry that we published at Aviation Week. Glad to have that in the yearbook, of course. I think PMA is just ... As you're right, the whole landscape has changed from when we were reporting on it 10 years ago or so. I thought one of the most interesting things I heard when I was in Singapore in September 2025 was the changing Chinese attitude to PMAs and well, USM as well. China is one of those countries that hadn't opened up to PMA or hasn't really opened up to PMA at the same rates as everyone else.
Even USM parts. I mean, there wasn't even a pension for used parts in China. It was mostly for OEM factory parts, but the landscape has become more favorable in terms of procurement. There's a more open kind of system now led by the regulator, the CAAC like everyone else. Chinese carriers will want to look for things that could be cost effective. So yeah, we're seeing more openness to it in China. I knew for a few years now that Asia Pacific as a region had become more open to it with its airlines over there, talking PMAs, but also extending to USM of course as well, although it was always more so than China as a country. We're just seeing it a lot more now in ... It differs on a region by region basis, but yeah, that's not a part of the world I thought would open up as quickly as it has to these kind of alternative parts as well.
So that'd be interesting to see how that grows in the next five years or so.
Alex Derber: Yeah, because I mean, that's a huge reservoir of demand opening up at a time when retirements still aren't really happening. So what that's going to do to USM prices in the near term, obviously Ted, obviously retirements will happen at some point, but it might lead to a sudden uptick in prices aren't on USM.
James Pozzi: Yeah. I mean, we've seen in Europe, and especially in North America, the USM pricing dependent on program, of course, some are rising higher than others in terms of price, of course. But that market has completely ascended in terms of costs in, well, I guess the last five years or so seems to ... Some crazy prices that I've heard floating around for certain parts relate to certain programs and multiple times higher than in quote unquote normal times. And also another one as well, an article on kind of OEM networks, building for those future networks. We've seen that constantly, especially in the last five years, new hangars, new engine shops being set up in all parts of the world. There are other issues in terms of serving capacity that you can build a hangar and you can set up, get it kitted out with all the equipment or the tooling, but there are other challenges there, of course, the supply chain, but also people.
That's another big one too. And that seems to be one of the big constraints at the moment for the kind of future health of the engine market. It differs region by region in terms of causes of this. For example, Asia Pacific has a bit of a shortage of engine MRO capacity despite all the investment that's gone on there in the last few decades, countless shops being set up there with engine OEM affiliations, airlines setting up their engine. And that's continuing, of course, with several really interesting projects going on there. Since the pandemic, Asia Pacific saw a big shortfall and a drain in talent and they are making moves to change that around, but that's going to take a lot of time in the engine side of the market. Whereas compared to the airframe side of Asia Pacific's market, that's well served still. So there's not many capacity concerns there according to people in the region I've spoken to.
Whereas in North America and to an extent Europe as well, the average age of the average engineer or technician in the industry is kind of around the mid-40s, I think the last time I looked. So attracting that new talent into the industry to get people in early and develop them over the course of 40 years or so throughout their careers is tough. Whereas you go to the Middle East, for example, and they are really focusing on developing their own workforces to be the engine technicians of the future instead of relying on expatriates, for example, which is something that they've done to an extent for quite a while now. So I guess the human side is a big challenge for the future too, but there's certainly obviously no shortage of demand at the moment in the market. As I said, the demand is certainly there and there's a lot of growth for not just narrow body, of course, which takes up a lot of the focus when we're talking about engines, but also the wide body.
There's a very strong market there with the GE Aerospace and Rolls-Royce engines in future. And that's come back very strong, I'd say. So just a little plug from my side. I think, of course, the Engine Yearbook has the directory section listing all the companies involved in the engine ecosystem, got MROs, OEMs, airline maintenance companies, more recently lessors now are in there. We've opened it up to business aviation and for the first time we've got a services and suppliers section, which I think was a bit overdue in terms of its inclusion because basically, sorry, lists anyone who doesn't do traditional repairs on an engine. So all part of that engine ecosystem, it could be a supplier of, I don't know, we've got a supplier of engine covers in there, for example. And it's all those people that are important in this industry, but aren't necessarily repairing the engines as such.
But yeah, it's good to have those companies listed at last. And I think the last time I checked, we had well over 500 listings, maybe even more. So maybe 1,000 for 2027 perhaps we've grown all the time and it's kind of reflected in the events as well. We do the Aero Engine events. Of course, we've got one coming up here for the Americas region in mid-February in Tampa, Florida. So that series of events is also growing in terms of attendance and volume and plenty of good sessions too and lots of good material to come for aviationweek.com, no doubt. Excellent. Well, Alex, thank you very much for taking us through the new yearbook. That is now available. You can inquire about that on aviationweek.com. If you're attending one of our upcoming shows such as the Aero Engine Show, you'll find a copy available to pick up, but get them quickly because they do vanish after a day or two.
They go like hotcakes.
Alex Derber: Well, thanks for having me, James.
James Pozzi: Yeah, cheers, Alex. Thanks for taking us through that. Thank you for listening today to the MRO Podcast. Join us every Monday for the latest episode. They drop Monday morning. We call it MRO Mondays, and you can hear those new episodes drop either on Apple or Spotify while you're there, feel free to leave us a review. And thank you for listening.
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