Assessing Phantom Overhauls
One of many uncertainties about how the engine aftermarket will develop over the next few years concerns the number of mid-life and older engines that will undergo another shop visit.
“This is a decision to which many operators and lessors will be giving serious consideration, key factors being the asset’s maturity and whether or not a swift recovery is anticipated,” David Archer, senior engine analyst for consultancy IBA tells the Engine Yearbook.
IBA has estimated how demand may recover under three scenarios, according to the most optimistic of which shop visits catch up with pre-Covid projections near 2024, while its downside scenario would see demand depressed for almost the whole decade.
A useful guide to which visits may or may not occur is the composition of shop visit demand each year, by percentage of first-, second- and third-run engines.
For example, in 2020 51% of shop visits were (pre-Covid) projected by IBA to be for second- or third-run engines, and these likely constitute the bulk of the more than 50% drop-off in shop visit numbers that the consultancy forecasts for this year, even accounting for some extra maintenance demand from cargo carriers.
Second- and third-run engines dip to 45% of shop visit numbers for 2021, which may mean that the engine aftermarket does somewhat better than the grimmer projections for next year, but thereafter their share climbs steadily to reach almost 60% of projected visits by 2025.
At that point, IATA predicts that passenger traffic will exceed 2019 levels, in which case airlines may well be willing to push older engines through another overhaul.
If not, however, engine overhaul shops could be facing a lost decade, or at least one in which they share a much smaller pie than previously envisaged.
To find out more about the engine market and engine technology may develop in the wake of the current crisis, see the forthcoming Engine Yearbook 2021.