2020 was an unsettled year for aircraft MRO providers, according to Brian Foley, founder of Brian Foley Associates. However, depending on whether they were maintaining private aircraft or airliners made a significant difference. Flight activity drives an aircraft closer to scheduled maintenance events as required by their maintenance manuals, which specifies when various aircraft parts and systems have to be inspected, replaced or overhauled. Usage also accelerates unscheduled maintenance events that occur when a part unexpectedly fails and must be replaced.

But for a time there were no takeoffs, no landings and no flight hours, which (other than calendar events) correlate directly with MRO revenues. This happened in March and April last year, when lockdowns and border closures dealt a powerful blow to the world civil aviation fleet. At one point the number of civil flights was off by more than 90 per cent.

“This is where the tale of two aviation sectors begins,” says Foley. “While both private jets and airliners were initially clobbered by the wave of groundings, each has clawed back at vastly different rates. For the airlines, which operate equipment such as those made by Boeing and Airbus, things would only remain muddled. Flight activity would eventually increase slightly but still be 60-70 per cent off from previous levels for much of the year. A good portion of the world's airliner fleet was simply taxied to long-term parking and shut down, with the air carrier deciding whether to hang onto it for when things improved or to retire and scrap it all together. Many of the planes parked were older and more maintenance-intensive, adding to the volume of MRO business. All of these factors conspired to further deflate commercial MRO opportunities.

“In contrast, for those MRO organisations that had an exclusive or diversified presence in the business aviation sector that services private aircraft, such as those made by Gulfstream, Textron, Embraer and Bombardier, life has been far more forgiving. Firstly, flights didn't immediately grind to a halt last spring as quickly as for the airlines. Private individuals with the financial means travelled privately to their place of choice to hunker down, all while avoiding the unknown risks associated with public airports and airline cabins. This actually drove a temporary uptick in private aircraft activity, and hence maintenance, until private flyers got themselves and their families situated.”

Compared to airliners that were unceremoniously ‘pickled’ and locked away, many business jet owners took the opportunity to fly their aircraft to MRO facilities to have any scheduled or preventive maintenance done so as not to be inconvenienced when their flights eventually resumed again. Some went as far as to have their jet completely updated with the latest avionics upgrades, exterior paint and interior cabin improvements. This phenomenon helped to cushion the blow to maintenance shops in this sector.

Summer leisure travel brought private aviation up to within 20 per cent or so of normal flight activity, whereas the airlines continued to languish with flights still down by half to two-thirds. This further widened the chasm for MRO needs between the airlines and business aviation, again favouring those MROs with chips in the private aircraft sector.

“The MRO industry is actually much broader than just turning wrenches on an airframe,” Foley notes. “Aircraft systems such as cockpit avionics electronics, powerplants, landing gear, wheels and brakes all need care and attention. A reduction in maintenance work on these items creates a negative ripple effect throughout the aircraft parts supply chain. Additional stress is added to these suppliers when the airlines harvest still-functioning parts and systems for reuse from the hundreds of jets they've retired for good. Those MRO facilities on the business aviation side of the fence have found it easier to adapt to an eventual around 15-25% reduction in business without the draconian measures required by their airline industry brethren who suffered an approximately 50 per cent collapse in MRO spend.”

All eyes are now on 2021 MRO activity, the first half of which should be on par with 2020. There's hope that the second half of 2021 will help both sectors claw back more lost ground, with business jet flight activity rising to well within 10% of normal and airlines improving to 25-50 per cent off of normal levels.

Most MROs who have already adapted to the reduced activity levels will likely survive 2021 until better times return. However the shops that are highly leveraged or with depleted financial reserves will be systematically culled in the coming quarters, with their business distributed among the remaining players, helping to assure a stronger and more resilient MRO industry going forward.