Strategic Assessment of Aerospace Aftermarket Estimated to Experience a Notable Rise
Posted: Oct 26, 2020
In recent years, OEMs are focusing toward introducing aftermarket services such as parts, maintenance, repair, and digital services as such kind of aftermarket services enable OEMs to leverage significant revenue streams with higher profit margins than sales of new equipment. However, OEMs at times may lose ground to independent MROs or other third-party part manufacturers attributed to less expensive services offered by such MROs and third-party part manufacturers. Thus, to retain the market share, OEMs must identify the loopholes by having a detailed examination of aftermarket lifetime value, which, in turn, also help them boost the core business during the forecast period.
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Currently, narrowbody aircraft are gaining more popularity owing to significant new additions of narrowbody fleets by replacing old narrowbody and turboprop fleets during the forecast period. The market has considerably evolved in developed regions such as North America and Europe and is gaining popularity in geographies such as the Asia-Pacific and Middle East and Africa (ME&A). Further, it is experiencing further growth because of continued research and development activities through huge investments by various MRO service providers for the maintenance of intermediate narrowbody aircraft.
In the recent years, the global airline industry has shown significant financial results owing to integration of advanced technologies into an aircraft. Further, various airlines have become more focused toward regular maintenance of their operations in order to serve their passengers with optimized customer experience. Such regular maintenance is expected to lead to huge opportunities for MRO service providers who can expand and diversify their capabilities by getting a contract from airlines, such as line maintenance, fleet management, and airframe services.
The complex structure of various aircraft components such as engines, airframes, systems, and related components leads to adoption of maintenance, repair, and overhaul (MRO) services for inspection and maintenance. Further, implementation of safety regulation by Civil Aviation Authorities (CAA) in various regions also make necessary upgrades of different aircraft components and parts, driving more revenue growth for aerospace aftermarket.
According to Colins Aerospace, everyday hundreds-of-thousands of transactions take place between airlines and their aftermarket service providers for aircraft services. However, various MROs are engaged in implementing new technologies including hangars & paperless shops, virtual maintenance training, predictive maintenance, and drone-supported maintenance to operationalize aircraft monitoring, improve technician efficiency and productivity, and bring actionable solutions to the airlines faster.
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MRO providers and airlines generally purchase used serviceable material (USM) from various traders at distinct prices, and many times, the cost of a used part may exceed that of a new component depending on the supply and demand for a particular component or part at the time of the transaction. Thus, there is no formal mechanism existing to access the value of used parts today. In order to deal with such circumstances, the International Air Transport Association (IATA) has taken initiatives to prepare a web-based pricing model which provide aftermarket players and airlines to real-time access to transparent market values for aircraft components, considering availability and delivery times for different parts and equipment.
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