Future looks bright for MRO market in ME

Middle East carriers are forecast to see net profits improve to $600 million in 2018.

The future looks bright for the Middle East's maintenance, repair and overhaul (MRO) industry in 2018; however the new year will not be without its challenges, experts at the Airline Engineering & Maintenance: Middle East conference said.
Organised by Aviation Week Network, the conference brings together key stakeholders in the aviation aftermarket to explore the landscape, and discuss emerging opportunities in the Middle East.
Richard Brown, principal at ICF, noted that the global MRO market is expected to grow by 4.1 per cent per annum to over $100 billion by 2026. The Middle East MRO market is set to doubles to reach around $11 billion by 2026.
"Investments will continue in the Middle East, driven mostly by original equipment manufacturers (OEMs)," he said on Monday. "New and better connected aircrafts will provide airlines, OEMs and MROs the chance to improve reliability, increase supply chain efficiencies, and optimise maintenance to reduce unscheduled events and their associated costs."
Over the next five years, MRO demand in the Middle East will grow at an estimated 9.1 per cent compound annual growth rate (CAGR). The growth will be driven by engine maintenance, which will account for nearly $13 billion. Engine maintenance alone is expected to increase at an 11.8 per cent CAGR through 2022.
The healthy performance of the regional MRO industry also stems from the optimistic outlook of the global airline industry. The International Air Transport Association (IATA) forecasts the global industry net profit to rise to $38.4 billion in 2018, an improvement from the $34.5 billion expected net profit in 2017. The industry will see a rise in overall revenues to $824 billion in 2018, up 9.4 per cent from $754 billion in revenues expected this year, as per IATA estimates. Middle East carriers are forecast to see net profits improve to $600 million in 2018 - up from $300 million in 2017. Demand in 2018 is expected to grow by seven per cent, outpacing the announced capacity expansion of 4.9 per cent.
However, Brown noted that challenges that appeared in 2017 will continue, including jet fuel prices, and increasing competition. "Jet fuel prices have remained low over the past couple of years, but they have been creeping up recently. In addition, there is increased competition in the market, mainly from long haul low cost carriers."
Ziad Al-Hazmi, CEO of Lufthansa Technik Middle East, spoke about the importance of retaining a talent workforce in the region.
"This is one of the challenges of setting up MROs in the region; attracting the right type of skilled labour and then retaining it. One of the ways of doing so is through proper education, and this does not necessarily mean opening more campuses or colleges, but ensuring that students get the right type of courses that gear them up to tackle the needs and challenges in the industry."
Aqeel Al Zarouni, director of Airworthiness - Aviation Safety Affairs, UAE General Civil Aviation Authority, also spoke about the challenges in acquiring skilled workers in an open market, adding: "We don't want to isolate ourselves from the industry. Regulators have to have proper industry experience for them to understand the challenges of the industry. Luckily, our inspectors have that experience, and we are able to tackle that challenge. We are also very active when it comes to investing in our inspectors and making sure that they have access to the latest training that is available in the industry."
- rohma@khaleejtimes.com