Impact of COVID-19 on the MRO Market

The COVID-19 outbreak was first identified in December 2019 and was subsequently classified as a pandemic by the World Health Organization (WHO) in March 2020. There have been more than 54 million confirmed COVID-19 cases as of November 2020.

The pandemic has had a significant negative impact on the aviation industry. There has been a complete standstill in flight activity, with governments asking its citizens to follow social distancing rules and closing its borders to ensure there is no influx of new cases from abroad. With increased travel restrictions and a decrease in demand among travelers, flights have been reduced mainly to freight and repatriation missions although the majority of aircraft have been grounded for most of the pandemic.

The lack of flight activity means a decrease in demand for non- scheduled and line maintenance operations – a major source of revenue for the Maintenance, Repair and Overhaul (MRO) industry. Asia-Pacific MRO businesses have not been significantly affected by the pandemic. The decrease in line maintenance and non-scheduled maintenance, due to the low flight activity, has been matched by an increase in base maintenance requirements. Regional MROs have also witnessed an increase in their customer base during the pandemic. Due to global lockdown and border closures, operators that previously relied on OEM operated MRO facilities in the west, now must turn to domestic MRO facilities as an alternative.

COVID-19 has forced many industries to adapt in order to survive. MROs that earlier focused only on commercial and business aviation aircraft are now focusing on other business – such as EMS and agriculture industries.

Paul Desgrosseilliers, General Manager at ExecuJet Haite Aviation Services China, said in an interview with Asian Sky Group: “Much of the negative impact was felt due to the decline of flight activity and consequently seen in the reduction of line maintenance and non-scheduled events. This decline has been mostly muted with an increase in base maintenance inputs as border closures have forced many operators and aircraft owners to select domestic MRO facilities as viable alternatives to repositioning the aircraft to foreign facilities as they have elected in the past”.

COVID-19 has forced operators to select domestic MRO facilities as viable alternatives to foreign counterparts.

Paul Desgrosseilliers, General Manager at ExecuJet Haite Aviation Services China

Dexter Ampong, General Manager at INAEC Philippines, said: “COVID-19 has not had much difference in our business. Aircraft owners were still using their aircraft after a month or two of the initial shock of the pandemic. So, business as usual. Repairs and maintenance still have to be done.”

Business is running as usual. Repairs and maintenance still has to be done.

Dexter Ampong, General Manager at INAEC Philippines

Liv Lewis-Long, Salus Aviation: “Reduced flight hours translates into a downturn in demand for maintenance, overhauls, and upgrades. As well as tourism, the flight training industry has been
severely impacted with significant redundancies worldwide and little demand for new pilots in the current environment. This means lower maintenance and repair requirements for large flight school fleets. On the other hand, both the EMS and agriculture industries are seeing increased activity, which provides MRO firms the opportunity to increase business within these sectors to offset the reduction in demand from others. For MROs, it is about adaptability and flexibility in order to sustain business in the short term and set up for long term success.”

For MROs, it is about adaptability and flexibility in order to sustain business in the short term and set up for long term success.

Liv Lewis-Long, Head of Marketing & Communications at Salus Aviation

POST COVID-19 ERA

Companies in the region are optimistic about the future of the Asia- Pacific MRO business. With the border closures forcing operators and owners to depend on domestic MRO facilities, these MROs have the opportunity to stand out and prove they are just as capable of providing similar or superior services as compared to their western counterparts. MRO operations conducted within the Asia-Pacific region have the added benefits of being cheaper and having a lower lead time for Asia-Pacific operators.

James Walker, Commercial Manager at Airflite: “At the start of the pandemic, during the lockdown, business was slow, however in recent months General/Executive Aviation activity has picked up in the region and in turn MRO demand has been higher than expected. Airflite predict this trend will last into mid 2021 before Airlines return to some sense of normality.”

In recent months General/Executive Aviation activity has picked up in the region and in turn MRO demand has been higher than expected.

James Walker, Commercial Manager at Airflite

Some operators may, once the lockdown ends, return to overseas MRO facilities, however, some may be content with and opt for domestic MRO service providers. The regional MROs thus have an opportunity to increase their client base and shift client preferences to maintenance services provided by Asia-Pacific MROs.

Paul Desgrosseilliers, Execujet Haite: “I expect the domestic Chinese MRO business to transition back to historical norms and the share of line to base maintenance to revert to a normal mix. Some operators may now return to overseas facilities, while others may now elect for domestic providers dependent upon a positive outcome during a pandemic driven input. This will allow some MRO companies that have delivered superior or similar service offerings to those found abroad to grow market share, while others may return to their previous position in the market.”

Clients may continue relying on domestic MRO companies that have delivered superior or similar service offerings to those found abroad even after the pandemic.

Paul Desgrosseilliers, General Manager at Execujet Haite Aviation Services China

Alex Law, Senior Maintenance Support Manager at Hongkong Jet: “Since the outbreak of COVID-19 in early 2020, business has dropped significantly compared with 2019 due to heavy travel restrictions. But the market will gradually recover. A large number of clients are eagerly waiting to fly again as long as the travel restrictions are eased or more travel bubble schemes are formed. We believe that the demand for travel is strong and is on the rise, which will impact the MRO market positively in the future.”

The demand for travel is strong and is on the rise, which will impact the MRO market positively in the future.

Alex Law, Senior Maintenance Support Manager at HongKong Jet

Additionally, certain regions have started recovering and stabilizing from the pandemic and have reopened domestic flight routes. International borders are still closed to prevent imported cases of the virus. Thus, with domestic flight activity on the rise, domestic MRO facilities can further increase their market share by overseeing non-scheduled aircraft maintenance.