Protectionism And U.S. MRO (Links)

North America is a net exporter of MRO services, meaning that its service providers do more MRO work for foreign operators than its airlines offshore. Oliver Wyman’s latest forecast puts the projected 2017 difference at $800 million ($3.6 billion farmed out; $4.4 billion pulled in).

How much of this could be at risk if the Trump Administration’s idea to slap tariffs on imports comes to fruition? It’s hard to say.

A top executive with Haeco Americas, the U.S. arm of independent MRO provider Haeco (it is part of Swire, which also owns Cathay Pacific), tells Aviation Week that it typically aligns its customers geographically, giving the company an advantage.

A recent Aeronautical Repair Station Association (ARSA) analysis noted there are more than 1,400 EASA-approved repair stations in the U.S. While the data doesn’t shed light on how much revenue they generate from work supporting European-registered aircraft, it’s a safe bet that it’s significant, as such approvals are an investment in time and money.

The positive-trade balance highlights a few common misperceptions about aviation maintenance. One: who is doing the work.

While companies with massive, on-airport hangars play major roles in keeping aircraft flying, most of the work is done in smaller, off-airport shops. An Oliver Wyman analysis done for ARSA found that 85% of U.S. MRO providers are small businesses that employ 50 people or fewer.

That helps underscore another big misperception: airline maintenance means turning wrenches on big airplanes. About 60% of projected $72 billion in global MRO demand this year will come from work on engines ($30 billion, or 39%) and components ($16 billion, or 21%)–hence the extensive work in smaller shops. Airframe work (including interior modifications, which are booming) generate about $18 billion, or 23%.


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