It is a given that commercial airlines make their money through ticket sales from vacationers, those who travel for business, and those who just need to get point A to point B quickly. There is, however, another revenue opportunity that, in the past, has been overlooked by major airlines. Before a plane can fly and generate revenue, it must be certified as safe. The FAA calls for strict maintenance plans that include the disassembly and reassembly of aircraft. The 100-hour inspection is an example of a maintenance requirement that is extensive therefore requiring numerous hours and copious space. Since the 1990s, airlines have outsourced these maintenance procedures to Maintenance, Repair, and Overhaul (MRO) facilities that are located off-site and away from the airport.
These facilities were convenient for airlines that did not want to think beyond the flight times, plans, and ticket prices. MROs have large hangars, certified mechanics, and expensive test equipment to efficiently carry out the aircraft maintenance. From a business point of view, MROs were supplying an invaluable and highly specified service that the airlines relied upon.
As is the case with much of business sector growth, there comes a point where supply struggles to meet demand. In the aviation industry there is an increasing demand for MROS due to the increasing number of aircraft being commissioned. Asia and the Middle East are experiencing a significant rise in the commercial airline industry. More and more tickets are being purchased by middle class holiday makers, and the result is more and more aircraft being sent to MROs. The aftermarket refers to the business sector that is involved with the maintenance and repair of aircraft. In the 2019 market forecast report by Oliver Wyman predicts that the aftermarket is set to grow significantly over the next decade, citing China as the biggest market determiner.
So, what does that mean for airlines? This can be answered two ways. The first implication is that the maintenance programs of aircraft are being slowed down by the high demand for technicians and space. If an aircraft is not serviced in time, it may be grounded by the FAA, therefore losing money in ticket sales. On the other hand, airlines could view this growing trend as a business opportunity. Instead of outsourcing repair work, airlines are beginning to establish their own maintenance bases therefore cutting costs and side stepping any costly wait times. Delta, Lufthansa, and KLM are already ahead of the trend, each operating their own maintenance business for many years now. By taking control of their own maintenance facilities, airlines also address the growing authority of original equipment manufacturers who are leveraging their own position in the aftermarket industry by becoming increasingly stringent over intellectual property.
In a nod to the digitization of all aspects of the aviation industry, including maintenance, in June 2019, Embraer announced the launch of their Big Data analytics platform, IKON. With this platform, Embraer can analyze the performance data on their latest aircraft, the E-Jet E2 family. Data can be quickly reported to mechanics who can predict the required maintenance of an aircraft before it leaves the airport. Embraer’s maintenance program may well become one of the most effective plans, perhaps paving the way for other airlines.