Story ID: 023g
MRO Providers Consider 2020's Challenges, Prospects
By: Jerry Siebenmark
Caption: An election year and worries of a downturn create some uncertainty for the MRO industry in 2020.
Word Count: 657
Maintenance, repair, and overhaul (MRO) providers are divided by what lies ahead for their business in 2020. While they benefitted to some degree from the FAA’s ADS-B Out mandate over the past couple of years—in some cases leading to entirely new avionics installations or as part of other larger projects such as cabin refurbishments and connectivity installations or upgrades—their business in 2019 continued to be driven largely by scheduled maintenance, equipment obsolescence, and improvements in avionics suites and connectivity.

But among some MRO executives like Constant Aviation CEO Stephen Maiden, 2020 looks to be an uncertain year because of the upcoming Presidential election, as well as talk of an economic downturn in some business aviation circles.

“I think we all go to; 'what is 2020 going to look like?'—and it’s going to tie to an election year,” Maiden told AIN. “And is there a downturn in the market coming and how is that going to affect not normal scheduled maintenance? But on what I talked about, discretionary spending: interiors, avionics upgrades, cabin management upgrades? What’s going to happen to those discretionary dollars? And I think that's where the concern is, or where the focus is.”

Duncan Aviation CEO Aaron Hilkemann told AIN he expects 2020 to continue to be a growth year for the Lincoln, Nebraska-based MRO, with work coming from scheduled maintenance and inspections, some ADS-B installations from “people who just waited to see if it really was going to happen,” as well as replacement activity for cabin management systems and connectivity upgrades. “I think Wi-Fi and cabin management will be important over the next few years,” Hilkemann said.

“There are some emerging technologies that may already exist, but we could see a trend toward, [technology such as] CPDLC, even in the U.S. at some point in time,” Hilkemann continued. “It's just an efficient way for communication and allows for fewer errors. So it may not be a mandate, but it may be something that operators will want in their cockpit as time goes on.”

C&L Aerospace regional sales manager of corporate MRO Ron Jennings told AIN he’s seeing more activity in assisting owners and operators of aging business aircraft with determining whether to part out or upgrade their aircraft. For instance, C&L is currently working with the owner of an older Challenger that needs new engines. The dilemma is that the cost of new or overhauled engines exceeds the twinjet’s value. “So we’ve tried to locate engines that are [around] half-life to put on the airplane to keep it going for several years. But everybody else is doing the same thing,” Jennings explained.

That aging market may explain the thousands of airplanes that haven’t upgraded to ADS-B. It may be that those owners are just looking to get out from under their airplanes, Constant’s Maiden suggested. “There's a significant number of airplanes that will be grounded,” he said. “And then there's going to be this second tier or third tier market that's going to go buy an airplane relatively inexpensively, upgrade it and either charter it, fly it, or sell it. I think that’s an opportunity in 2020.”

Despite concerns about the election cycle or an economic downturn, MRO is still in a good position, Maiden added. 

“I do think it’s going to be a flat year, and I think everybody is a little concerned and on edge about the election and what's going to happen there,” he said. “And if there's going to be some budget cuts. But here’s the one thing that everybody needs to be aware of; there are more airplanes flying in the United States than ever. They're flying more hours, longer distances than ever. And their average age is older than ever. And that is good for maintenance.”