The world’s airlines, and its aircraft leasing companies, have always required a skilled maintenance, repair and overhaul (MRO) sector to help keep them aloft. As aircraft makers struggle to keep pace with demand, that’s true now more than ever.
It’s an opportunity for Ireland, which currently manages more than 60 per cent of the world’s leased aircraft and has an MRO sector valued at €370 million that employs 3,200 people.
According to The Next 10, a new report from Dublin headquartered aircraft leasing company Genesis, aviation’s growth story is set to continue globally, as millions of travellers in emerging markets take to the sky for the first time.
But this increase in demand must be managed by a sector that is still playing catch-up after the pandemic and the supply chain snarl-ups that followed it.
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Genesis estimates lost production since 2019 at more than 5,000 aircraft, an imbalance that won’t be resolved until the early 2030s, at best.
As a full-service aircraft leasing company with a portfolio of 70 aircraft on lease to 40 customers in 30 countries, Genesis also has a component trading division, ReGEN, which provides airframe and engine component solutions to the global airline and MRO markets.
According to its report, while airlines learned how to cope with the unprecedented drop in passenger demand during the pandemic, now, after years of steady recovery, they are grappling with the opposite challenge – too few new aircraft to support demand.
Many are delaying aircraft retirements as a stopgap measure, in turn driving increased demand for MRO.
By its nature, MRO tends to stay close to clients, resulting in what is seen within the sector as the “ongoing slow shift” in location towards emerging markets for airframe MROs, closer to customers and available talent.
That includes Emirates’ investment in a 1 million sq m MRO facility at Dubai World Central – the largest of its kind by any airline – and Air India’s mega MRO facility at Bengaluru Airport.
However, while airframe MRO will continue to move to locations with lower labour costs, the same is unlikely to be true of engine MRO. Put simply, the value of an aircraft engine is so great that the labour cost component is much less significant.
At the same time, while historically the engine MRO market was dominated by original equipment manufacturers (OEMs) such as GE and Rolls-Royce, which closely protected their aftersales service revenue, such protectionism is now easing due to overwhelming demand
All of this presents an opportunity for higher-cost locations such as Ireland to develop their engine MRO capacity. “As sophistication and complexity rises, it moves to a greater focus on quality,” explains Karl Griffin, chief executive of Genesis.
Griffin started his career, in 1990, as an MRO apprentice at Shannon Aerospace, and is currently chair of Aircraft Leasing Ireland (ALI), the Ibec group representing the aircraft leasing industry in Ireland.
He believes Ireland is well positioned to capitalise on the MRO shortage. Its status as a global hub for aircraft leasing, focus on quality, strong education system and strong track record in aviation engineering all make it an ideal location for high-value, precision-driven engine repair.
As a result, there is now, reckons Griffin, a huge opportunity to replicate Ireland’s past successes in MRO by creating a new generation of aviation technicians to service this high-demand, high-value industry, which is less price sensitive and more quality driven than other MRO segments.
For its own part, Genesis, through its component business ReGEN, already plans to expand into the engine MRO space to address the market gap.
It’s an outlook the Government appears to share, having last year announced a doubling of aircraft mechanic apprenticeships and charging Solas, the State agency for further education and training, to establish a national centre of excellence for aircraft mechanic training.
The lion’s share of new apprenticeships is already being hosted by Shannon-based Atlantic Aviation Group, a leading provider of MRO services.
Speaking at the Government’s announcement, Shane O’Neill, chief executive of Atlantic Aviation, pointed out that the move doesn’t just benefit its organisation but the entire Irish aviation sector.
It also reflects “the strategic importance of developing a strong pipeline of engineering talent to meet the needs of a rapidly evolving industry,” he said.
