Boom time for the $110b a year industry keeping airlines flying

Airlines large and small struggled to cope when demand roared back after the pandemic. But their problems have been a boon for the $110bn industry that keeps the world’s aircraft in the skies. A shortage of new planes caused by supply chain issues and a jump in labour costs has led to airlines spending more on maintenance and repairs than ever before as they keep their existing aircraft in the air for longer. “The [maintenance] market is incredibly strong,” said Eric Mendelson, co-president of Heico, a Florida-based company that is one of the world’s leading independent suppliers of replacement parts. “I’ve been at the company for 34 years and I have never seen a demand environment like we are in today.” Labour and raw material shortages have hampered the large manufacturers Airbus and Boeing and their plans to meet demand for new planes, while problems on some engines have added to the challenges in the supply chain. Maintenance spending had historically been 8 to 10% of an airline’s cost structure, said Kevin Michaels, head of Michigan-based consultancy AeroDynamic Advisory. This year, however, he estimated that the world’s airlines would spend more than $110bn on maintenance, including labour and material, or about 14% of total revenues. “It’s the highest we’ve seen it.” Michaels said three factors were driving the higher spend: airlines investing in discretionary maintenance that had been deferred during the Covid-19 pandemic; older aircraft due for retirement having to fly longer than expected given issues with new generations of engines, as well as supply chain constraints; and inflation as the cost of labour and parts had risen. While most of the supply chain crisis had been “about the manufacturing side of things this is the first time we’ve had a supply chain crisis that is really impacting the whole after-market in maintenance, repair and overhaul”, Michaels said. “It’s new territory.”<br/>