Potential For Annual Growth Rate Of Five Percent Through 2016

In 2009, engine maintenance, repair and overhaul (MRO), which is the largest segment in the MRO market, accounted for 40 percent of MRO activities, worldwide. During 2008 and 2009, the Asia Pacific engine MRO market experienced rising demand but declined in 2010 due to the effects of the economic downturn. The scenario is likely to change in the next five years with the market expected to grow at a compound annual growth rate (CAGR) of 5 percent, spurred by the increase in aircraft deliveries and air traffic.

Air passenger traffic has a direct relationship with fleet utilization, which in turn results in a greater need for engine MRO.

New analysis from Frost & Sullivan, Asia Pacific Engine MRO Market - Revenue Opportunities and Stakeholder Mapping, finds that the market earned revenues of $4.8 billion in 2009 and estimates this to reach $6.6 billion in 2016.

"Meanwhile, participants have to strategize to deal with the high procurement costs of new engines for aircraft such as the A380 and the B787 Dreamliner, which are restraining airlines from upgrading and maintaining their aircraft engine," observes Frost & Sullivan Industry Analyst Karen Yap. "Therefore, airlines acquire replacement parts from the Parts Manufacturer Approval (PMA), which are lower-priced parts that are manufactured or designed by companies that are not original equipment manufacturers (OEMs)."

Despite these challenges, robust growth in the air traffic of low-cost carriers has created business opportunities in the engine MRO market.

"New market participants could partner with airlines to set up engine MRO facilities to leverage their technical and management expertise, with lower resource and shared costs, to maximise profits," notes Yap. "Existing market participants could consider expanding their engine hubs in the region to prevent service shortage, as air traffic is expected to grow."

FMI: www.aerospace.frost.com