Newest ARSA Report: Positive Trade Balance, Growth Prospects for Global Maintenance
Aviation maintenance, an often overlooked but vital segment of the aviation industry, is not only a major employer nationwide making a substantial impact on the U.S. economy; it has achieved a positive balance of trade, a new report finds.
According to the 2017 Global Fleet & MRO Market Assessment, prepared by consulting firm Oliver Wyman for ARSA, the U.S. civil aviation maintenance industry employs more than 277,000 people across the United States and generates $44.1 billion in annual economic activity.
The report found there are more than 3,800 American firms across all 50 states performing maintenance services. Contrary to popular perceptions about the industry, most aviation maintenance work is done “off the aircraft” by highly specialized FAA-certificated facilities working on engines and components. The vast majority of these repair stations, close to 85 percent, are small-to-medium sized businesses employing 50 or fewer people. Overall, thanks to strong performance in component and engine-specific services, the United States enjoys a positive balance of trade for maintenance: American maintenance exports exceed imports by almost $850 million.
The report was released March 15 at a Capitol Hill briefing conducted as a part of ARSA’s annual Legislative Day, an event that has become a highlight of the transportation policy community’s spring calendar. David Marcontell, Oliver Wyman vice president, presented this year’s report.
The total worldwide market for commercial aviation maintenance in 2017 is expected to reach nearly $75.6 billion, Oliver Wyman found. By 2027, global sales will expand to more than $109 billion, based on the firm’s projections. Maintenance providers will see steady demand growth, as fleets expand and new technologies emerge, Marcontell noted during the briefing.
As a further enhancement to this year’s report, the 2017 assessment includes an economic sensitivity analysis that tests the $109 billion projection against four alternative economic scenarios. Ranging from “cloud nine” robust growth to “black swan” disaster, the maintenance market fares relatively well against each variation. In fact, in three of the four situations considered, the market actually outperforms Oliver Wyman’s baseline economic projection. Even when bearish assumptions are made for a “weakened economy,” airline dependence on legacy aircraft would still bolster maintenance, repair and overhaul spend to $111 billion by 2027.
“Basically everything would have to go economically haywire in the global market for maintenance spend to not at least meet projections,” Marcontell said about the analysis. “Even then, the numbers are still in the ballpark of $100 billion in 10 years’ time; in terms of dollars and cents, this is a very durable industry.”
“The most important takeway from this report for members of Congress is that you may not know it, but the aviation maintenance industry plays an important part in your state’s economy,” ARSA Executive Vice President Christian A. Klein said. “So, whether you’re reauthorizing the FAA, refining the tax code, changing trade policy or overhauling the regulatory system, lawmakers need to consider the impact on repair stations and their employees.”
Highlighting the hundreds of thousands of American workers involved in avatiion maintenance, Klein concluded: “We say it a lot, but it bears repeating: We can’t fly without them.”
The report’s executive summary, as well as a fact sheet illustrating U.S. state-by-state employment figures, can be found in ARSA’s economic data center at arsa.org/news-media/economic-data.
For more information – including live updates – on ARSA’s 2017 Legislative Day & Annual Repair Symposium, visit arsa.org/symposium.
Previously from ARSA...
March 16, 2016
With FAA reauthorization bills taking center stage on Capitol Hill, ARSA’s annual economic market assessment once-again highlights the impact of an often unseen part of the aviation industry: maintenance.
The 2016 Global Fleet & MRO Market Assessment prepared by Oliver Wyman was released March 16 at a Capitol Hill briefing. The event, conducted as part of ARSA’s annual Legislative Day, was headlined by House Aviation Subcommittee Member Carlos Curbelo (R-Fla.) and attended by aviation maintenance industry executives and congressional staff.
Steve Douglas, vice president of CAVOK, a division of Oliver Wyman, provided attendees with a maintenance industry overview and the findings of this year’s report. Douglas, a former manager of the FAA’s Aircraft Maintenance Division, noted that the total worldwide market for commercial aviation maintenance is expected to be nearly $68 billion in 2016. The industry, which currently employs 350,000 people worldwide, will approach $100 billion – four percent annual growth – by 2026.
For its part, the U.S. civil aviation maintenance industry employs more than 270,000 people and generates $43.1 billion in economic activity. In total, more than 3,800 American firms scattered through all 50 states perform maintenance, repair and overhaul services. The vast majority of these, close to 90 percent, are small-medium sized businesses employing 50 or fewer people.
“For policymakers the major takeaway from this report is that, although you may not know it, the aviation maintenance industry is part of your state’s economy,” ARSA Executive Vice President Christian A. Klein said. “There are important issues looming in the House and Senate FAA bills that will affect maintenance businesses and their hundreds of thousands of employees nationwide. Each member of Congress needs to pay attention and be mindful of the consequences.”
The report underscores that America is the global leader in this sector but highlights a variety of potential challenges coming over the next decade. Repair stations will have to manage continually increasing cost scrutiny from air carriers and other operators and find ways to leverage new technologies in materials, production, flight data and maintenance techniques.
“With the new generation aircraft coming into the global market over the next 10 years, MROs worldwide will need to adapt to new technology to maintain profitable margins,” Douglas said before the briefing. “Data sharing will become very important with new-generation aircraft and the self-monitoring of systems and components, resulting in gigabytes of data generated on each flight. Properly leveraged, this data is capable of alerting the operators and the MRO of the health of the aircraft systems.”
The report’s executive summary, as well as a fact sheet illustrating U.S. state-by-state employment figures, can be found in ARSA’s economic data center at arsa.org/news-media/economic-data
March 18, 2015
On Mar. 18, ARSA hosted a dual-premiere event on Capitol Hill to provide both visual and quantitative evidence for the importance of the aviation maintenance industry to American lives and livelihoods.
At a congressional briefing in the Rayburn House Office Building, Rep. Carlos Curbelo (R-Fla.) helped the association unveil You Can’t Fly Without Us – The World of Aviation Maintenance. The seven-minute documentary was developed as part of a series of informational public-television features and is intended to provide a foundational introduction to the work of the men and women who keep the world safely in flight.
The video can be seen on AVMRO.arsa.org, the aviation maintenance industry’s information portal.
After the screening, ARSA released the 2015 Global Fleet and MRO Economic Assessment, prepared by CAVOK, a division of Oliver Wyman. David Marcontell, CAVOK’s vice president, presented an overview of the report’s findings, noting that the total worldwide market for commercial aviation maintenance activity will surpass $100 billion by 2025. On American soil, Marcontell noted that the industry employs nearly 300,000 men and women and generates more than $43 billion in economic activity, while producing more than $5 billion in federal corporate and individual income taxes.
The full report, as well as a fact sheet illustrating U.S. state-by-state employment figures, can be found in ARSA’s economic data center at arsa.org/news-media/economic-data.
“Each year, [the Global Fleet and MRO Economic Assessment] continues to paint a clear picture of a complex, but vibrant industry,” Marcontell said before the event. “People across the world are becoming more connected with each other and demanding even more from the aviation industry to carry them and their products safely and cost-effectively around the globe. As air carriers and other aviation businesses respond to this demand, the already-dynamic aviation maintenance market will march right along in step.”
“The message here is pretty simple,” said Christian A. Klein, ARSA’s executive vice president. “Every single time you land safely, or pick a loved-one up at the airport, or have a package arrive on your doorstep, there’s a maintenance provider somewhere for you to thank. These repair stations, maintenance facilities and component shops – the businesses that ARSA represents every day – are part of a complex global network of services that are vital to our national and global economy. We can tell those stories in many different ways, and this report and our documentary make key points in the overall discussion: You can’t fly without us.”
March 12, 2014
ALEXANDRIA, VIRGINIA – The Aeronautical Repair Station Association (ARSA) and TeamSAI Consulting (TeamSAI) today released the 2014 Global MRO Market Economic Assessment. The study provides a 10-year forecast of the global air transport maintenance, repair, and overhaul (MRO) market and examines the aviation maintenance industry’s current economic and employment impact.
The report paints a picture of a vibrant $57.7 billion global commercial MRO industry that is expected to grow to $86.8 billion in the next decade. The study also finds that the commercial and business aviation MRO and parts manufacturing/distribution industries combined generate $44.4 billion in economic activity in the United States and employ 244,000 workers across the country. Other issues addressed in the report include the flow of trade between various regions and market conditions in specific maintenance sub-sectors (airframe, engine, component and line maintenance).
“For over 14 years now, TeamSAI has been proud of its role to quantify and clarify for MRO industry leaders the various opportunities and risks facing their businesses. This year is no exception, with significant analysis of repatriation opportunities for many airframe MROs as well as an in-depth analysis of cross-border MRO import/export flows,” said David A. Marcontell, TeamSAI president and COO.
“The report is a valuable new tool,” stated ARSA Executive Vice President Christian Klein. “It will help our members plan for the future, help the public better understand how repair stations fit into the economy, and help policymakers understand the economic implications of laws and regulations that affect repair stations.”
A state-by-state breakdown of the U.S. MRO industry is available here.
ARSA is an Alexandria, Virginia-based trade association that represents aviation maintenance and manufacturing companies. Founded in 1984, the association has a distinguished record of advocating for repair stations, providing regulatory compliance assistance to the industry, and representing repair stations on Capitol Hill and in the media. More information is available at www.arsa.org.
TeamSAI, Inc. is a leading aviation services firm known for its innovative yet pragmatic approach to the industry. Services include strategic and tactical consulting services, airline technical support services, and MRO data and benchmarking, specializing in operations and maintenance sectors. With its aviation centered vision of supporting the worldwide community of airline, airports, manufacturers, MROs, VIP completions and corporate/fractional operations, TeamSAI provides unique and customized solutions addressing the most challenging business issues.