A rise in commercial flights will boost demand for aircraft maintenance and associated parts
New York, NY (PRWEB) March 12, 2015
Over the past five years, the Aircraft Parts Distributors industry has struggled to fully recover from the recession. Industry operators distribute aircraft parts, engines, components, supplies and sometimes even complete planes and helicopters. Following the recession, the economic recovery led to increased air travel. As a result, commercial aircraft utilization climbed, causing aircraft wear and tear. This, in turn, increased demand for replacement parts and related distribution services. Moreover, aircraft production also climbed, increasing demand for distribution services from manufacturers. Increased international air travel also aided demand for industry services and specifically drove demand for exports.
However, the industry's recovery was stifled by a number of factors. For instance, the size and age of the US aircraft fleet decreased, reducing the need for replacement parts. Moreover, the stripping down of older aircraft flooded the market with used surplus goods, which reduced the value of inventories and increased competition from surplus dealers. According to IBISWorld Industry Analyst Maksim Soshkin, “Combined with increasing wholesale bypass and increased internal competition, industry revenue growth slowed, and profitability was squeezed.” In addition, operators had to deal with decreased demand from the military as the United States reduced combat operations and defense spending. Therefore, in the five years to 2015, industry revenue is expected to increase slightly.
IBISWorld estimates that the Aircraft Parts Distributors industry exhibits a low level of market share concentration, with the top four companies absorbing less than 15.0% of total industry revenue in 2015. The other portion of the industry is composed of small warehouses, local suppliers and family-owned operations (mostly servicing the general aviation market segment). Because there is a small degree of market share concentration, small operators are able to win business by forging relationships with downstream customers in their geographic location; however, these companies rarely expand beyond those bounds. On the other hand, the industry's larger players have increased consolidation over the past five years. “Competition with manufacturers, airlines wishes to deal with less distributors and demand for efficiency have forced operators to undergo mergers and acquisitions,” says Soshkin.
Over the five years to 2020, industry revenue is forecast to climb marginally. Continued economic growth is projected to drive air travel traffic higher, resulting in heavier aircraft utilization and larger fleets. As a result, demand for aircraft parts and distribution will climb. Similarly, distributors will be able to export more parts as international air travel increases. However, operators will have to continue contending with increasing competition and pressure from ever-larger customers. Consequently, operators are anticipated to continue consolidating in order to gain economies of scale and scope. Moreover, demand for industry services will be tempered by an increasingly younger aircraft fleet, which will require fewer replacement parts.
For more information, visit IBISWorld’s Aircraft Parts Distributors in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry sell a range of original equipment manufacturer (OEM), non-OEM and aerostructure components (including fuselage, wings and flight control surfaces) used in the maintenance and repair of aircraft to commercial, freight and defense customers. Distributors offer all aircraft parts and typically also sell finished aircraft or offer aircraft repair and maintenance services.
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