Fewer aircraft hours flown and accidents have reduced demand for services
Los Angeles, CA (PRWEB) March 03, 2013
In 2013, the Aircraft Maintenance, Repair and Overhaul industry will continue to pick up the pieces in the recession's aftermath. Industry firms perform maintenance, repairs and overhauls (MRO) on aircraft, but demand for such services has been moderately volatile. During the recession, revenue was down 2.3% in 2008 and 8.6% in 2009. As the recession began to recede, revenue only grew a meager 0.6% in 2010 but increased a further 4.7% in 2011. Falling revenue over the past five years has resulted in greater consolidation among companies, strong competition and falling industry participation. The total number of industry establishments has decreased at an average annual rate of 1.5% to an estimated 8,758 during the five years to 2013. The industry has a low level of market share concentration. As a result, competition is high and there is no one market leader. “The nature of the industry means that mechanical workers can own their own company and perform the work themselves,” says IBISWorld industry analyst Lauren Setar. “A high number of nonemployers is another sign of its competitiveness and demonstrates the inability for a small number of companies to control the market.” The industry is maturing, and larger companies, such as major players General Electric Aviation, Boeing, General Dynamics and United Technologies Corporation, are looking for ways to expand their presence in the market through nonorganic growth.
Falling capacity among major airlines, a decline in the number of active aircraft and hours flown and a drop in recent aircraft accidents have resulted in less demand for Aircraft Maintenance, Repair and Overhaul industry services. “Additionally, as the total trade value decreases, producers demand less air transportation and, therefore, less MRO services,” adds Setar. Overall, IBISWorld estimates the recession's effects caused revenue to grow at an average annual rate of just 0.1% over the five years to 2013.
Although air travel will slightly recover, weaker prices stemming from strong competition will curb industry revenue growth. Because trends in MRO services are independent of scheduled maintenance and repairs, which must be performed regardless of demand due to government regulations, the industry's downturn was less significant compared with that of its major customers. MRO operators have grown in 2013, with revenue increasing 2.5% to $21.3 billion.
Although industry concentration will never be high because owner-operators comprise more than 70.0% of all companies operating in the industry, participation is projected to stagnate as strong competition offsets establishment growth through 2018. In the five years to 2018, establishment numbers are expected to fall. In light of these conditions, IBISWorld forecasts that revenue will grow in the five years to 2018. For more information, visit IBISWorld’s Aircraft Maintenance, Repair and Overhaul in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry provide support services, such as aircraft inspection and testing, ferrying aircraft between departure gates and taxiways, aircraft maintenance and repair, and aircraft and parts overhaul, to air transportation operators. The main industry services are commonly referred to as maintenance, repair and overhaul (MRO).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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