A rise in commercial flights will boost demand for aircraft maintenance and associated parts
Los Angeles, CA (PRWEB) August 23, 2013
The Aircraft Parts Distributors industry has performed erratically over the five years to 2013; however, recent stabilization in revenue is expected to result in 0.3% annualized growth through the period. Although the recession reduced the level of aircraft repair and maintenance needed, several other factors contributed to fluctuating demand. “Federal funding for defense, one of the largest sources of revenue for industry operators, has declined over the past five years,” says IBISWorld industry analyst Deonta Smith. “Additionally, the number of domestic trips by US residents also dropped during the recessionary years.”
Beginning in 2008, demand for aircraft parts fell and revenue became volatile for many industry players. As a result, participants sought to lower operating costs to stabilize fluctuations in profit and offset losses from suppressed inventory prices. "Cutbacks consisted of reductions in operators' workforces; consequently, the total number of employees decreased at an average annual rate of 1.3% to 24,475 in the five years to 2013. “Simultaneously, the federal government cut funding for defense, resulting in fewer parts distributed to the military for aircraft repair and maintenance,” adds Smith. However, following dramatic drops in demand in 2008 and 2009, the industry experienced considerable growth in demand as manufacturers' operating costs fell, resulting in lower aircraft parts and component prices for distributors. As a result, revenue for the Aircraft Parts Distributors industry is expected to grow 2.4% to $30.8 billion in 2013.
In the next five years, the industry is forecast to perform better than in the past five. A boost in commercial flights will benefit industry distributors; increased domestic trips by US residents will ultimately result in higher demand for commercial aircraft repair and maintenance. This trend is expected to stabilize growth in aircraft parts distribution activity and eventually help reduce revenue volatility.
Furthermore, market share concentration will likely increase in the next five years as small companies serving niche markets face competition from larger established operators. In the five years to 2018, the number of aircraft parts distributors is forecast to fall slightly as larger companies stabilize and acquire these smaller operators to gain economies of scale. The industry currently exhibits a low level of market share concentration and is mainly composed of small warehouses, local suppliers and family-owned operations (mostly servicing the general aviation market segment). As a result, 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. 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.
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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