On-time parts availability will remain key challenge for MRO companies

One of the most important aspects of an airline's operation is aircraft and component maintenance. This is a mandatory and strictly controlled activity that ensures flight operations are safe while it also accounts for a sizable portion of operator costs.

Maintenance for passenger and freighter aircraft is quite similar, but freighters require special maintenance around the cargo door, floor, cargo loading system and some electrical mechanisms. Most major maintenance, repair and overhaul (MRO) companies worldwide have adapted to offer maintenance services for all aircraft types, including freighters. The dashboard below shows the global locations where freighter aircraft are undergoing some type of maintenance. Clicking on a single location will list the aircraft type and quantity by operator.

Source: CH Aviation, as of March 9, 2022

Taipei, Miami, Singapore and Mobile (Alabama) currently hold the highest number of aircraft under maintenance. This information matches the quantity and size of MRO companies located at those airports, such as Evergreen Aviation Technologies (EGAT) and Taiwan Aircraft Maintenance and Engineering (TAMECO) in Taipei or Airbus and Safran in Mobile. All these businesses are set to witness significant growth over the next decades, but they are facing an uncertain landscape to succeed and achieve operational and financial targets. The question is: How will current MRO challenges affect the global freighter fleet?

The ongoing war in Ukraine has raised concerns about potential supply chain and material vulnerabilities. Russia is one of the world’s largest suppliers of raw materials such as nickel, copper, aluminum and titanium. Prices for these commodities have soared in the past weeks because of sanctions and trade bans imposed by Western countries; meanwhile, aerospace companies worldwide have expressed concerns regarding the dependency on Russian resources.

Russian-based VSMPO-AVISMA is the largest global producer of titanium, a key metal used in the aerospace industry. They are also the largest titanium supplier for Boeing as it is used for parts in most of their airplanes. Titanium is critical in engine parts and airframe structures while titanium accounts for about 15% of the airframe by weight in newer generation aircraft, such as the Boeing 787 and Airbus A350. Boeing has suspended purchases of titanium from Russia but the manufacturer has stated that “its inventory and diversity of titanium sources provide sufficient supply for airplane production.” The potential future shortage of titanium won’t likely affect the delivery of freighters since older generation airplanes don’t rely heavily on this metal.

Nickel is another metal widely used in the aerospace industry to manufacture discs, turbine blades and other critical aircraft engine parts. Some aircraft components such as heat exchangers, APUs or exhausts also use this metal because of its ability to maintain strength and corrosion resistance under high-temperature conditions. Most engine parts for older-generation aircraft, including the 767 and 747 freighters, are made up of some type of nickel alloy. Russia is not the largest producer of nickel but the price of this metal saw a 70% jump this week and reached a record of $100,000 a tonne , putting pressure on aerospace suppliers. Freighter operators will likely be more impacted by the nickel price soar than the availability of titanium. However, the current situation is leading to significant reconsiderations of essential supply chains across multiple industries.

Supply chain disruptions in 2021 caused delays in getting parts on time to locations across the globe. The industry moving from a steady-state production strategy to a build-upon-demand model requires a high level of supply chain and inventory management agility. Managing the complexities of getting parts where they need to be on time remains the primary issue around MRO companies, and these corporations are rethinking their approach around inventory management and how they move parts between MRO facilities at the right time. Converted freighters are often made of older airframes, engines and components, and this leads to a higher number of non-routine maintenance events as material properties weaken over time due to the stress of normal operation and systems utilization. Rapid access to critical spares will remain the top challenge faced by freighter operators in the short term.

On-time parts availability will remain key challenge for MRO companies

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