Commercial Aviation: Asia PacificCommercial Aviation: Asia Pacific Fleet & MRO Forecast MRO Asia...

Commercial Aviation: Asia PacificFleet & MRO Forecast

MRO AsiaSeptember 2020

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Intelligence & Data Services | Aviation Week Network

For more information, contact:

Paul Burton

Managing Director, Asia

[email protected]

+65 9182 3480

Information Classification: General

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Asia Pacific Europe Middle East United States World

Global Economy

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Global Financial Crisis COVID-19

The economic downturn caused by COVID-19 will be significantly worse than after the 2008 financial crisis

Unlike after the global financial crisis, GDP is expected to contract in all global regions.

Source: IMF

• Downturn is projected to be significantly worse than the one which followed the Global Financial Crisis

• Global GDP is expected to contract by between 4-6% in 2020

• Extent of the economic impact varies by region but all will see GDP fall.


Utilization – The beginnings of a recovery?

Note: Day-on-day % change, 7-day average utilization rate through end of August

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Seven day average of growth in flight hours suggests Chinese, European and US utilization has made steady gains since late April but recovery remains tentative

Rate of decline in US and European utilization reached

its peak in late March

US and European utilization has seen a steady recovery

since late April.

Chinese utilization saw a recovery in mid-to-late February but has

plateaued since that time

Large increase in European utilization in early July driven

by LCCs.

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Source: Flight Tracking Data, Aviation Week Intelligence Network, Copyright 2020


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2015 2016 2017 2018 20192020 (f)2021 2021 2021 2021 2021 2021 2021 2021 2021 2021

Aircraft

Forecast2.4% CAGR 2021-30

2.9% CAGR 2015-19

Aviation Week Network Forecast

In-Service Fleet - Analysis

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Annual count of active commercial aircraft, historical & forecasted

Source: 2021 Commercial Aviation Fleet & MRO Forecast, Fleet Discovery, Aviation Week Network, Copyright 2020.

• 2.4% CAGR expected after 2.9% historical fleet growth.

• In-service fleet in 2020 is expected to fall to 27,370 aircraft – below 2015 levels - losing 3,200 aircraft vs. 2019.

• Narrowbodies are key growth driver over decade.

Fleet increases from 27,370 in 2020 to

38,300 in 2030


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2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

% Active# Retirements

Aircraft Retirements - Analysis

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Annual retirements historical & forecasted

Source: 2021 Commercial Aviation Fleet & MRO Forecast, Fleet Discovery, Aviation Week Network, Copyright 2020.

2015-20 Average = 668

Forecast2021-30 Average = 917

• Retirements peak in 2020 at 719.

• Retirement projections continue to increase peaking at 1,122 in year 2028.

• Historic high percentage of fleet rates dominate the decade.

• Used spare parts/green time engines will flood markets for popular legacy types depressing pricing.

• ~2,060 737s, ~1,951 A320s retiring in next 10-years.

~9,400 retirements over 10-years



New Deliveries - Analysis

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Annual deliveries historical & forecasted

Source: 2021 Commercial Aviation Fleet & MRO Forecast, Aviation Week Network, Copyright 2020.

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• 16,200 new deliveries over 10-years.

• Deliveries 30% lower than previous expectations.

• Narrowbodies lead recovery efforts, 71% share.

Narrowbody71%

Widebody16%

Regional Jet7%

Turboprop6%

2021-30 Share of Deliveries



Most valuable programmes, 2021-2030 – by family

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A330ERJ170/190

A220

767

747

ATRA380

C919

DHC-8

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MRO Demand (billions)

$2 trillion worth of aircraft to be delivered over the next decade with $1 trillion spent on MRO

Boeing 737Retail value: $563 billionMRO demand: $203 billion

Airbus A320Retail value: $613 billionMRO demand: $259 billion

Airbus A350Retail value: $267 billionMRO demand: $47 billion Boeing 787

Retail value: $267 billionMRO demand: $88 billion

Boeing 777Retail value: $140 billionMRO demand: $129 billion



-$10.0

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$70.0

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2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Engine Maintenance $30.2 $35.6 $36.7 $41.7 $39.7 $43.9 $43.3 $43.5 $43.3 $46.5

Line Maintenance $16.3 $17.3 $18.0 $18.2 $18.4 $18.6 $18.8 $18.9 $19.0 $19.2

Components $13.8 $15.5 $16.8 $17.5 $17.8 $18.2 $18.6 $18.7 $19.2 $19.5

Modifications $5.2 $5.6 $6.1 $6.4 $6.9 $6.8 $6.6 $6.6 $6.5 $6.4

Airframe Heavy $5.6 $4.9 $4.5 $5.5 $5.3 $4.3 $5.6 $5.0 $4.7 $6.4

Pre-Covid Forecast $87.3 $87.9 $93.6 $92.7 $95.1 $97.3 $99.3 $100.3 $106.8

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MRO Demand - Analysis

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MRO aftermarket and the impacts from the pandemic


Pre-COVID-19 Forecast

MRO Demand CAGR 2021-30:3.6%

Pre-COVID vs, COVIDMRO Demand 14% lower,

$36.6 billion across 2021-23

• MRO grows at 3.6% CAGR 2021-30, worth $878 billion.

• Engine MRO demand is $405 billion over decade and grows the fastest at 4.9% CAGR.

• Component demand grows at 3.9% CAGR, $175 billion demand.

Total MRO Demand

Line Maintenance

Modifications

Airframe Heavy

Components

Engine Mainenance

21%

7%

6%

20%

46%


Engines

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In-service fleet trends by engine size category


• Engine fleet claws back at 2.2% CAGR.

• The key driver of growth, narrowbody engines, grows at 3.8% CAGR.

• Narrowbody engines comprise a 61% fleet share by 2030.

• LEAP surpasses CFM56 by 2029. -

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Turboprop Regional Jet Widebody Narrowbody

Engine Fleet increases from 65,260 in 2020 to

79,250 in 2030

2.2% CAGR Forecast2021-30


Engine MRO

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MRO service events (overhauls vs. LLPs), demand and trends


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ATA 72 Engine Overhauls ATA 72 Engine LLP ATA 72T Engine Overhauls - Turbo ATA 72T Engine LLP - Turbo

116,000 Engine Service Events3.9% Event CAGR 2021-30

• Demand grows at above average 4.9% CAGR.

• $405B in demand is expected.

• Engine MRO comprises 46% of all MRO demand.

• Nearly 116,000 engine service events needed over the decade.

• Turbofan LLP events grow at 5.6% CAGR.

$405 billion in $ Demand4.9% Dollar Demand CAGR

Total MRO Events

ATA 72T Engine LLP

ATA 72T Engine Shop Visit

ATA 72 Engine LLP

ATA 72 Engine Shop Visit

4%

15%

19%63%


Heavy Airframe Demand

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Heavy airframe maintenance demand will be driven by the timing of checks when aircraft return to service.


• $52 billion will be spent on heavy airframe maintenance by operators over the next decade.

• Around 46% of demand relates to maintenance on the Airbus A320 Boeing 737.

• COVID-19 groundings have created a bow-wave of calendar checks which will drive short term demand.

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A320 737 777

747 A330/340 787

767 ERJ170/175/190/195 A350

A380


Storage

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Aircraft Returning from long-term storage post-pandemic


• Around half of the aircraft stored in the early stages of the pandemic are expected to return to service by 2023.

• Through the first three years of the forecast, a total of over 2,200 aircraft are expected to return from storage.

• Over half of the aircraft returning from storage in the forecast period will return by the end of 2021.

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Single Aisle Twin Aisle Regional Turbofan Turboprop

Long range widebody fleet will see the slowest return to service with aircraft gradually leaving storage over the next five years.


Asia-Pacific 2021-2030:Regional MRO Marketcompared to Global Market

13Source: 2021 Commercial Aviation Fleet & MRO Forecast, Aviation Week Network, Copyright 2020.

24% in APAC

27% in APAC

28% in APAC

24% in APAC 26% in

APAC

APAC ISF growth x 2

APAC MRO growth x 1.5


Asia-Pacific 2021-2030:Fleet and MRO Demand: Regional Markets



Asia-Pacific 2021-2030:Fleet Forecast



Asia-Pacific 2021-2030:MRO Events



Asia-Pacific 2021-2030:China Fleet Forecast



Asia-Pacific 2021-2030:China MRO Forecast



Asia-Pacific 2021-2030:Vietnam Fleet Forecast




Asia-Pacific 2021-2030:Vietnam MRO Forecast


Asia-Pacific 2021-2030:South Korea Fleet Forecast



Asia-Pacific 2021-2030:South Korea MRO Forecast



Asia-Pacific MRO:Key Observations


• Heavy maintenance revenues falling faster than projected

• Drop in demand as technology improves

• Bustling marketplace, lower labour costs and service charges from cheaper market entrants mean that quality and innovation are critical

• Workload balance changing….but will the new revenue blend last?

Commercial AviationFleet & MRO Forecast

24

Intelligence & Data Services | Aviation Week Network

Date post:	25-Sep-2020
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