TURBULENCE AHEAD DISENGAGE THE AUTOPILOT 2015-2025 Middle East and Africa MRO Market Forecast by MRO

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Transcript of TURBULENCE AHEAD DISENGAGE THE AUTOPILOT 2015-2025 Middle East and Africa MRO Market Forecast by MRO

  • © Oliver Wyman

    AVIATION

    Andrew Medland

    Principal

    WEDNESDAY, FEBRUARY 3, 2016

    TURBULENCE AHEAD DISENGAGE THE AUTOPILOT 2015-2025 GLOBAL FLEET & MRO MARKET FORECAST

  • 1 © Oliver Wyman

    Oliver Wyman’s aviation practice integrated TeamSAI into CAVOK, our aviation technical consulting and services division

    • The largest consulting team dedicated to

    aviation and aerospace in the industry

    • Deep expertise across all areas of the

    aerospace value chain

    • Aviation industry insights and publications

    including: MRO Survey, Airline Economic

    Analysis Report, Industry Insights

    • Leading forecasting and benchmarking tools

    available at www.PlaneStats.com

    Aviation, Aerospace & Defense Practice

    • Due diligence

    • Post-acquisition implementation

    • New business design

    • Operational improvements

    • Materials strategies

    • Operational strategy and transformation

    • Facility design

    • Market strategy

    • Maintenance programs, engineering,

    reliability

    • Regulatory approvals

    OEM Strategy

    MRO Strategy

    Transaction Support

    Maintenance and Operations

  • Global Fleet &

    MRO Market Outlook

  • 3 © Oliver Wyman

    13,124 16,949

    21,089

    4,686

    5,753

    7,181

    3,396

    3,222

    2,906

    2,721

    3,079

    3,232

    23,927

    29,003

    34,408

    5.2%

    4.2%

    -1.0%

    2.5%

    4.5%

    4.5%

    -2.0%

    1.0%

    0

    5,000

    10,000

    15,000

    20,000

    25,000

    30,000

    35,000

    40,000

    2015 '15-'20 CAGRS

    2020 '20-'25 CAGRS

    2025

    Narrowbody Widebody Regional Jet Turboprop

    • Global fleet will grow on

    average 3.7% annually

    over the full forecast

    period

    • Passenger fleet expected

    to grow at 3.8% annually

    • Cargo fleet forecast to

    grow by 2.3% annually

    • Narrowbody aircraft will

    lead the growth

    • Regional jets will actually

    decline in the mix

    Key Fleet Forecast

    Growth Rates

    2015-2025 Global Fleet Forecast

    by Aircraft Class

    The global air transport jet and turboprop fleet will grow by more than 10,000 net new aircraft by 2025

    N u

    m b

    e r

    o f

    A ir

    c ra

    ft

    The growth outlook, however, varies widely from region to region

    3.9%

    3.5%

  • 4 © Oliver Wyman

    A 5 pt spread in regional growth rates leads to a significant share shift over the decade ahead

    The mature North American and Western European markets will continue to

    undergo significant refleeting efforts during the next 10 years

    2015

    Fleet Size

    722 North America

    Europe

    Latin America

    & the Caribbean

    Africa / Middle East

    Asia Pacific / China / India

    0.9%

    2.8%

    4.7%

    5.5%

    6.1%

    6,131

    1,720

    1,965

    997

    1,562

    5,235

    10YR

    CAGR

    2015- 2025

    Absolute Growth

    2,204

    7,420

    6,452

  • 5 © Oliver Wyman

    A 5 pt spread in regional growth rates leads to a significant share shift over the decade ahead

    The mature North American and Western European markets will continue to

    undergo significant refleeting efforts during the next 10 years

    2025

    Fleet Size

    North America

    Europe

    Latin America

    & the Caribbean

    Africa / Middle East

    Asia Pacific / China / India 6.1%

    7,420

    6,131

    1,720

    2,204

    6,452

    8,096

    2,717

    3,766

    11,687

    8,142

  • 6 © Oliver Wyman

    New Cargo Deliveries

    423

    New Passenger Deliveries

    18,068

    664

    Cargo Retirements

    7,346

    Passenger Retirements

    Passenger Fleet

    716

    P2F Conversions

    Cargo Fleet

    43% of all new aircraft deliveries will replace old technology aircraft over the forecast period

    The systematic elimination and replacement of older aircraft with new technology

    aircraft will drive significant change is the business for airlines and maintainers

  • 7 © Oliver Wyman

    New Cargo Deliveries

    423

    New Passenger Deliveries

    18,068

    664

    Cargo Retirements

    7,346

    Passenger Retirements

    Passenger Fleet

    716

    P2F Conversions

    Cargo Fleet

    43% of all new aircraft deliveries will replace old technology aircraft over the forecast period

    The systematic elimination and replacement of older aircraft with new technology

    aircraft will drive significant change is the business for airlines and maintainers

    10,481 Net Growth

  • 8 © Oliver Wyman

    2025 Global Air Transport Fleet

    by Vintage

    2015 Global Air Transport Fleet

    by Vintage

    The significant move towards late generation aircraft, in addition to improving airline

    costs, will undoubtedly impact MRO dynamics

    The result is a staggering change in fleet mix by 2025

    1970's 2%

    1980's 26%

    1990's 63%

    2000's 9%

    1970's 0.1%

    1980's 9%

    1990's 46%

    2000's 16%

    2010's 29%

  • 9 © Oliver Wyman

    22% 19% 17%

    42% 45% 47%

    19% 18% 19%

    18% 18% 18%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    2015 2020 2025

    Airframe Engine Component Line

    $14.5 $15.9 $16.7

    $27.9 $37.1

    $46.8 $12.4

    $15.2

    $19.2

    $12.3

    $15.0

    $17.8

    $67.1

    $83.2

    $100.4

    1.9%

    5.9%

    4.1%

    4.0%

    1.0%

    4.8%

    4.7%

    3.5%

    $0

    $20

    $40

    $60

    $80

    $100

    $120

    2015 '15-'20 CAGRS

    2020 '20-'25 CAGRS

    2025

    B il

    li o

    n s

    Airframe Engine Component Line

    Global MRO Market Share Forecast

    by MRO Segment

    Global MRO Market Size Forecast

    by MRO Segment

    The fleet dynamics of the period result in a forecast that tops $100 billion by 2025, a 4.1% average annual growth rate

    2 0

    1 5

    D o

    ll a

    rs (

    $ U

    S B

    )

    M a

    rk e t

    S h

    a re

    Airframe Heavy Maintenance costs improve with the new technology while both

    Engine and Component sectors will take a larger share

    4.4%

    3.8%

  • 10 © Oliver Wyman

    Shadowing the fleet trends, large differences in regional growth rates will lead to a significant shift in MRO demand

    Asia/Pacific, China, & India will be challenged to build the necessary infrastructure

    capable of handling the volume of MRO the combined region will demand

    2015

    MRO Spend ($USB)

    $1.3 North America

    Europe

    Latin America

    & the Caribbean

    Africa / Middle East

    Asia Pacific / China / India

    0.6%

    3.3%

    7.3%

    5.5%

    6.6%

    $17.9

    $3.2

    $7.0

    $3.3

    $5.3

    $16.5

    10YR

    CAGR

    2015- 2025

    Absolute Growth ($USB)

    $7.5

    $18.3

    $20.0

  • 11 © Oliver Wyman

    Shadowing the fleet trends, large differences in regional growth rates will lead to a significant shift in MRO demand

    Asia/Pacific, China, & India will be challenged to build the necessary infrastructure

    capable of handling the volume of MRO the combined region will demand

    2025

    MRO Spend ($USB)

    North America

    Europe

    Latin America

    & the Caribbean

    Africa / Middle East

    Asia Pacific / China / India 6.6%

    $20.0

    $17.9

    $3.2

    $7.5

    $18.3

    $21.3

    $24.9

    $6.5

    $12.8

    $34.8

  • Middle East and Africa Fleet &

    MRO Market Outlook

  • 13 © Oliver Wyman

    Passenger traffic is soaring in the Middle East surpassing 11% growth in the last year. Traffic growth in Africa has remained mostly flat

    2015 PASSENGER TRAFFIC (RPK)

    GROWTH

    11.1%

    2015 CURRENT FLEET

    2,204

    2,100+

    2015-2025 AIRCRAFT DELIVERIES

    800+

    2015-2025 AIRCRAFT RETIREMENTS

    +5.5%

    2015-2025

    FLEET CAGR

  • 14 © Oliver Wyman

    In 10 years, over 42% of the Middle East and Africa fleet will be new technology aircraft requiring new technical skills and capabilities

    777

    737NG/MAX

    A320C/NEO

    737CL

    A330

    767

    747