EXPECTED CHANGES COMING TO MRO INDUSTRY IN FALL 2018

EXPECTED CHANGES COMING TO MRO INDUSTRY IN FALL 2018

Aviation and aircraft maintenance can expect some (possible) big changes in the fall. In a positive light, aviation and aircraft capacity has tightened considerably. However, the downside to this positivism is the possibility of higher fuel prices, which could cut back traffic growth and cause older-jets with higher maintenance requirements to sit parked.

CAPACITY

Within the last ten years, we have seen excess capacity becoming more and more consumed. It is said that pretty soon it will be hard for operators to find slots. This change will lead to an increase in MRO pricing. This is because higher prices will encourage overtime work, higher wages and investments in capacity and long-term commitments to shops. Rumor has it that this summer is delaying the capacity effect, but come fall and winter operators will struggle to find open slots.

OIL

In regards to change in fuel, Brent crude prices are pushing towards $80 per barrel. While the change is not expect to happen in the short-term, significant fuel price increases are predicted and could have high effects on costs, fares, traffic and fleets. This is due to oil being more than 30% higher than it was in 2017. Not to mention, it has doubled in costs over the past two tears.

Projections suggest that a 30% boost in oil cost, which is 17% of airline operating costs, will increase expenses by 5%, which must either come out of company profits or increased fare.

Oil prices and changes with fuel costs will be fully seen sometime in fall 2018.

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