28 Feb 2025

How Supply Chain Challenges Are Impacting Aircraft Maintenance and Repairs

The global aviation industry is currently navigating a complex landscape marked by significant supply chain disruptions. These challenges have led to delays in acquiring essential aircraft parts, adversely affecting maintenance schedules and escalating operational costs for airlines worldwide. As the industry strives to meet burgeoning travel demand, understanding the root causes and potential solutions to these supply chain issues is paramount.

Escalating Supply Chain Disruptions

In recent years, airlines have grappled with constrained capacity due to supply chain and technical challenges, which have impacted their ability to meet soaring demand. Boeing's regulatory and production issues, compounded by the COVID-19 pandemic, have led to significant delivery delays affecting airlines like Ryanair and Emirates. Additionally, engine durability issues, particularly with Pratt & Whitney and Rolls-Royce, are causing widespread aircraft groundings, further complicating airline operations.

The International Air Transport Association (IATA) has highlighted that these supply chain issues are frustrating airlines with a triple impact on revenues, costs, and environmental performance. Load factors are at record highs, and there is no doubt that if more aircraft were available, they could be profitably deployed. However, the ageing fleet that airlines are using has higher maintenance costs, burns more fuel, and requires more capital to keep flying. On top of this, leasing rates have risen more than interest rates as competition among airlines intensifies the scramble to find every way possible to expand capacity.

Impact on Aircraft Maintenance and Repairs

The ripple effects of these disruptions are acutely felt in aircraft maintenance, repair, and overhaul (MRO) operations. Engine manufacturers like General Electric (GE) and Rolls-Royce are reporting significant challenges in meeting demand for engine repairs. The industry has seen wait times for engine repairs surge by 150% for modern engines and 35% for older models. This surge is a result of several factors, including ongoing supply chain disruptions, an increase in fleet utilisation, and parts shortages.

Airlines are forced to extend the lifespan of their current fleets, increasing demand for MRO services. This increased demand creates a shortage of used serviceable parts and engines. The MRO industry is grappling with ongoing supply chain disruptions caused by the global pandemic, geopolitical tensions, and raw material shortages. These disruptions have delayed the availability of essential parts and components, leading to longer turnaround times and increasing operational costs.

Financial Implications for Airlines

The financial ramifications of supply chain disruptions are profound. Airlines are incurring higher operational costs due to increased maintenance requirements and the necessity to lease additional aircraft to cover grounded fleets. The IATA projects that severe supply chain issues will continue to impact airline performance into 2025, raising costs and limiting growth. The average age of the global fleet has risen to a record 14.8 years, a significant increase from the 13.6 years average for the period 1990-2024. Aircraft deliveries have fallen sharply, with the estimate for 2024 deliveries at 1,254 aircraft, a 30% shortfall from what was predicted.

Despite these challenges, the industry is expected to reach a historic milestone with revenue of $1.007 trillion in 2025, up from a projected $964 billion in 2024. This growth is driven by strong travel demand, but supply chain issues are limiting growth opportunities and driving up several cost areas, including aircraft leasing and maintenance.

Strategic Responses and Mitigation Measures

In response to these challenges, industry stakeholders are adopting several strategies:

• Diversifying Supply Chains: Airlines and MRO providers are exploring partnerships beyond traditional suppliers to ensure a steady flow of parts and materials. This includes engaging with multiple suppliers to mitigate the risk of single points of failure.
• Investing in Predictive Maintenance: The adoption of artificial intelligence (AI) and big data analytics enables predictive maintenance, allowing for the identification of potential issues before they lead to significant problems. This proactive approach reduces downtime and enhances operational efficiency.
• Enhancing Workforce Training: Addressing labor shortages by investing in workforce development is crucial. Training programs aimed at upskilling technicians and engineers ensure that the industry can meet the increasing maintenance demands.
• Extending Aircraft Leases: To maintain capacity, airlines are extending leases on existing aircraft and, in some cases, leasing older models to bridge the gap caused by delivery delays. This approach helps in managing fleet availability amidst production shortfalls.

Acumen Aviation's Role in Navigating Supply Chain Challenges

As a leading asset manager in the aviation industry, Acumen Aviation offers a comprehensive mix of consultancy, advisory, and asset management services, complemented by digital products tailored for owners, investors, and lessors of commercially operated aircraft. In the face of current supply chain disruptions, Acumen's expertise is invaluable in several ways:

• Asset Management: Acumen's extensive experience in managing diverse aircraft portfolios enables clients to optimize fleet utilization, ensuring that maintenance schedules are effectively managed despite parts shortages.
• Advisory Services: Providing strategic guidance on navigating supply chain complexities, Acumen assists clients in making informed decisions about fleet expansion, aircraft leasing, and maintenance planning.
• Digital Solutions: Through platforms like SPARTA (Strategic Planning and Real-Time Analytics), Acumen offers tools that enhance operational efficiency, allowing clients to monitor fleet performance and anticipate maintenance needs proactively.

In these challenging times, partnering with Acumen Aviation equips stakeholders with the insights and tools necessary to mitigate the impacts of supply chain