Aircraft Maintenance, Repair, & Overhaul Industry …

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2 2. Industry 1 Globally and North 4 3. Occupational North North Carolina Military North Carolina Non-Military Aviation maintenance 4. SWOT 5. Appendix This material is based on work supported by the US Small Business Administration (SBA). Any opinions, findings, conclusions, or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA. North Carolina Aircraft maintenance , Repair, & Overhaul Industry Analysis 1.

3 Introduction The North Carolina Small Business and Technology Development Center (SBTDC) has conducted this Industry analysis to determine the feasibility of strengthening and expanding the Aircraft maintenance , repair, and Overhaul (MRO) Industry within the State of North Carolina. This preliminary Industry analysis identifies and details the key information that will assist in determining the potential for future statewide growth within this Industry . Specifically, this report addresses: Current trends in the Aircraft maintenance , repair, and Overhaul (MRO) Industry at the national and state level Strengths and weaknesses of the local Aircraft MRO Industry and comparisons with other states Current trends in occupational certification, labor demand, and the availability of skilled workers within North Carolina Potential opportunities and risks associated with investing in and promoting this Industry within North Carolina.

4 2. Industry Overview Globally and Nationally Importance of the Commercial Jet MRO Sector The Aircraft maintenance , repair, and Overhaul Industry , generally referred to as the MRO market , grew out of the early 1970 s trend of airlines committing technicians lying idle between in-house jobs, to performing third-party contracted repairs. The airlines were motivated by the prospect of drawing profits and productivity out of an underutilized resource. Today, the MRO market for North America alone stands valued at $ billion (2001), with revenues projected to increase to $ billion by The commercial jet transport market is the largest of what might be described as six core market segments comprising the MRO Industry as a whole.

5 These six core segments include: major airlines, regional airlines, & air taxi/charter services ( commercial jet transport ); independent maintenance , repair, & Overhaul stations; in-house corporate flight departments; military/government repair facilities; FBOs (fixed base operators- independent full-service vendors offering repair services, maintenance , fuel, flight instruction, and Aircraft sales, in addition to providing charter services); and flight/ Aircraft mechanic schools & training facilities. In a 2002 survey of 679 aviation maintenance professionals, more than one-third reported being employed by a 1 Frost and Sullivan Consulting.

6 (April 2002). North American Commercial and Military Aircraft and Engine maintenance , Repair, and Overhaul figures cited in: Lack of trained technicians leaves MRO markets up in air. (2002, April 5). Journal of Aerospace and Defense Industry News. (AEROTECH online edition). Access this article at: . 1 major or a regional airline, while five percent reported working for an air taxi/charter The commercial jet MRO market is estimated to be a $ billion market worldwide (early 2002 estimate).3 Analysts predict steady growth in the commercial jet transport MRO market over the next ten years.

7 Adopting a conservative, slow growth outlook, the commercial segment is forecasted to grow just under annually for the next five years (2002-2007), followed by for the succeeding five-year period (2007-2012).4 This would give rise to a $ billion Industry by 2012, with the worldwide fleet of Aircraft estimated to reach 21,534 (a increase from the current estimated fleet of 14,898 commercial jets in active use). The fast growth scenario (high GDP growth with optimal conditions) projects the commercial jet market to grow about over the next five years, followed by 4% for the succeeding five-year period, resulting in a $ billion Industry by In the near term, the Industry has seen a decline in the wake of the tragedy of September 11, 2001.

8 The commercial jet MRO market can be divided into four segments: heavy maintenance visits & major modifications or retrofits ( HMV/mods ); engine Overhaul ; component Overhaul ; and regular line maintenance . Analysts BACK Aviation Solutions, in conjunction with Strand Associates, Inc. (SAI), preeminent MRO market consultants, report a decline in all four segments to-date. A breakdown by segment appears below. Commercial Jet MRO Market Segments Early 2001 ($bil.) Early 2002 ($bil.) %Change from previous year HMV/mods $ $ Overhaul $ $ Overhaul $ $ maintenance $ $ = $ $ Source: BACK & SAI 2001 and 2002 MRO Forecasts.

9 Overhaul & maintenance . The recent decline followed by the popular prediction of a market turnaround by 2005 is in keeping with the cyclical nature of the MRO Industry . The level of maintenance and repair work is dependent upon several factors, including the number of hours an Aircraft has flown, the number of days since its last inspection, and rotating cycles of The number of Aircraft permanently retired ( in the desert as the saying goes, owing to the fact that older Aircraft are frequently parked in long-term desert storage facilities like that in Mojave, California) is also a determinant of maintenance activity.

10 Many of the planes within this desert fleet will either remain permanently parked, become a source for spare parts, or be sold to lesser developed 2 Kocks, Kathleen, Contributing Ed. (2002, July 1). 2002 Aviation maintenance Salary Survey. Aviation maintenance . (Online edition). Access this article at: +the+trumpets&SourceQueryZip=%28%28%28as w%2 Cavn%2 Carfn%2 Ccran%2 Chn%2 Cwaw%29%3 Cin%3 Epublication%29%3 Cor%3E%28%28%27www%2 Eaviationtoday%2 Ecom%27%3 Cin%3 Evdkvgwkey%29%29%29&Collection=sites&Col lection=archive&SortSpec=&.