The global economic slowdown has reduced the defense budgets of most leading spenders in the world, including the US, France, Germany, and the UK. These countries have cut back their spending on various defense sectors such as space, aircraft, and military vehicles. However, these budget cuts have propelled the military aviation MRO industry as countries now prefer to maintain, repair and upgrade their existing fleet instead of buying new equipment. High growth markets such as India and China have been formulating continuous programs to enhance their military aviation MRO sector, with the US too focusing on maintaining their existing fleet. This trend is also evident from the fact that even a small market like Africa is expected to show positive growth during the forecast period.
What are the key drivers behind recent market changes?
The last decade has witnessed wars in Iraq, Afghanistan, Serbia and Libya which were primarily carried out by aerial attacks. Countries have been relying primarily on air power because it enables them to respond quickly to distant threats while putting relatively few lives at risk. However, this constant use has resulted in rapid aging and wearing out of the military aircraft fleet of the US and coalition allies, who are now spending considerably on their maintenance, repair and upgrading. The US, which is the highest spender on military MRO globally, is currently facing a combined problem of the rising age of many of its combat aircraft and delays to the F-35A fighter aircraft fleet. In spite of budget cuts and with a view of mitigating these problems, the government has decided to increase its spending on military aircraft MRO. Moreover, global spending is also expected to increase as the worldwide military fleet will only get older and the cost of replacing them is far greater than the cost of their MRO.
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Report Details:
No. of Pages: 178
What makes this report unique and essential to read?
“The Global Military Aviation MRO Market2012-2022” provides detailed analysis of the current industry size and growth expectations from 2012 to 2022, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
Key Features and Benefits
Detailed Market Analysis.
The report provides detailed analysis of the market for military aviation MRO during 2012-2022, including the factors that influence why countries are investing or cutting defense expenditure. It provides detailed expectations of growth rates and projected total expenditure.
The Main Providers in the Industry.
Lockheed Martin, Boeing, BAE Systems, DynCorp International, Pratt and Whitney, Honeywell International, EADS, SAAB, Thales, Northrop Grumman, General Dynamics, Raytheon, Elbit Systems, Rolls Royce, Embraer SA.
Market Entry Opportunities and Entry Strategies.
The military aviation MRO market is highly fragmented with many companies. With the total amount spent on military MRO being more than the amount spent on new aircraft production, many companies are vying for a share in this lucrative market and this has led to countries outsourcing most of their MRO contracts. Potential areas of cooperation with third-party MRO firms include issues with obsolescence in avionics for regular upgrades in software, training, calibration of test set-ups, aging studies and radio frequency identification (RFID). North America outsources approximately 50% of its military aviation MRO contracts and the Indian Air Force is also looking to outsource most of its MRO requirements to privately-owned companies in the country. This is primarily because it deals with issues such as a large mixed fleet, inadequate spares and support, high attrition of skilled manpower and obsolete equipment.
Key Market Issues
Joint programs expected to increase over the forecast period.
A significant number of countries are investing in the development of their domestic military aviation MRO capabilities by establishing strategic alliances and technology transfer agreements with established global manufacturers. In addition to improving the indigenous capabilities of a domestic firm, this provides foreign companies with an opportunity to cater to a new market. This is especially true in today’s economic scenario when companies are looking to maximize efficiencies and cut costs.
High taxes hamper indigenous growth in some countries.
In some countries in Asia-Pacific and Latin America laws do not favor indigenous MRO third party providers including customs duty on the import of spares affecting the industry in India. Aircraft components are mostly imported by service providers and usually incur a customs charge at the rate of 25.40% with it going up to 100% for some equipment. The current rate of indirect taxes on other MRO activities is also quite high, making them uncompetitive as customs duty is exempt on parts imported for MRO of aircraft subject to specified conditions which, if not satisfied, would impose customs duty in the range of 19% to 27% on the imported parts.
Lack of skilled personnel.
Though the global military aviation MRO industry is rising, it is currently facing a significant challenge in terms of skilled manpower to carry out the work efficiently. This shortage is now restricting companies in the amount of work they can take on which is primarily due to the lack of in-house training programs which is further attributed to the MRO industry moving away from traditional apprenticeship programs in an effort to cut costs. A good example of the shortage of skilled personnel is the Canadian military helicopter MRO market which is witnessing a public bias against manual labor as a career choice and many youngsters are now opting for other vocations such as computer technology.
Long cycle times often lead to a reduction in military equipment inventories.
Over the extended life of a military system or platform, the sustainment, repair and overhaul phase represents approximately 60-80 percent of the entire system lifecycle. With continued focus on outsourcing military aviation MRO activities, private OEMs are being asked to assume responsibility for the total care of these systems and platforms, even as cost pressures are increasing and resources are limited. Due to these factors, the military aviation MRO industry still faces significant challenges in resource allocation, information management and service management while delivering required MRO services for a component or an entire platform.
Key Highlights
North America to continue to dominate the market.
Despite budget cuts, North America is expected to account for the largest share of the total global expenditure on military aviation MRO, with 48% share during the forecast period. High demand in the region is primarily driven by the region’s modernization programs and the overseas war against global terrorism.
Growth in performance based logistics (PBL) contracts.
Performance-based logistics contracts are rising in both civilian and military aviation MRO as they enable operators to offload investments in spares and other MRO capabilities. As a result, the company can focus on its core competencies thereby reducing costs and maximizing efficiencies. PBL contracts consist of an operator contracting with a supplier on a long-term basis to deliver a particular kind of service-related performance and sometimes take the form of a per-hour maintenance cost or a specific reliability guarantee. PBL contracts focus primarily on performance or output, rather than tasks or inputs by the service provider.
Civil MRO providers crossing over to the military domain.
The military maintenance market is worth more than its civil counterpart and this has resulted in commercial aviation MRO providers tapping into its potential to provide a distinct reliable revenue stream. In the current economic environment, companies in the aviation MRO domain are finding it hard to sustain strong revenues by focusing solely on civil MRO services and are looking to use their expertise for providing military MRO services. Government contracts and long term budget commitments make military MRO more resilient to global economic fluctuations compared to commercial maintenance.
Table of Content:
Introduction
1.1 What is this Report About?
1.2 Definitions
1.3 Summary Methodology
1.4 About Strategic Defence Intelligence (www.strategicdefenceintelligence.com)
2 Executive Summary
3 Global Military Aviation MRO Market Size and Drivers
3.1 Military Aviation MRO Market Size and Forecast 2012-2022
3.1.1 Global military aviation MRO market to show positive growth during the forecast period
3.2 Global Military Aviation MRO Market – Regional Analysis
3.2.1 North America dominates the global military aviation MRO market
3.2.2 Demand for Attack Aircraft MRO in the US to support the global Military Aviation MRO market
3.2.3 Military aviation MRO market to be robust in Europe due to planned budget cuts
3.2.4 The aviation MRO market in the Asia-Pacific to be driven by spending in China, Australia and India
3.2.5 Military aviation MRO market in the Middle East to increase during the forecast period
3.2.6 Brazil expected to be the highest spender in the Military Aviation MRO sector in the Latin American region
3.2.7 Military aviation market in Africa expected to increase over the forecast period
3.3 Military Aviation MRO Sub-Sector Market Size Composition
3.3.1 Attack Aircraft MRO market to record strong CAGR growth
3.3.2 Transport aircraft MRO to account for the second largest segment in this sector
3.3.3 Market for rotor craft MRO to account for the third largest segment in this sector
3.3.4 Market for UAV MRO to register a CAGR of XX% during the forecast period
3.4 Demand Drivers and Growth Stimulators
3.4.1 Aging military aircraft fleet
3.4.2 Technological innovations driving the military MRO market
3.5 Defense Budget Spending Review
3.5.1 European capital expenditure expected to increase during the forecast period
3.5.2 Asian defense budgets expected to increase at a robust pace
3.5.3 North American defense expenditure projected to decline marginally during the forecast period
3.5.4 Modernization programs likely to drive defense expenditure in South American countries
3.5.5 Military budgets of African countries expected to increase during the forecast period
3.5.6 Defense budgets of Middle Eastern countries likely to increase during the forecast period
3.6 Defense Modernization Review
3.6.1 Financial constraints causing delays in European defense modernization programs
3.6.2 Defense budgets of Asian countries likely to be driven by competitive arms acquisitions
3.6.3 Global economic slowdown leading to defense budget cuts in the North American region
3.6.4 Need to replace aging equipment driving South American defense expenditure
3.6.5 Security threats increasing the defense budget of African countries
3.6.6 Demand for air defense systems is likely to increase in the Middle East
4 Industry Trends, Recent Developments and Challenges
4.1 Technological Developments
4.1.1 DSTO has developed the C-130J aircraft propeller balancing software
4.1.2 Snubber technology to result in cost savings in engine repairs
4.1.3 An acoustic system developed to monitor the structural integrity in military aircraft
4.2 Market Trends
4.2.1 Countries outsourcing MRO work
4.2.2 Growth in performance based logistics (PBL) contracts
4.2.3 Civil MRO providers crossing over to the military domain
4.3 Industry Consolidation
4.3.1 Joint programs expected to increase over the forecast period
4.3.2 Companies are expected to consolidate in the face of global defense budget cuts
4.3.3 Private equity interest growing in the aviation MRO sector
4.4 Key Challenges
4.4.1 High taxes hamper indigenous growth in some countries
4.4.2 Lack of skilled personnel
5 SWOT Analysis of the Military Aviation MRO Market
5.2 Strengths
5.2.1 Military aviation MRO outsourcing by leading defense spending nations driving growth for the sector
5.2.2 Procurement and modernization initiatives driving the market
5.2.3 Force readiness initiatives by major defense spenders are providing impetus for market growth
5.3 Weaknesses
5.3.1 Lack of domestic MRO capabilities in some countries
5.3.2 Long cycle times often lead to a reduction in military equipment inventories
5.3.3 Performance based contracts impair profitability for aviation MRO providers
5.4 Opportunities
5.4.1 Many nations currently possess aging fleets of aircraft
5.4.2 Defense budget cuts expected to channel more funds towards the military aviation MRO sector
5.5 Threats
5.5.1 A large portion of the MRO workload brought under the ambit of government depots in US
5.5.2 The US and European economic crisis
6 Country Analysis – Military Aviation MRO Market
6.1 United States Market Size and Forecast 2012-2022
6.1.1 Attack aircraft MRO expected to account for the largest share of US military aviation MRO expenditure
6.1.2 Transport Aircraft MRO segment of military aviation MRO expected to constitute the second largest market share in the US
6.1.3 Rotorcraft MRO segment to exhibit a CAGR of XX% during the forecast period
6.2 France Market Size and Forecast 2012-2022
6.2.1 Military Aviation MRO market to be attractive in France during the forecast period
6.2.2 Attack aircraft MRO market to be attractive in France during the forecast period
6.2.3 European heavy lift helicopter maintenance contract to drive the rotorcraft MRO market during the forecast period
6.2.4 Maintenance of A400M aircraft to be a major program in transport aircraft MRO market
6.3 Russia Market Size and Forecast 2012-2022
6.3.1 Expenditure on attack aircraft MRO to be robust during the forecast period
6.3.2 Maintenance services for Mi-8 multi-role helicopters to be a major program in Russian rotorcraft MRO market
6.4 The United Kingdom Market Size and Forecast 2012-2022
6.4.1 Attack aircraft MRO market in the UK to increase during the forecast period
6.4.2 Transport aircraft MRO market to register robust growth during the forecast period
6.4.3 Integrated Merlin Operational Support (IMOS) contract to be a major program in rotorcraft MRO market
6.5 Saudi Arabia Market Size and Forecast 2012-2022
6.5.1 Attack aircraft MRO market expected to increase during the forecast period
6.5.2 Rotorcraft MRO market to be robust during the forecast period
6.6 UAE Market Size and Forecast 2012-2022
6.6.1 Rotorcraft MRO market expected to increase during the forecast period
6.6.2 Overhaul of C-130J transport aircraft to be a major program in transport aircraft MRO market
6.7 Australia Market Size and Forecast 2012-2022
6.7.1 MRO contracts for various fighter aircraft to drive attack MRO expenditure
6.7.2 Australia to spend US$XX billion on maintaining, repairing and overhauling its fleet of transport aircraft
6.8 China Market Size and Forecast 2012-2022
6.8.1 China is expected to invest heavily in attack aircraft MRO to maintain its growing fleet of multi-role fighters
6.8.2 China expected to allocate US$XX billion towards military rotorcraft MRO
6.9 India Market Size and Forecast 2012-2022
6.9.1 India’s aviation MRO market driven by the significant investment in procuring military fighter aircraft
6.9.2 India expected to spend US$XX billion on transport aircraft MRO over the forecast period
6.1 Brazil Market Size and Forecast 2012-2022
6.10.1 Rotorcraft MRO expected to be the highest segment of expenditure by Brazil on military aviation MRO
6.10.2 Transport aircraft MRO segment expected to exhibit a CAGR of XX% during the forecast period
6.11 Colombia Market Size and Forecast 2012-2022
6.11.1 Colombia’s expenditure on transport aircraft MRO to increase at a CAGR of XX%
6.12 South Africa Market Size and Forecast 2012-2022
6.12.1 Attack aircraft MRO market to increase during the forecast period
7 Major Military Aviation MRO Programs
7.1 Attack Aircraft MRO
7.1.1 Tu-160 bombers modernization program
7.1.2 MiG-29
7.1.3 B-52 Stratofortress Weapon System Modernization
7.1.4 Raptor Enhancement Development and Integration program
7.2 Transport Aircraft MRO
7.2.1 Hercules aircraft maintenance program
7.2.2 C-17 Globemaster III integrated sustainment program (GISP)
7.2.3 E-3D AWACS Sentry Whole Life Support Program (WLSP)
7.3 Rotorcraft MRO
7.3.1 Merlin Capability Sustainment Program
7.3.2 US Air Force contract field teams (CFT) program
7.3.3 Logistics Support for H-60 Seahawk Helicopters
7.4 UAV MRO
7.4.1 Maintenance for Sperwer Drones contract
7.4.2 Unmanned Aircraft System (UAS) Services III
7.4.3 Support for the Predator MQ-1 Aircraft and related Systems
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