22 Mar 2023
As the aerospace industry continues to grow and expand, broader services are evolving and adapting to meet the needs of OEMs, MROs, airlines, and passengers. Advancement in technology and a focus on sustainability is leading industry stakeholders to rethink their business strategies.
Mario Pierobon of MRO Management sought insight on the current landscape of the aircraft engine leasing market from Wasim Akhtar, Director of Engines at AJW Group, and Patrick Biebel, Managing Director MTU Maintenance Lease Services.
Akhtar begins by explaining the high capital costs associated with purchasing engines, which has led many airlines to lease rather than buy engines. ‘With the pent-up demand for engines, the traditional dry leasing routines have come back, and we are seeing the rates going back to 70% of pre-pandemic levels,’ he notes.
Biebel explains that many airlines avoided shop visits over the pandemic years but that the short-term leasing market has recovered quickly, and MRO activity is predicted to go from strength to strength in 2023. He mentions that MTU predicted this upturn and prepared and expanded its facilities, personnel, and material assets to deal with the growth and strength in services.
Competition in the engine leasing market is fierce, among large and smaller players alike. It is important to note that as the number of engines needing to be overhauled goes up, the short-term engine leasing market and the demand for used serviceable materials (USM) grows with it. Akhtar states, ‘The demand for USM material will drive the retirements, which will allow asset owners to exit their legacy engines on a higher note.’
While the aviation industry steadily recovers, some businesses are still on the back foot financially and are spending cautiously while watching their bottom line. The primary focus is on efficiency in managing assets and optimising operational and logistic functions.
According to Akhtar, ‘Airlines are asking for power-by-the-hour (PBH) types of engine leasing agreements, which were on the rise during the low utilisation Covid times.’
It appears that agility and adaptation within the sector are essential for businesses to survive the evolving market. The article discusses ways in which they are meeting customer demand through various leasing agreements such as green time leasing or engine exchange, amongst others. It boils down to what is most cost-effective and efficient for the client, there is no one size fits all. Engine leasing comes with many challenges, but companies are developing and enhancing their business strategies to deal with these to maximise owners’ assets.
Aircraft engine maintenance has evolved recently, due in part to technological advancements, concludes Akhtar, ‘The use of computerised systems allows for more accurate and efficient maintenance and reduces the need for costly repairs. Furthermore, the development of more durable engine parts has led to a decrease in the frequency of replacements.’
The aviation industry has survived the pandemic with the help of companies offering extended warranties and free services over longer periods, which helps reduce maintenance costs, affirms Akhtar. AJW is playing its part and continues its commitment to transforming aviation efficiency and has expanded its services into sectors such as aircraft remarketing and leasing. This agile, independent industry leader accommodates and adapts to the changing environment in the industry and offers its global client base the most efficient and reliable supply chain solutions.
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