Companies in every sector are digitally transforming today. Leading carriers are introducing new generation aircraft into their fleets and recognize that legacy maintenance systems aren’t up to the task of supporting today’s need for efficient and flexible operations. Additionally, these airlines are all making the digital transformation across their enterprises and see the need for their core MRO (Maintenance, Repair, and Operations) software solutions to be integrated and collaborative throughout all enterprise organizations. As airlines ramp operations back to pre-pandemic business and resume deliveries of new aircraft, MRO software solutions must be able to meet the challenges of next-generation technology and enterprise scale operations.
Market and Technology Drivers for Commercial Air Transport MRO
ARC conducted primary and secondary research into the MRO software space to identify current trends and drivers. This involved outreach to the largest commercial airline carriers to interview those in maintenance and engineering management and decision-making positions, and the determination of which MRO software solutions are currently being used by carriers to maintain their fleets.
The market for MRO software for commercial air transport has been shifting significantly in the last few years due to a number of factors. Additionally, now that commercial air travel has been subjected to a global pandemic that virtually shut down air travel, forcing carriers to park most of their fleets for months, air transport operations and maintenance requirements are impacted even more. But even before the pandemic shutdown there were significant growth drivers and inhibitors:
- Rising demand for low-cost carriers
- The maintenance requirements for aging fleets
- More stringent airworthiness norms and policies
- Digitalization of aircraft MRO services
- Higher costs associated with aircraft components and spare parts
- Aircraft downtime due to complex MRO operations
- Workforce shortages
Carriers are now in the process of ramping up operations to levels of pre-pandemic travel. They are resuming routes and getting parked aircraft back into service, but not without some operational and service disruptions. Initially, they are depending on the flexibility of their MRO solutions to ramp up fleet/line maintenance operations to previous levels, and then resume periodic and scheduled heavy maintenance, along with component maintenance.
One of the major issues carriers are currently facing is direct labor shortage of qualified technicians and mechanics. When travel shut down during the height of the global pandemic, and carriers parked their fleets, many maintenance personnel were furloughed. Getting maintenance staffs back up to capacity has been very challenging for the carriers and MRO subcontractors. Without a significant change in this current situation, this trend is poised to continue for the near future. Maintenance directors are depending on the flexibility and robustness of their MRO software solutions to schedule and perform maintenance operations with smaller workforces and constrained resources, and to manage more outsourced services.
The overall digital transformation of industry and services and the digitalization of all organizations and sectors across the enterprise has clearly impacted the major carriers and their operations. Maintenance operations has been no exception, with the clear trend being the integration and collaboration of MRO processes with all other organizations across the airlines’ enterprise business. Major carriers are now much more focused on a core set of MRO operational processes that are informationally connected to other functional operations such as scheduling and ticketing, flight and ground services, flight crews, labor force availability, and other operational requirements.
While many large carriers use a primary or core solution set for MRO operations, it is not uncommon to find that they may use point solutions for certain maintenance functions. That could include engine and component maintenance and certain areas of heavy and aircraft on ground (AOG) maintenance, as well as MES and manufacturing planning applications.
There is a growing trend among carriers with large fleets to seek enterprise level core MRO solutions that are more comprehensive in scope (fleet/line, engine, component, heavy maintenance), and are at enterprise scale. Some specific examples include American Airlines, which has decided to integrate and expand SCEPTRE MRO to enterprise scale, while United and Delta airlines are looking to replace legacy SCEPTRE with vendor supplied enterprise level core MRO systems. Based on the research of this study, legacy ERP/MES systems such as SAP are being replaced or seek replacement by core MRO solution sets at enterprise scale. The shift in the market share of MRO software solution providers reflects this growing trend among the top carriers.
There is also a growing trend for airworthiness policies to become more comprehensive and stringent, especially in the wake of the Boeing 737 Max incident. Expect a degree of uncoupling of regulatory bodies like the FAA with the aircraft OEM, such as the relationship between Boeing and FAA regulators where Boeing engineers held oversight on certain systems. This could impact MRO software providers in terms of more stringent maintenance requirements for certain systems of the aircraft. This would impact the carriers more directly rather than the aircraft OEM.
Another trend is for carriers to build more homogeneous fleets in terms of common models across their fleets. Low-cost carriers like Southwest and Ryanair have made common models an integral part of their business model and maintenance operations. The large carriers with a wide range of models are retiring many of these older aircraft and replacing them with common narrow-body models like Boeing 737 Max and Airbus 320neo and 321neo.
The carriers will design and implement their routes around the aircraft. There will remain long range routes for international carriers and models like the Boeing 787 and 777x and Airbus 330, and 350 family will service these routes. Airbus has delivered the last 380 to Emirates and will shut down its production line. Boeing will close the 747-8 production line in two years. Remaining deliveries will be cargo aircraft with most of them headed to UPS.
Maintenance requirements for most carriers will primarily center around the new models being introduced and integrated into their fleets and the very large orders that the carriers will take delivery on over several years. MRO maintenance solutions will have to focus on new technologies and next-generation materials that will be introduced with new aircraft. This would include advanced component and avionics technology and advanced composite materials and aircraft configurations.
MRO Software Market Share Dynamics
ARC’s research explored the MRO software market and identified the primary MRO solutions used today by the largest airlines. The market is fragmented, with many software providers having a small share, a couple of modern solutions with significant market share, and a substantial share held by legacy systems that are no longer sold and well supported.
At this point as the pandemic abates, commercial air transport and travel is getting back to normal operations. Countries have opened international air travel, and major carriers are resuming their routes and schedules. Additionally, the carriers are resuming scheduled fleet maintenance and other MRO operations as they put their parked fleets into operation. The ramp up to full operations will most likely experience some disruptions due to shortages of maintenance and other service personnel. With the overall trend by the major carriers to move to enterprise level core MRO solutions that are more comprehensive in scope, this should afford an opportunity for those providers whose MRO solutions meet these enterprise core requirements to replace legacy MRO systems currently used by these carriers.
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Keywords: MRO (Maintenance, Repair, and Operations) Software, Digital Transformation, Commercial Airlines, Pandemic, Regulatory Policies, ARC Advisory Group.