you're reading...
Aircraft Parts, aviation, Distribution, Manufacturing, PMA

Aerostrategy Predicts Growth in Airframe and Component PMAs

Jonas Murby of Aerostrategy spoke at the Gorham Conference today about the outlook for the PMA market.

Due to the global issues, the PMA market is down about 8%, from $416 million in 2007 to $381 million in 2008. Factors directly affecting this downturn include the number of parked aircraft, which have resulted in less need for MRO services and also in a greater pool of used parts from disassembled aircraft.

Another factor is OEM defensive strategies that have been successful. GE, for example, has established a licensed engine service center model. They have licensed capabilities to large MROs in exchange for an agreement to only purchase GE parts. They have established import strategic alignments with ST Aerospace, Iberia, and Aveos. Most of these agreements affect CFM 56 engines, although the Aveos agreement also affects and CF34 engines.

Murby used the CFM56-5B engine as a good illustration of OEM  success in affecting PMA market entry. GE controls 24% of the MRO market for the CFM56-5B engine, but they have also entered into agreements with other major MRO shops that prevent the use of PMA parts. Those shops control a significant percentage of the market for CFM56-5B MRO:

· SNECMA 17%

· Iberia 11%

· AFI 9%

· AT Aerospace 8%

· Aveos 8%

This means that GE controls the parts market for 77% of the MRO market on that engine, and is able to prevent PMAs from entering the marketplace in all of these MRO facilities.

Several air carriers have agreed to participate in the GE TruEngine program, which will likely prevent PMA parts from being used on these engines, as well. This further limits the market.

Murby explained that the barriers to entry in the component and airframe markets are lower than engines. These parts markets are more fragmented, too, so the OEMs are less able to bring market power to bear in order to prevent PMA entry.

For these reasons, Aerostrategy believes that the most significant near-future PMA growth will be found in the component and airframe markets. While there will be some engine PMA growth, the most Aerostrategy predicts much more robust growth in the component and airframe markets. As a whole, though, they continue to see significant total growth in the PMA market.

Advertisements

About Jason Dickstein

Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Aircraft Fleet Recycling Association and the Modification and Replacement Parts Association.

Discussion

No comments yet.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: