12 September 2024
Navigating MRO waiting times - The Technical v Trading Debate
The MRO Space Is Under Pressure with Waiting Times for Redelivery and Disassembly Rising.
How Can Lessors Best Navigate This Issue?
We have felt this pressure first hand after a recent disassembly enquiry born out of a long delay. It’ll be 2025 before the potential customer can get a slot at their current location and they’d like us to go out there and disassemble the aircraft onsite. They want to realise the value of the asset before next year.
The waiting time for MRO doesn’t show much sign of easing up either. Bain and Company analysis suggests that ‘peak delays [are] adding up to two to four months to pre-pandemic levels’. They also expect that ‘demand is likely to experience a near-term peak in 2026 and remain constrained through the end of the decade’.
What can lessors do to navigate this issue? Supply chains and a skills shortage are not going to be fixed quickly. But there may be other issues that can be resolved.
We can start by asking if there is a mismatch between the needs of the technical and trading teams. Why is our aircraft in a location where the wait is over six months? How was the decision taken?
It’s understandable for technical people to want to offload aircraft to a one-stop shop. Especially one they use often. The aircraft can be parked and then wait for a disassembly slot or a transition decision. For the technical team this is job well done. This is all fine when there are plenty of slots available.
Unfortunately, extra waiting time puts pressure on the trading team. They want to sell or re-lease the asset, either for a part out, or transition on to a new airline. In the current market, with a shortage of aircraft, the buyer is keen. But they want an immediate slot for disassembly, and understand the value of getting one, they don’t want one half a year later.
The trading to also want to quickly get the aircraft out of storage and into the hands of a team who do the necessary maintenance and livery changes to transition it to a new carrier.
The aircraft is killing time in the MRO storage queue, which has an effect on the bottom line. The asset’s value can’t be released, and everything goes on hold for months.
How can this be resolved? We think a little joined-up thinking between the technical and trading teams would help. This could deliver best value for both.
Both teams could think about the outcome for the aircraft first. Is it destined for disassembly? Does it need heavy or light maintenance? Is it straight to transition? The expected outcome for the aircraft should determine where it goes. This may mean opening location options and having more than one facility available.
For example, with ecube you can cover these outcome scenarios:
- Re-leased and Redelivered. Store the aircraft in one of our locations that can adapt to your need, enable your aircraft to fly out swiftly to a pre-arranged MRO slot, if Heavy Maintenance is required, whilst give your trading team the best opportunity to sell the asset should plans change.
- Part-Out and Disassembly. Make it easier to sell end-of-life aircraft by choosing an attractive location for parts companies, offering timely disassembly slots that we release the assets value sooner – trust us, your parts trading customer will thank you!