The COVID era is about six months old now, and we’ve seen different national and regional approaches to the global health crisis. Even those who initially thought we were dealing with just another flu, learned that COVID-19 will be far worse. The only certainty at this point is the uncertainty as to how and when this will end. One thing we do know is that in addition to the enormous human distress, COVID-19 will have a significant economic effect on companies as well as countries.
GA Telesis Engine Services (GATES) and the global engine MRO industry were impacted immediately after the airline fleets’ grounding as there was seeming little need for engine maintenance when aircraft were not operating. That, coupled with a very uncertain financial outlook for the airlines, made things even more challenging. Additionally, the ongoing adverse effects through airline bankruptcies, reorganizations, premature aircraft retirements, and capacity reductions will perhaps redefine the engine MRO sector for the foreseeable future. The vast demand for Engine MRO capacity that was experienced globally until as late as March has transformed into enormous overcapacity. Massive investments were being made to build new facilities, increase production lines, and add personnel. However, due to the crisis, all Engine MROs have either closed for a period, cut capacity for short to long term, and furloughed or laid off personnel. Numerous reports forecast that the number of parked aircraft, availability of green-time engines, and the airlines’ continued financial troubles will completely change the Engine MROs’ business outlook.
Is this a Whole New Ballgame then for the Engine MROs?
Partly it is. The competition will be fierce (as if it wasn’t before) as companies are trying to keep their full production volumes in a smaller market. GATES is no exception to this. Another thing that is changing is the availability of USM (Used Serviceable Material) due to the availability of engines for part out. Finally, the lessors will be taking a more active role in the normally airline-run engine maintenance process to protect their assets and to even more carefully watch over the use of the collected Maintenance Reserves. These reactions are all very natural in a situation of scarce resources, i.e., CASH.
However, with a more in-depth look, the Engine MRO business has not changed as much as the environment. The main parameters: Price, Quality, and Turn Around Time, are still the cornerstones for the customers. The business is based on relations and understanding of one’s customers’ needs. Meaning that presenting the best alternatives on a case by case basis will ultimately lead to success. Engines are still the most significant driver for an airline’s maintenance costs, and the customers increasingly want turnkey solutions without any distraction to their operations. GATES is well-positioned in the market through the GA Telesis Ecosystem™. We can offer lease or exchange solutions together with maintenance financing solutions for the duration of the engine shop visit campaign.
Even more importantly, business, in general, has not changed. It is still the people on the shop floor who work hard for their customers’ success, and it is the whole organization that pulls together to produce these results. Remember, the service we provide is not maintenance, it is access to the finest and most talented group of people in the industry. And while we are in crisis, leadership at all levels becomes even more vital. It also requires closer cooperation through the entire value chain.
Although these times are tough for the entire aviation industry, not only Engine MROs, it is the simple things that count. The business will come back to a growth trajectory, and it will be the companies that foster their people and customers that will succeed. Through its dedicated people, GATES lives the GA Telesis Mission: Our Business is Integrated Solutions; Our Mission is Customer Success.