Africa: How Can African MROs Break Out Of The Malaise and Survive Competition?
The liberalization of African skies is often presented as a panacea to the continent’s many aviation problems (as observed last week at the African Airlines Association’s general assembly in Zimbabwe).
But a look at the financial forecast provides sober reading.
According to IATA, African airlines made a loss of $700 million in 2015, a record which is expected to be followed by another loss of $500 million in 2016. This does not look promising for the continent’s MRO market. African MRO faces a plethora of challenges, including:
– Lack of infrastructure to support aviation businesses.
– Few available local solutions to IT and software issues.
– Unrest in certain areas which impacts the aftermarket/supply chain – in extreme cases spare parts become unavailable
– Government support is often not guaranteed and therefore provision of services is limited.
– Lack of training – one of the biggest aftermarket needs of African carriers is the training of MROs, from basic to specialized services.
– Increased competition from OEMs entering the aftermarket.
How can African MROs break out of this malaise? One route is to partner with established providers such as AAR. In October this year the provider set up an MRO joint venture with South African Airways Technical (SAAT) to provide component inventory management and repair services .
The deal, worth $125m, will boost South Africa’s MRO industry and increase access to Africa-based MRO services. By partnering with an aftermarket expert like AAR, growing carriers can benefit from its experience, supply chain network and technical expertise. AAR also provides component parts and component repair to Ethiopia Airlines, Kenya Airways and Fastjet (Tanzania).
Ultimately stronger economies are needed to provide more middle income earners who will drive the demand for commercial air transport. Martyn Haines, technical director of Kenya Airways, observes that more African countries have become politically stable, therefore attracting foreign investment to develop and sustain the economy. But there is still a long road to go.
For more on the challenges and opportunities of the African MRO market, look out for the February edition of Inside MRO.