Aviation Support Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 4,200 aviation support services in the US provide airport operation, repair, maintenance, storage and ferrying services. Primary services offered include maintenance and repair; fixed base operators (FBO) services; airport administration and operation service; and handling services for goods (cargo, baggage). Other services include air traffic control, runway services (cleaning, snow removal), de-icing, and parts inventory management services.

Regulated Environment

The US aviation industry is heavily regulated by the Federal Aviation Administration (FAA) which sets the standards for repair and operation of all aircraft and parts.

Advances in Technology

Advances in technology have fundamentally changed the need for maintenance, repair and overhaul services.

Industry size & Structure

The average US aviation support services provider employs about 48 workers and generates $6-7 million annually.

    • The US aviation support services industry consists of about 4,200 firms that employ 206,600 workers and generate over $29 billion annually.
    • The industry is moderately concentrated at the top and fragmented at the bottom; the top 50 companies account for about 57% of industry revenue.
    • Large MRO firms include AAR and Aviation Technical Services (ATS). Foreign firms, such as HAECO, offer aviation support services through domestic subsidiaries and joint ventures.
    • The top 100 US aviation markets typically contract with a chain fixed base operator (FBO), such as Signature Flight Support and Atlantic Aviation.
                                Industry Forecast
                                Aviation Support Services Industry Growth
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                May 17, 2022 - Ruling That Ended Traveler Mask Mandate Appealed
                                • The US Department of Justice appealed a late-April ruling that struck down the US government's rule requiring masks to be worn on public transportation, most notably aboard airplanes. US District Judge Kathryn Kimball Mizelle said that the Centers for Disease Control and Prevention (CDC) exceeded its statutory authority and failed to properly justify its decision for imposing the mandate. The CDC had extended the mandate until May 3 just a few days before the mandate was struck down. The CDC issued a statement saying that it continues to believe that requiring masks in indoor transportation settings "remains necessary for the public health." CDC will continue to monitor public health conditions to determine whether such an order remains necessary, according to a statement from the agency. "CDC believes this is a lawful order, well within CDC's legal authority to protect public health."
                                • The Transportation Security Administration stopped enforcing the Biden administration's rule mandating masks on planes, trains, and other forms of public transportation, an administration official said on April 18. The move came the same day that a federal judge in Florida struck down the mandate. Local mandates may be affected by the decision. US District Judge Kathryn Kimball Mizelle said the Centers for Disease Control and Prevention (CDC) exceeded its statutory authority and failed to properly justify its decision for imposing the mandate. The CDC had extended the mandate until May 3 just a few days before the mandate was struck down. The legal decision comes as COVID-19 cases have risen in a number of states due to the spread of the BA.2 subvariant of Omicron. The CDC said that it extended the mandate to evaluate the impact of the rise in cases on severe disease and health care system capacity.
                                • The North American market may be insulated from the immediate effects of the Ukraine crisis and is seeing the “tail end” of the recover from Covid, according to WingX. Most of the benefit is accruing to the largest cabin aircraft flying multiple-hour sectors. The regions outside of North America and Europe, including Russia, have seen the strongest of all rebounds in bizjet flights in 2022, with a 52% increase in this March compared to three years ago. Brazil, Argentina, Australia, India, Nigeria, have all seen much higher activity than pre-pandemic.
                                • Industry watchers expected the drop in COVID-19 cases to boost air travel demand as Omicron waned and more countries reduced travel restrictions for vaccinated travelers. The outbreak of war in Ukraine dampened hopes for a rebound in summer travel, however. Airspace restrictions over Ukraine and parts of Russia and Belarus prompted airlines to reroute flights. Flying is also likely to get more expensive as the conflict pushed oil prices above $100 per barrel.
                                • Demand for used parts may be strongest for older narrow-body aircraft cargo conversions and for engine work on existing cargo aircraft due to weak passenger traffic demand. Industry watchers note that airlines pulled spare parts from grounded aircraft during the pandemic, reducing demand for new parts. Maintenance, repair, and overhaul (MRO) demand for parts will likely follow as airline demand rebounds. Some of the postponed work will occur once aircraft utilization patterns normalize. Still, much of that revenue may not be recovered as aircraft near the end of their lifecycle may remain mothballed instead of undergoing expensive, late-life MRO work.
                                • Industry watchers suggest the COVID-19 pandemic will accelerate MROs’ digital transformation efforts as they look for ways to increase efficiency and trim costs. Key trends include remote inspection and training that’s enhanced with augmented reality (AR) technology, analytics-based predictive maintenance, and IoT-enabled inventory systems.
                                • The 2021 Boeing Market Outlook (BMO) predicts that the global aerospace and defense market value will be $9 trillion over the next decade, up from the $8.5 trillion forecast in 2020’s BMO and the $8.7 trillion forecast in the 2019 BMO. The global commercial fleet will add about 43,500 aircraft over the next 20 years, or about 500 more planes than in the 2020 BMO. Single-aisle aircraft seating 90 or more passengers are expected to account for more than 32,600 of about 43,600 global aircraft deliveries between 2021 and 2040. Boeing expects the global aviation industry will need 626,000 new maintenance technicians during the period, down 15% from the 739,000 projected in 2020.
                                • Some MRO firms have fared better than others during the pandemic. Success is often determined by which types of aircraft are serviced. Commercial flights were essentially grounded in the early days of the pandemic, but people with the means to do so took private planes to quarantine destinations. In some cases, the downtime that followed was used to provide scheduled maintenance or avionics and interior upgrades. Business and charter aviation have generally enjoyed greater demand than commercial flying during the pandemic. That has helped prop up demand for private jet MRO services. Business jet activity has also held up better than airline demand since the emergence of the Omicron variant.
                                • Most airlines are hesitant to make significant changes to their MRO strategies before the full return of passenger traffic, according to Aviation Week. Large airlines tend to have more in-house MRO operations, and many of them have no major plans to shift toward outsourcing. Smaller airlines that already depend on outsourced MRO are likely to lean on outsourcing even more to keep up with maintenance as scheduled flights increase.
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