Podcast: Constrained Capacity, Connected Cabins And Carrier Consolidation

Listen in as editors discuss several hot topics in the July digital-only issue of Inside MRO, which is now available here. Lee Ann Shay and James Pozzi discuss the capacity crunch, OEM maintenance strategies, how airline consolidation is affecting the aftermarket and more.

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Lee Ann Shay: Welcome to the MRO podcast. We're finishing Inside MRO's July digital-only issue and wanted to share some of the tidbits or as some of my British colleagues say "bits and bobs" of the issue. Joining me is colleague James Pozzi, who is Aviation Week's MRO editor for Europe, the Middle East and Africa. And James wrote a few of the features in this issue. James, welcome. Now for starters, let's talk about our cover story, the hot topic of hangar capacity, which is at a premium. James, what are some of those bits and bobs you like to highlight?

James Pozzi: Well, yeah, I sorted this into a multi-slide gallery on aviationweek.com, which is now live, just to let the readers know. Yeah, of course. Capacity is a topic we cover almost every day, and I think the takeaways at the moment are, and I don't want to sound like I am stating the obvious, but there is simply not enough capacity, whether it's for aircraft or engine inductions as well. The market demand is very strong and will be very sustained. Of course, there are older assets in the market aircraft and engines that have stayed in fleet for longer than anyone could have anticipated. Established models and programs that still need plenty of maintenance checks over the next decade or so. And of course there's the ramp-ups to new generation programs, aircraft and engines and some of the durability and technical issues related to those aircraft and engines that we talked about a lot over the last few years of course, and covered extensively there has been progress in moving forward with those across many, many programs.

So we all know things may be picking up there in terms of production over the coming years and more of those engines of course will go into the fleet and those aircraft as well. So that obviously creates a lot of demand, a lot of aircraft and engines to be serviced. So this has been separated into several regions, the big four so to speak, in terms of by maintenance spend and size and industry, North America, of course the number one. Then Europe, Asia Pacific, and the Middle East. And what I do is highlight some of the kind of main current, and we're talking 2025 this year, occurrences related to capacity in the market. So a few takeaways, without giving away too much about this, airlines are very active, whether it's in Europe, the Middle East and Asia particularly as well. They're adding their own capacity. Of course, shop visits are at a premium and slot availability is so hard to come by with many airlines if possible, with MRO, suppliers are booking their slots more and more in advance than before.

They like that certainty and that multi-year agreement for certain lines of maintenance. British Airways of course, the main national carrier where I'm based in the UK, we talked before about how they've bought extra capacity at Gatwick by buying the facility formerly operated by Boeing Global Services. And there they'll insource some A320 checks. Of course, they've got a big Airbus, A320 fleet of course, and more capacity for their internal fleets. And that's what's happening in other regions too. A lot of these airlines want to grow their fleets by quite significantly and they need the capacity there in order to do certain checks which may not be available or maybe harder to come by with third parties. So they've got that extra control over their maintenance. Of course in your region, Lee Ann, North America, there's always a lot of growth there. Of course in terms of demand that's very sustained and that won't go away.

Some of the interesting findings there, several base maintenance projects are happening there. Of course, very recently AAR announced the quite interesting bit of information that their expanded hangars in Oklahoma City and Miami are already seeing slots booked out such is the demand. So as I said, that is sustained and it will not go away for that slot demand for various aircraft checks. I think a lot of this as well is being OEM-led in terms of the growth to meet capacity, particularly in the engine MRO segments OEMs are growing their networks, whether it's for the narrow-body engines, the GTF and the LEAP, even in some wide-body programs. So the GEnx and of course Rolls-Royce who are adding a lot of capacity to existing and new Trent Engine joint ventures. And I say existing that's accounting for Rolls-Royce's internal shops. So yes, building is happening everywhere.

There are the challenges we could spend a whole other podcast talking about such as getting the right workforce numbers in order to meet these capacity ramp-ups. That's definitely an immediate challenge. I think the industry knows it has to expand and grow its footprint across the board in order to meet these ramp-ups that are occurring. And as we've said before, it's a nice position for the industry to be in. There is no shortage of demand, but servicing that demand will be the challenge for many years to come. And I'm sure we'll discuss it in depth at many upcoming conferences where capacity is always on the agenda.

Lee Ann Shay: Absolutely. And I think one thing that's different about hangar capacity now compared to even like a decade ago when there was just that it was a term "hangar mania," MROs could build kind of aspirational hangars. If we build it, they will come and didn't necessarily happen. Now it's the opposite. There's so much demand that these hangars are being sold out before they're even open.

James Pozzi: Yeah, interesting take I heard recently at a conference, and of course you can call it demand-driven. It is demand-driven, but someone, a speaker at a conference months ago said, it's not just demand-driven, it's necessity-driven. This is out of necessity now. It's not necessarily just flat out demand. The industry needs this, otherwise these aircraft won't be able to be serviced. It's very much a necessity-driven market now, which I found an interesting take on it, a different kind of angle to obviously we talk a lot about the demand. So yeah, that was quite an interesting take I thought worth mentioning.

Lee Ann Shay: Absolutely. And of course we have several other features in Inside MRO's July issue. One I wanted to highlight: Keith Mwanalushi's analytical story on airline consolidation effects on the aftermarket. And without giving too much away, it covers a lot, but one of the obvious ones is purchasing power, whether they're going to the OEMs or supply chain buying parts or MROs and they're leveraging that and increasing insourcing and you get to a certain scale, does it make sense to maybe bring some of those capabilities in-house, which can kind of jump back to James's point, then maybe you need more hangar capacity. Are we configured hangar-wise? And then of course there's the technology piece and more digital from planning, etc., scheduling. And when you look back to some of the previous big consolidations like United, Continental and American and America West here in the U.S., it took them a while to just get their MRO systems together and get that aftermarket piece done. Whereas I kind of feel like that now with the newer consolidations, some of that digital piece is happening faster. James, do you agree or disagree?

James Pozzi: Yeah, I mean I think that's the case. I mean, of course digital integrations especially are often time-consuming, of course quite costly. And that was a good example you mentioned of course, I think it was back 2013, 2014, those big U.S. airline mergers, I think where six airlines became three, as I recall, very early in my days in the industry. That was certainly one of the big stories there. But yeah, Keith mentioned some examples obviously in his piece of some of the airlines merging into groups in recent times. Of course ITA Airways in Italy of course, which replaced Alitalia a few years back then on to the Lufthansa group and then of course into the Air India network. So I think it'll be interesting to see kind of what the timeframes are with some of these integrations and I think it'll make a very interesting feature actually potentially about integrating a tech ops operations into an airline merger. It could be something worth looking at another time, but it'd be interesting to see what some of the timeframes are compared to some of the mergers you mentioned from a decade ago. And yeah, I imagine from what I've seen that that would be a faster and smoother process now. And I think obviously the airlines will be hoping a less costly one as well too, because that's also a factor, the price and the cost elements as well.

Lee Ann Shay: All excellent points. And James, I love that feature. Okay, you heard it first here on the podcast. Breaking news. I think we should pursue that feature and readers, we are in the process of working on our 2026 editorial calendar, so I always love to hear from you. If you have any suggestions with topics that you would like to read about, please reach out to me. Also inside MRO would not be complete without engine content. You mentioned EME, I think in the gallery, but any other highlights you wanted to mention?

James Pozzi: Yeah, I sat down earlier this month with the two leaders of EME Aero, of course, that's the MTU Aero Engines and Lufthansa Technik joint venture in Jasionka in southeastern Poland. Set up several years ago of course, and working exclusively on three Pratt & Whitney geared turbofan engine variants. That's the 1100, the 1500 and the 1900. So yeah, I sat down with them, CEO, Robert Malla and Chief Operating Officer Annika Trawler, and they spoke to me about the operation and the addition of a second test cell, which I was there to cover of course for Aviation Week. So basically this second test cell, it mirrors the first: 60,000 pounds of thrust capacity. So that essentially adding that second one doubles its existing test capacity, which is good news for the shop. They've got some ambitious ramp-up targets that need to be met. They want to service more than 500 engines a year by around 2028.

And they were quite candid, Robert and Annika, they said this wouldn't have been possible at all with just one test cell. The test times are quite long. They can range anything from eight to 20 days depending on the engine type and other various factors about or related to the engine. And yeah, if there's an issue in testing an engine when they operate just one test cell and say that engine needs troubleshooting as can happen, that would block the use of that test cell for other engines that need to be tested. They did highlight the flexibility of having a second test cell, and this will really help them meet those ramp-up goals because they're a very young company in many ways, only been operating for a few years really since the pandemic time, just before the pandemic even amazingly. Originally it was set up with an eventual target of 450 shop visits that was originally planned for 2026 once at full operational readiness.

But this volume has now been revised and they want to do more and they're working towards 500. So yeah, this will definitely help them of course, because of course they assemble, disassemble and test the engines while working with partners in their network, for example, on things like certain component repairs of course. So yeah, this is definitely a positive for EME Aero and does give that market a bit more of that extra capacity for testing because one of the discoveries of recent times has been a lack of test capacity, particularly for some of those narrow-body engines, whether they're new ones or established ones. So CFM56 for example, there's in certain regions of the world, including all of the Americas, Latin America and North America and Central America, there's a lack of test capacity for those engines. And that seemed to be the case as well for the GTF, which obviously is a much newer engine type in terms of its time in service.

But yeah, that's adding much needed capacity and serving that need. And I wouldn't be surprised if we see in the next few years more companies with the engine capabilities and testing, adding more in the way of test cells. Europe has been another example of that recently, SR Technics for example, they've added or they're adding at the moment, test capability for the LEAP-1A, -1B and the GTF as well. They're designated engine shop in Zurich that opened that last year, in fact. So I would not be surprised to see more testing capacity coming online in the coming years essentially to serve the market need and meet these big ambitious ramp-up for shop visits.

Lee Ann Shay: Absolutely. Then there's also the Willis joint venture engine test facility that's being built in Florida.

James Pozzi: Absolutely. Yeah. A pretty major one, I think.

Lee Ann Shay: Two other features I wanted to highlight that I think we can all relate to since we travel. So big shout out to the OEMs, the airlines, and the MROs who are making these two features better. One is lavs. Okay, definitely not a sexy topic, but there's a lot more touchless features that are going into lavatories that it makes the little hygienic experience better. Accessibility, this is a big one. There's some really cool things happening just to make people in wheelchairs and other things be able to use the lavs more accessible and from fold-down walls to all sorts of things. Lighting, lighter materials, ease of cleaning, and I think just traveling, you see those innovations being implemented. So thank you to the airlines and MROs who are doing all those things. And the other one is connectivity. We all know that connectivity is a big deal right now and it kind of stems from faster, cheaper technology and the passenger demand, we're all so attached to our devices.

So we do have a feature on IFE changes including the impact of low Earth orbit LEO satellites. So definitely check out those two features and those are some of the highlights of this issue of Inside MRO. James, thank you as always for your insight and thank you to Cory Hitt who is producing this podcast. She always makes the behind the scenes stuff for us really easy, and of course it sounds better for you all. So Cory, thank you. So that's a wrap. Don't miss this next episode by subscribing to the MRO podcast wherever you listen to them. And one last request. If you're listening to us in Apple Podcasts, please consider leaving us a star rating or writing a review. Thank you and have a great day.