Airline Engine Shops Are Overwhelmed, Delaying Flights and Costing Airlines Millions
The aviation industry is facing a severe engine repair backlog, with airlines struggling to get their aircraft serviced due to a perfect storm of factors. Parts and labor shortages, delayed deliveries of new aircraft from Boeing and Airbus, engine recalls, and premature repairs are all contributing to the issue. This surge in demand has created a cash cow for engine makers like GE Aerospace and specialist repair shops, while airlines are left scrambling to keep their fleets operational.
Key Takeaways:
- Engine repairs have become a multi-billion dollar business, with demand exceeding pre-pandemic levels by nearly double. This puts pressure on airlines, as they face significant delays and increased costs for engine overhauls.
- American Airlines has taken a proactive approach, increasing its in-house engine overhaul capabilities. This move gives them more control over their maintenance schedules and potentially faster turnaround times.
- The industry is grappling with the aftermath of the pandemic, facing labor shortages and supply chain disruptions. These issues are further impacting the timely delivery of new aircraft and spare parts, exacerbating the backlog.
- The engine repair bottleneck is also creating a windfall for engine makers, as they capitalize on the high demand for maintenance services. A shortage of spare engines has also driven up rental rates significantly.
The Perfect Storm: Bottlenecks Abound
The COVID-19 pandemic caused a ripple effect through the aviation industry, leading to a sharp decline in air travel and subsequent cuts to maintenance personnel and resources. As travel demand rebounded unexpectedly, airlines found themselves facing a shortage of skilled workers and a lack of experience in maintaining their aging fleets. Compounding these issues, airlines were also forced to continue operating older aircraft due to delays in the delivery of new, fuel-efficient planes from Boeing and Airbus.
Airbus has been grappling with supply chain woes, affecting the timely delivery of key components like landing gear and engines. Boeing, meanwhile, is dealing with safety issues related to its 737 Max aircraft, further impacting deliveries. These delays mean that airlines are relying on their older aircraft for longer than expected, increasing the need for engine repairs and overhauls.
The Strain on Engine Repair Shops
Airlines are facing significant delays in getting their engines overhauled, with some shops seeing turnaround times exceeding 200 days. This delays flights and creates operational challenges for airlines who rely on their fleets for revenue generation. The extended wait times are also adding to the financial pressure on airlines, with engine overhauls costing millions of dollars per unit.
American Airlines Takes Control
Recognizing the issues at play, American Airlines has taken steps to address the engine backlog. The airline has built out its own maintenance facility in Tulsa, Oklahoma, which is now the largest such facility in the world. American is aggressively increasing its in-house engine overhaul capacity, planning to increase its output to over 16 engines per month this year. This strategy allows the airline to directly control its maintenance schedules and avoid the long wait times experienced by other carriers.
A Boon for Engine Makers
The high demand for engine maintenance has been a windfall for engine makers like GE Aerospace, who are earning substantial revenue from repairing and overhauling the engines they sell with new aircraft. This creates a "razor-razor blade" model, where the initial sale of an engine is followed by ongoing revenue from maintenance and repairs.
The Challenges Ahead
The engine backlog is expected to persist for the next few years, as the industry continues to deal with the fallout from the pandemic and the ongoing supply chain challenges. While airlines try to find ways to manage their maintenance needs, they face limited options. The high demand for spare engines has driven up rental rates, making it a costly alternative.
Airlines such as Delta Air Lines have also attempted to mitigate the impact of the backlog by increasing their own engine repair capabilities and offering maintenance services to other airlines. However, demand is exceeding capacity, leaving many airlines struggling to secure a spot in repair shops.
In addition to the ongoing supply chain challenges, the aviation industry is also facing other hurdles, including a shortage of skilled workers and the need to adapt to new technologies. Addressing these challenges will be crucial for the long-term sustainability of the industry.
The current engine backlog is a stark reminder of the complex challenges facing the aviation industry. As airlines continue to navigate these obstacles, finding innovative solutions and collaborating with industry partners will be essential to ensure a smooth and efficient travel experience for passengers worldwide.
