Jamie Freed and Chen Lin

SINGAPORE, (Reuters) – The rising labor costs and weak recovery of the broadbody market pose new challenges for global aviation maintenance, repair and overhaul (MRO). Shop visits are beginning to recover after a serious pandemic.

According to Oliver Wyman consultancy, the MRO industry is worth $68.4 trillion in 2021. This has been hampered by older aircraft retiring, which require greater maintenance and less flying time for other airlines.

This has resulted in less wear on components and allowed airlines that have grounded aircraft to save money and put off shop visits.

The Singapore Airshow saw industry representatives stating that although the outlook was positive, labor costs were increasing. The recovery is slow and they are focusing on areas like narrowbody aircraft, dedicated freighters and older widebodies.

Kailash Krishnaswamy (NYSE: Senior Vice President of Aftermarket Services at Spirit AeroSystems) stated that there is a shortage in labour and higher rates are the best way to attract workers back to work. “Inflation will be a problem.”

The company’s business was strong in Americas. There it service narrowbodies. However, it has struggled in Belfast. This is because it used to do a lot for Airbus A330 widebodies.

Krishnaswamy explained that “we are trying to pursue more narrowbodies Belfast than we did in 2019”.

According to a survey done by Jefferies, aerospace aftermarket buyers expected a 11% rise in sales in 2013. Although engines are expected to see the greatest recovery, half believed that this would be due to many airlines having delayed maintenance because of the pandemic, Jefferies believes the predicted rise in passenger numbers could be due to the lower base of 2021.

Rolls-Royce (OTC) stated in December that the large-engine flight hours of 2019. were only at 50% due to the uneven nature. However, Chris Cholerton who is the civil aviation president of Rolls-Royce, indicated on Wednesday that the flying hours are expected to rise significantly.

According to him, shop visits are increasing and Rolls-Royce intends to hire more people in Singapore this fiscal year.

“The modern aircraft – the 787s, the A350s, A330neos, probably by before the middle of this year, they’ll be back to where they were in 2019,” Cholerton said. The parking of aircraft with less capacity is what has caused the reduction in flying hours.

Boeing (NYSE:) Global Services President Ted Colbert said the industry in Asia had been aided during the pandemic by a boom in passenger-to-freighter conversions that helped MROs fill spare hangar capacity.

Singapore Technologies Engineering (ST Engineering) is the largest beneficiary of this trend. They announced Monday a conversion to freighters deal and a lease agreement for five A320s with Vaayu Group. It is expected that the first of these will be leased in the second quarter.

Malaysian AirAsia (which had 55% of its aircraft on the ground as of last week) hopes that all its planes will fly again in the fourth quarter. This would increase maintenance demand.

Arjan Meijer of Embraer Commercial Aviation stated that it will be difficult for airlines to grow out of this crisis, increasing their capacities and getting MRO slots. “The hangar space is very limited, as well as human capital.

AirAsia parent Capital A announced Tuesday that it will raise over $95million for its engineering arm. The facility, to be located at Kuala Lumpur International Airport, is capable of carrying out heavy maintenance on up to 14 aircraft at once.