Low-cost airlines' big advantage on aircraft maintenance cost could disappear over the next 10 years, consultancy Oliver Wyman reports in a new survey of the global maintenance, repair and overhaul (MRO) industry.
Maintenance costs increased significantly for both legacy and low-cost airlines in the US over the past seven years, according to the consultancy's "MRO Industry Landscape 2012" report.
Since 2004, the maintenance share of a legacy carrier's cost per available seat mile (CASM) rose from 99 cents to $1.29, the survey says. For low-cost airlines, maintenance CASM jumped from 82 cents to $1.02.
But the rate of cost growth for legacy carriers has slowed by 50% over the last four years, even as the CASM growth rate for low-cost airlines has jumped by 700%, the Oliver Wyman study says.
"If these trends continue, we believe that the [low-cost airline's] long-held advantage (which hit its peak in 2007) could evaporate over the next 10 years," the survey states.
Low-cost carriers' fleets have aged more rapidly in the last six years, the Oliver Wyman report says. Meanwhile, legacy airlines have been renewing their fleets.
The survey also shows that the airlines and MRO suppliers continue to believe that the role of original equipment manufacturers in the MRO industry is continuing to expand.
A possible consequence is that airlines will have less leverage to negotiate better price and service deals on MRO contracts in the future, the survey says.
Oliver Wyman's consultants recommend that airlines address this problem by making MRO cost the decisive factor in acquisitions of new aircraft.
Source: Air Transport Intelligence news
