Economic Outlook for the PMA Marketplace

Howard explained that the retirement of PMA-friendly platforms, and OEM and leasing impediments will eventually cause PMA growth to slow down, but we do not yet seem to be approaching that “tipping point” because PMA is still seen as a safe and reliable way to reduce costs. Thus, while the growth of PMA cannot go on forever, it will continue to grow for quite awhile and the slow-down point is far enough in the future that Aerostrategy is not willing to even begin to estimate where or when that “tipping point” may be found.

PMA Impediments

Throughout this year’s Gorham Conference, there was a general agreement that leasing contracts are a major impediment to the growth of PMA, but that some of these hurdles are slowly being surmounted. As with other industry segments, the key to surmounting the perceived hurdles is treating the leasing industry as potential partners and opening lines of communication with them.

An Aerostrategy study shows that airlines believe that leasing companies are the biggest barriers to use of PMAs, but Howard sees situations where leasing companies are starting to get more comfortable with the use of PMAs, particularly for older types.

The Aerostrategy study shows that leasing companies are the biggest obstacle but they are not the only obstacle to PMA penetration. OEM total care and power by the hour contracts often exclude PMAs and they can reflect significant impediments to the use of PMAs – particularly among engines. David Doll added his belief that one of the reasons that OEMs purchased MRO facilities was to protect their aftermarket parts sales markets; he concluded that OEM MRO facilities may reflect another impediment to PMA penetration.

Aerostrategy sees the PMA industry continuing to grow at a rate faster than the rate of MRO growth, and is currently predicting that the PMA market will grow from in $367 Million 2010 to $665 Million by 2015 (assuming fuel prices remain within a moderate $80-$110 per barrel range). If this prediction proves correct, it will mean that the PMA market will have grown at a rate of over 12% over that period.

At the Gorham Conference, Michele Bassi-Degenkolb asked if Aerostrategy has looked at air carrier inventories to assess PMA penetration? Howard said that they have not done this for the whole market. Michele Bassi-Degenkolb pointed out that United is pushing PMA at their MRO service suppliers, and is looking carefully at their contracts to make sure that there are no impediments to PMA. She explained that airlines are getting smarter as they understand better how to overcome PMA impediments, in order to take advantage of the savings and reliability improvements associated with PMA.