1. MRO Business Context
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

2. The Big picture
Agenda
MORE
FOR
LESS
AIRLINES
REDUCE
MAINTENANCE COST
MRO OEM
ONE STOP SHOP
FLY BY THE
HOUR SERVICES
MRO NETWORKS
MRO CONSOLIDATION
MRO NETWORKS
BETTER MAINTENANCE PROGNOSIS
BETTER USE OF DATA
INDUSTRIAL INTERNET
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

3. The big picture . . .
We live in the world of more for less
MORE
FOR
LESS
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

4. Things that all of us know
Passengers has the power to push down the airfares . . .
Data Source: IATA Profitability and the air transport value chain
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

5. The big picture . . .
… and the airlines are the first victims . . .
MORE
FOR
LESS
AIRLINES
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

6. Things that all of us know
Return on invested capital in the airlines and their WACC
"If you want to be a
Millionaire, start with a
billion dollars and launch
a new airline."
Data Source: IATA Profitability and the air transport value chain
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

7. Things that all of us know
Evolution of aircraft utilization
Data Source: IATA Profitability and the air transport value chain
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

8. Some things that some of us didn’t know . ..
ROIC services vs airlines
Data Source: IATA Profitability and the air transport value chain
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

9. Some things that some of us didn’t know . . .
Return on capital varies throughout the air transport value chain
Data Source: IATA Profitability and the air transport value chain
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

10. Things that all of us know
Airlines struggle with high and volatile fuel prices
0
20
40
60
80
100
120
140
160
180
Jet Fuel Spot Price WTI $/bbl Brent $/bbl
JET FUEL 77.5 WTI 50.57 BRENT 60.29
WTI & BRENT Data March 4th 2015: Source: Bloomberg
JET FUEL: February 2015 IATA
2015
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

11. Some things that some of us didn’t know . .
In 2005 fuel overpass labour as most important source of cost
Soucre: Air Transport Association of America 2012
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

12. The big picture…
The airlines are always looking how to reduce cost
MORE
FOR
LESS
AIRLINES
REDUCE
MAINTENANCE COST
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

13. Typical airline cost structure
33%
1%
4%
4%
5%5%
11%
7%
7%
7%
7%
9%
Fuel and Oil
Other**
Air Navigation Charges
Passenger Service
Cabin Attendants
Airport Charges
Aircraft Ownership
Station and Ground
Reservation , ticheting, Sales and Promotion
Flight Deck Crew
General and Administrative
Maintenance and Overhaul
IATA Airline Cost Management Group (ACMG) 2014
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

14. How can airline Management influence cost?
External factors
- Fuel prices
- Salaries
- Over flight and Landing fees
Limited control
 Aircraft Selection
 Fuel consumption
 Maintenance programme
 Insurance
 Aircraft Operation
 Fuel consumption
 Maintenance programme
 Crew costs
 Handling/Catering
Total control
 Administration
 Commercial policy (Lease or buy?)
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

15. Saving 1% of fuel
consumption will
have a higher
impact than
saving 1% on
maintenance
cost.
How can airline Management influence cost
Not all savings have the same impact
33%
1%
4%
4%
5%5%
11%
7%
7%
7%
7%
9%
IATA Airline Cost Management Group (ACMG) 2014
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

16. Maintenance cost
Context of direct and indirect maintenance cost
Total Operating Cost Disposal Cost
Direct Operating Cost Indirect Operating Cost
Financial Operation Maintenance Cost Delays/Cancellations Others
Direct Operating Cost Indirect Operating Cost
End of life
•Build/Facilities fees
•Administration
•Marketing
Purchase of:
•Aircraft
•Engines
•Spares
•Specific tools
•Interest
•Depreciation
•Crew Expenses
•Fuel
•Landing
•Nav Fees
•On a/c Labour & Material (Maintenance
Checks)
•Off a/c Labour & Material (Engine overhaul,
Component repair)
•Service Fees (e.g spares)
•Energy, IT services
•GSE Maintenance
•Engineering work
•Training
Insurance
Life Cycle Cost
Data Source: Air Business Academy 2013
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

17. Maintenance cost
Direct vs Indirect
Maintenance Cost
Direct Maintenance Cost Indirect Maintenance Cost
•Maintenance Costs (labour & material) associated
directly with operation the aircraft
•Basic costs for maintenance of airframe
components and powerplants
•Cost is a function of aircraft size, design, age and
its operating environment, etc, etc, etc ------
•Maintenance Costs associated indirectly with
supporting the fleet
•Additional costs for establishing and supporting
maintenance of the fleet
•Cost is a function of the level of support
required by the operator: its maintenance
capability, inventory and staff levels
Data Source: Air Business Academy 2013
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

18. Direct Maintenance Cost
Sources
• The need to verify full system functionality on a regular basis
• Airframe & system checks and inspections
• The need to restore full performance by replacing worn parts
• Engines, Components removed for overhaul
• The need to comply with unscheduled component failure
• Components replaced and repaired
• On-condition maintenance
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

19. Titelmasterformat durch Klicken bearbeiten
Some slides removed due to confidentiality . . .
Nicolas OSORIO LORA – Aircraft Lifecycle solutions

20. DMC
Definitions
DMC =
Check Component Repair Engine Shop Visit
+ +
Check Interval Comp. Repair Interval Eng. S.V Interval
DMC =
Check Component Repair Engine Shop Visit+ +
Total number of flight hours during the period
IN THEORY
AS REPORTED
Source: Air Business Academy 2013
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

21. Typical DMC Breakdown
Components
Source: Air Business Academy 2013
DIAGNOSTIC AND MAINTENANCE SYSTEM
NACELLES/PYLONS
INFORMATION SYSTEMS
LIGHTS
ICE AND RAIN PROTECTION
HARDWARE
FIRE PROTECTION
OXYGEN
FUEL
AUTOFLIGHT
VACUUM
WATER/WASTE
HYDRAULIC POWER
PNEUMATIC
COMMUNICATIONS
IN FLIGHT FUEL DISPENSING
INDICATING / RECORDING SYSTEM
FLIGHT CONTROLS
NAVIGATION
AIR CONDITIONING AND PRESSURIZATION
LANDING GEAR
EQUIPMENT/FURNISHINGS
Key parameters:
• MTBUR* / MTBR**
• Repair & Overhaul costs
Costs split at:
• Component level
• Part number level to identify drivers
Line
20%
Engine
42%
Component
23%
Base
15%
*Mean Time Between Unscheduled Removal
**Mean Time Between Removal
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

22. Titelmasterformat durch Klicken bearbeiten
Some slides removed due to confidentiality . . .
Nicolas OSORIO LORA – Aircraft Lifecycle solutions

23. Aspects that can influence aircraft maintenance cost
Newness and Ageing Factors
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Maintenancecostperyear
Years from entry into service
Newness factors
►Warranties
►Lower LRU removal rate
►Engines have long (first run) life
Ageing factors
►Corrosion
►Fatigue
►Engines costs increase, LLP need
replacement
Newness Maturity Ageing
Source: Air Business Academy 2013
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

24. Titelmasterformat durch Klicken bearbeiten
Some slides removed due to confidentiality . . .
Nicolas OSORIO LORA – Aircraft Lifecycle solutions

25. Maintenance cost in summary
After 25 years
A/C Value = Maintenance Cost (MC))
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

26. The big picture
Inside the MRO industry
MORE
FOR
LESS
AIRLINES
REDUCE
MAINTENANCE COST
MRO OEM
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

27. MRO
The Ecosystem – actors
- The MRO its part of the airline
and takes care of its own aircrafts
-It doesn’t provide services to
other airlines
-It might have or not all the
competences to perform the
whole aircraft maintenance
AIRLINE MRO
- The MRO is owned by the
airline but managed as an
independent business
- It can provide services to other
airlines
- The big MROs of this group try
to develop MRO networks
AIRLINE THIRD PARTY
- Their main business is aircraft
maintenance.
- They are not owned by an
airline or OEM.
- They can have single or
multiple capabilities
INDEPENDENT MRO
- Supply spares is the most
important source of incomes
for them.
- They want to enhance they
participation in the MRO
services to increase revenues
OEMS
Parts Manufacturer Approval
-It’s business is to produce and sell
approved spares that could replace
the ones from the OEMs
PMA
Objectives
- Develop new capabilities and
ensure market coverage
- Phase consolidation
- Provide one stop shop solutions
- Propose new services
JOINT VENTURES
- Supply the market with spares
either from OEMs or PMAs
DISTRIBUTORS
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

28. MRO
Market Forecast
Data Source: TEAM SAI. Data analysis P3 Group
11.5 13.2 17.2
22.1 29.9 33.212.2
15.3
18.7
11.9
14.8
17.7
2014 2019 2024
Airframe Engine Component Line
57.5
73.2
86.8
Compound Annual Growth Rate = 4%
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

30. MRO Suppliers participation in the market
Services and Materials
1%
56%
30% 23%
34%
14%
29%
9%
78% 8%23%
9%
5%
10%
12%
20% 30%
20%
30%
31%
10%
40% 40% 30%
48%
6% 4% 5% 2% 3% 3%
22%
Airframe Engine Line Cabin Systems Landing Gear Avionics Flight Control
OEM Airline Airline third party in house Airline third party outsourced Independent Joint Venture Contracted
8%
1% 1% 2%
20% 64% 58%
78%
10% 9%
42%
11%8%
8%
8%18%
Airframe Engine Line Component
Parts repair
Surplus
Distributors
OEM
PMA
Services Providers
Material Suppliers
Data Source: TEAM SAI. Data analysis P3 Group
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

31. VERY FRAGMENTED MARKET
MRO Suppliers participation in the market
Base maintenance suppliers
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

32. MRO COST STRUCTURE
Labor vs Material
60%
9%
77%
35% 50% 35%
62%
14%
40%
77%
23%
65% 50% 65%
38%
Airframe Engine Line Cabin Systems Landing Gear Avionics Flight Control
Labor Parts repair Material
Data Source: TEAM SAI. Data analysis P3 Group
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

33. MRO
Outsourcing trends
Source: IATA Airline Maintenance Cost Executive Commentary . Nov 2014
51 43 47 38
57
44
33
32
76
105 89 88
24 24 23 29
46 52 48 47
151 156 165 168
22 9 23 18
81
73 70 65
337 331 366 379
110
108 116 112
32
46
55 54
45 58
44 39
2010 2011 2012 2013 2010 2011 2012 2013 2010 2011 2012 2013 2010 2011 2012 2013
Base Component Engine Line
OUTSOURCED MATERIAL LABOR
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

34. MRO
Outsourcing considerations
1. Ferry costs
2. MRO capabilities
3. Turn-around-time
4. Quality of work
5. Customer service
6. Maintenance cost
?
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

35. MRO
Outsourcing considerations – Ferry cost
Boeing 777–200 LR
ATR
E-190
B737
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

36. MRO
Outsourcing considerations – Logistics, customer support and TAT
Irkutsk
Moscow
Sao Paulo
Mexico
Miami
Aeroflot: 2 freq/day
Paris
Frankfurt
Madrid
Lufthansa: 4 freq/day
Air-France KLM: 7 freq/day
Iberia: 2 freq/day
Lufthansa: 14 freq/week
Air-France KLM: 12 freq/week
Iberia: 14 freq/week
Lufthansa: 7 freq/week
Air-France KLM: 3 freq/week
Iberia: 14 freq/week
Lufthansa: 7 freq/week
Air-France KLM: 7 freq/week
Iberia: 7 freq/week
Source: P3 Group & AeMBA MCTP 2010
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

37. MRO
Outsourcing considerations – Logistics, customer support and TAT
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

38. 10
20
30
40
50
60
70
1990 1995 2000 2005 2010 2015 2020 2025
US$dollars
North America Mature Asian MRO Emerging Asian MRO
MRO
Outsourcing considerations – Maintenance cost
ALL THAT
MESS FOR
~4 BUCKS?
59US$
55US$
45US$
Average Widebody Airframe Heavy Maintenance 3rd Party
Labor Rates In North America vs. Asia (USD per Man-Hour)
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

39. Big Picture
Welcome to the future . . .
MORE
FOR
LESS
AIRLINES
REDUCE
MAINTENANCE COST
MRO OEM
ONE STOP SHOP
FLY BY THE
HOUR SERVICES
MRO NETWORKS
MRO CONSOLIDATION
MRO NETWORKS
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

40. The evolution of the MRO after The 90’s
1990 1995 2000 2005 2010
Early 1990s Late 1990s Early 2000s Late 2000s Present
Aftermarket
Afterthought
Increased Engine
OEM Awareness
Emergence of
MRO Integrators
Airline
Bankruptcy
Airframe/
Component OEM
Response
Source: Business Model Innovation In The Commercial Aftermarket; KATE SCHAEFER; MOOG 2014.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

41. Aftermarket was an afterthought in the Early 1990s
1990 1995 2000 2005 2010
Ecosystem 1990-1995
Airlines
• Mostly captive
maintenance
• Maintenance cost center
OEMs
• Aftermarket afterthought
• Rolls-Royce ahead of game
Independents • Large independents
• Most airlines performed maintenance inhouse
• Rolls-Royce first to introduce flying hour support via
TotalCare® contract with Cathay Pacific A330 EIS in
1995
• GE purchased British Airways engine MRO shop (GE
Wales)
• Emergence of profit focused airline MROs e.g.
Lufthansa Technik, Swiss Air, TEAM Aer Lingus, SIAEC
Source: Business Model Innovation In The Commercial Aftermarket; KATE SCHAEFER; MOOG 2014.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

42. Airlines Began Seeking Maintenance Cost Savings in the Late 1990s
• Economic pressure forcing airlines to seek cost savings
whenever possible
• Emergence of low cost carriers with total outsource
maintenance e.g. easyjet
• FLS Aerospace and LHT innovate with component
management solutions
• PMA parts gain traction as airlines face escalating OEM
spare parts pricing
• Lufthansa Technik acquired a 20 percent stake in HEICO
in 1997
1990 1995 2000 2005 2010
Ecosystem 1995-2000
Airlines
• Airlines scrutinizing
maintenance investment
Increasing outsourcing
OEMs
• Increase awareness with
some OEMs
Independents
• Boom times
• Emergence of PMA
Source: Business Model Innovation In The Commercial Aftermarket; KATE SCHAEFER; MOOG 2014.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

43. Several Large MRO Integrators Established in the Early 2000s
• Structural change in the market as major US
carriers spun off maintenance arms
• Swiss Air and Sabena bankruptcies create two
new independent integrators: SR Technics and
Sabena Technics
• Beginning of broad component support era -
Lufthansa Technik launched Total Component
Support® with Spirit Airlines
Ecosystem 2000-2005
Airlines
• Maintenance not viewed as
core anymore
OEMs
• Some OEMs develop
dedicated aftermarket
organization
• Isolated innovation
Independents
• Some encroachment by
OEMs
• Emergence of large
Integrators
• PMA heyday
1990 1995 2000 2005 2010
Source: Business Model Innovation In The Commercial Aftermarket; KATE SCHAEFER; MOOG 2014.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

44. Late 2000’s were Characterized by Airline Bankruptcies and
Maintenance Arm Spin Outs
• Several airline bankruptcies in North America: US
Airways, United, Air Canada, Northwest etc.
• Airlines maintenance arm spin outs: Air Canada
Technical Services
• GE launched TRUEngine® program in 2008 as defensive
measure against PMA usage
• Rapid growth of Middle East carriers; Goodrich opened
Dubai campus in 2006
1990 1995 2000 2005 2010
Ecosystem 2006-2010
Airlines
• Spin out or slim down
• Bankruptcy
OEMs
• More OEM aftermarket
Organization
• Some service innovation
Independents
• Independents losing
market share
• PMA growth slows down
Source: Business Model Innovation In The Commercial Aftermarket; KATE SCHAEFER; MOOG 2014.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

45. The Focus is Now on Airframe and Component OEM
Response in the Aftermarket
• Aircraft OEMs establishes aftermarket support
programs: Airbus FHS / Boeing GoldCare
• Component OEMs grows flying hour offering
and introduces licensed service center model
• Era of surplus parts and aircraft cannibalization
• Emergence of AJ Walter
1990 1995 2000 2005 2010
Ecosystem 2010
Airlines
• ROIC focus
• Consolidation
OEMs
• Aircraft and component
OEMs get aggressive
Independents
• Independents struggling
• PMA market flat
• Asset management giants
(AJ Walter)
• Decision to compete or
partner
• Aircraft recycling
Source: Business Model Innovation In The Commercial Aftermarket; KATE SCHAEFER; MOOG 2014.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

46. MRO
The Ecosystem – part 2
Narrow
Output
Oriented
Broad
transactional
Broad
Output
Oriented
Narrow
Transactional
Most of ATA
Chapters
BreadthFew ATA
Chapters
Transactional
Solutions
Service
Integration
Output
Oriented
Solutions
Broad Output Oriented
Key Selection
Criteria
• Access to inventory
• Total cost
Key Success
Factors
• Asset management
• Large rotable pool
• Logistics
• Customer support
• Account support
Key
Suppliers
• Global Integrators
• Aircraft OEMs
Broad Transactional
Key Selection
Criteria
• Price
• Breadth of offering
Key Success
Factors
• Low overhead
• Supplier
management
Key
Suppliers
• Component brokers
• Larger
independents
Narrow Transactional
Key Selection
Criteria
• Cost
• TAT
Key Success
Factors
• Low overhead
• Product Focus
• Execution
Key
Suppliers
• Small
• Independents
Narrow Output Oriented
Key Selection
Criteria
• Total cost
guarantees
• Engineering
Key Success
Factors
• Technical support
• organization
Key
Suppliers
• Tier 1 Component
OEMs
Source: Business Model Innovation In The Commercial Aftermarket; KATE SCHAEFER; MOOG 2014.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

47. New and ageing fleets requires different kind of services
Source: Business Model Innovation In The Commercial Aftermarket; KATE SCHAEFER; MOOG 2014.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

48. The Big Picture
The rise of the machines
MORE
FOR
LESS
AIRLINES
REDUCE
MAINTENANCE COST
MRO OEM
ONE STOP SHOP
FLY BY THE
HOUR SERVICES
MRO NETWORKS
MRO CONSOLIDATION
MRO NETWORKS
BETTER MAINTENANCE PROGNOSIS
BETTER USE OF DATA
INDUSTRIAL INTERNET
Optimize parts utilization to
reduce cost, increase
revenue and maintain safety
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

49. Aircraft Data Value Chain
Data
generation
Data
Transmission
Data
hosting
Data
processing
conversion
Data
analysis (2) :
experts
Sensors &
Embedded
computers
Experts
Software
Applications(5)
Middleware (4)
ACARS
Gatelink
Data
analysis (1):
tools
Software
applications
Data
acquisition
ValuechainEmbedded
FDAU /
ACMS
Source: P3 Group.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

50. The Big picture
Conclusion
MORE
FOR
LESS
AIRLINES
REDUCE
MAINTENANCE COST
MRO OEM
ONE STOP SHOP
FLY BY THE
HOUR SERVICES
MRO NETWORKS
MRO CONSOLIDATION
MRO NETWORKS
BETTER MAINTENANCE PROGNOSIS
BETTER USE OF DATA
INDUSTRIAL INTERNET
Stay close to the
customer
• Braking silos - the middleware
• Information sharing
• Ingest data, analyse it , use it
• What is an airline?
• What is the product of the airline?
• What is the role of Airbus?
• Who do Airbus support?
• FHS coverage
• Consolidation (Civil and Defense –
Austerity) SIMMAD
• Outsourcing is a trend in civil and defense
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

51. Exercise – 1
Pick up an airline from your country and place it in one of the four boxes and give your reasons
Narrow
Output
Oriented
Broad
transactional
Broad
Output
Oriented
Narrow
Transactional
Most of ATA
Chapters
BreadthFew ATA
Chapters
Transactional
Solutions
Service
Integration
Output
Oriented
Solutions
Broad Output Oriented
Key Selection
Criteria
• Access to inventory
• Total cost
Key Success
Factors
• Asset management
• Large rotable pool
• Logistics
• Customer support
• Account support
Key
Suppliers
• Global Integrators
• Aircraft OEMs
Broad Transactional
Key Selection
Criteria
• Price
• Breadth of offering
Key Success
Factors
• Low overhead
• Supplier
management
Key
Suppliers
• Component brokers
• Larger
independents
Narrow Transactional
Key Selection
Criteria
• Cost
• TAT
Key Success
Factors
• Low overhead
• Product Focus
• Execution
Key
Suppliers
• Small
• Independents
Narrow Output Oriented
Key Selection
Criteria
• Total cost
guarantees
• Engineering
Key Success
Factors
• Technical support
• organization
Key
Suppliers
• Tier 1 Component
OEMs
Source: Business Model Innovation In The Commercial Aftermarket; KATE SCHAEFER; MOOG 2014.
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

52. Titelmasterformat durch Klicken bearbeiten
MRO 5 FORCES ANALYSIS
Suppliers bargaining power:
medium/low
+
Fragmented market of spare parts allowing
MRO to often look/ask for best deal, except for
specific complex parts (eg. Engine)
Customer bargaining power: medium
-
In general, airlines (especially large carriers)
able to shop around/ask for favorable
conditions
+
However several exceptions constraining
airline power
+
Geographical areas with limited MRO
coverage
+
Complex/customized parts with limited
providers
+
Urgent/emergency maintenance forcing a
price taker scenario
Intensity of competition: medium
-
Fairly fragmented market with many players
(except geographical or component niches)
-
Increasing competition from new low-cost
entrants especially in Asia
+
Multi-year contracts with airlines allowing for
competition reduction
Barriers to entry: medium/high
+
Brand/reputation asset very crucial as
safety/security is at stake
+
Technological know-how very relevant and not
so easy to replicate
+ MRO certification required by authority
+
Need for intense capital/investment to
provide proper assets
Threat from substitutes: medium
+
Airlines not likely to insource maintenance as
the trend has been more and more oriented
towards the outsouring of those activities
-
OEM trying to capture the engine-
maintenance market (not for the remaining
less complex parts) throug vertical integration
Nicolas OSORIO LORA – Aircraft Lifecycle Solutions P3 Group

53. Your Contact
Disclaimer
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property of P3. No intellectual property rights are granted by the
delivery of this document or the disclosure of its content. This
document shall not be reproduced or disclosed to a third party
without the express written consent of P3.
This document and its content shall not be used for any purpose
other than that for which it is supplied.
Web
www.p3-group.com
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53
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+33 (0) 534 528 220
5/25/2015
Nicolas Osorio Lora
Consultant - Aircraft Lifecycle Solutions
+33 (0)6 67 22 01 15
Nicolas.osorio-lora@P3-group.com