Air Transport World

Space available: get ready for the next big shakeout. Airframe shops are not immune from the changes sweeping the industry.

Remember the shortage of maintenance facilities that was forecast in the late 1980s? Remember how anyone with a couple of spare acres near an airport was supposed to build a hangar and wait for the business to roll in? Well guess what: The experts were wrong.

Turns out that instead of having too few hangar bays in the U.S., we have too many, far too many. And that is bad news for smaller and poorer-capitalized shops that are unprepared to weather a business drought.

"Third-party maintenance capacity for the next 5-10 years is away over demand," says Patrick Murphy, VP-operations and COO of Avitas, Inc., the Reston, Va.-based aviation consulting firm. Avitas has studied the market closely over the past two years.

"I agree 100%," says Joseph Vreeman, VP-engineering and maintenance at the Air Transport Association of America. "There was some concern in the late 1980s about having enough capacity but that has turned around completely."

With business from airlines expected to be scarce, a shakeout and consolidation process is under way, leading to an environment in which a handful of large one-stop vendors will dominate the landscape, says Murphy. As the pool of airlines continues to shrink, suppliers of maintenance services need to try to lock up partnership agreements from the survivors. They also should try to capture business from overseas markets, where the weak dollar makes U.S. labor rates attractive. To date, few U.S. shops have received foreign repair-station approval but that will have to change. Players seeking niches need to look at cargo conversion, hush kitting/re-engining and Section 41 work, according to Avitas.

Evidence of overcapacity can be found in the fact that former Pan American and Eastern Airlines maintenance facilities in New York, Miami and Atlanta remain on the market, attracting little interest from potential purchasers. …

Log in to your account to read this article – and millions more.