Aftermarket Awaits Major A320neo Boost
First delivered in 2016, the Airbus A320neo has proved to be a highly popular member of the narrowbody community. Part of the new, more fuel-efficient generation of aircraft, A320neos sold well even as oil prices receded in 2016 through 2020. Now, with fuel costs rising and climate concerns intensifying, all the fuel-stingy types are highly preferred over their legacy predecessors.
Aviation Week’s 2022 Fleet & MRO Forecast shows there will be 1,652 A320neos in service by the end of 2022, representing nearly two-thirds of A320neo-family deliveries to date.
Maintenance on these jets will cost roughly $2 billion this year, with most of that spending going for either components, at 42%, or line maintenance, at 31%. Engine MRO, at 18%, and airframe heavy checks, at 8%, are smaller shares for this young fleet. There will be nearly seven times as many heavy checks as shop visits for A320 engines. Modification spending is a trivial 1%.
GE Aviation’s Leap 1As will power more than 60% of over 600 A320neos delivered in 2022. Both GE and Pratt & Whitney are experiencing supply chain challenges with structural castings and other parts, resulting in delayed engine deliveries. Pratt says it continues to work on mitigation strategies and expects better performance in the aftermarket soon.
China has the most A320neos now, but MRO spending is greatest in India, at $614 million in 2022, and in Western Europe at $383 million. MRO on Chinese A320neos comes in third at $314 million, and Latin America finishes fourth at $185 million. North America trails at $158 million, as Boeing narrowbodies still dominate the U.S. market.
Airframe work in 2022 should require $265 million in materials and nearly $500 million for 8.7 million hr. of labor at an average of $57 per hour. More than half of material costs will be spent on daily and weekly checks, while 41% of labor hours are devoted to these tasks. The rest of labor and materials spending is for A and heavy C checks as well as transit checks.
The C checks focus on systems, not structures, explains Sonia Dumas, head of services marketing at Airbus. They take about 1,500 labor hours, and turnaround time (TAT) depends on the number of mechanics dedicated to the work; typically, it is four days.
Lufthansa Technik Sofia’s C checks include operational and functional checks, visual inspections and free play checks, defect rectifications, component replacements and even modifications, explains Vladimir Petkov, planning team leader. The MRO has met only minor challenges, including conflicts between extended slats and open engine cowlings and interchangeability of parts on Neos versus Ceos.
Supply chain problems are not currently affecting TAT, as these are scheduled events and spares can be provisioned ahead of time, Dumas says. Only new findings might upset the schedule. Petkov notes that new Neos generate few findings. A few trimmable horizontal stabilizer bearings were found to be loose, prompting the MRO to remove the tail cone. Petkov says customer-supplied materials occasionally present TAT challenges.
More than 300 shops worldwide have A320 capability, so competition is ample. Nevertheless, problems in finding and training mechanics could affect Neos along with the rest of aviation.
More than 4,600 A320s, Ceos and Neos are connected to Airbus’ Skywise platform for collecting operational and maintenance data, which helps airlines anticipate unscheduled events. About 500 of these aircraft receive predictive maintenance services from Skywise. All Neos come with flight operations and maintenance exchanger equipment that supports predictive maintenance.
Predictive maintenance enabled one large European operator of A320s to avoid 100 unscheduled events in a year. Antonio DaCosta, head of single-aisle marketing at Airbus, stresses that predictive maintenance emphasizes aircraft availability, not just reliability, by minimizing delays and cancellations.
DaCosta says the A320neo’s market share makes it the reference aircraft for the short- to medium-haul market. The Neo’s 20% reduction in fuel burn and CO2 emissions and 50% reduction in noise should continue to attract customers, and Airbus plans to ramp up production to 75 per month by 2025.
The demand should be there. “It seems very unlikely that the Boeing 737 MAX family will recover ground lost to the A320neo family in net orders and deliveries,” says Mike Yeomans, valuations and consulting director at IBA. He notes that the MAX family lacks a competitor to the A321neo, and the A321neo LR’s range boosts the Airbus share as well. But Yeomans expects future Neo-family orders to focus on A321neos as airlines upsize their fleets. A320neos have accounted for 43% of Neo-family gross orders since 2017.
Brad Dailey, a director at Alton Aviation Consultancy, agrees with Yeomans that MAXs are unlikely to catch up with Neos, partly due to increased appetite for size, and Neo orders are shifting upward toward A321neos. However, he argues Boeing may benefit from supply chain constraints, as Airbus cannot offer near-term A320neo delivery positions.
In any event, by the end of 2031, the A320neo fleet will be much bigger and older. Expecting 4,885 A320neos in service by December 2031, Aviation Week predicts MRO spending on the popular narrowbody will more than quintuple to $10.2 billion (at 2022 price levels), funding nearly 2,700 MRO events.
As the fleet ages, the pattern of MRO will shift. By early in the next decade, engines will require nearly half (44%) of total MRO spend. Line, at 17%, and components, at 29%, will be major MRO accounts. Airframe heavy checks will be a small 7% of a much larger total MRO spend.
Modifications will become slightly more important at 3% of that $10.2 billion bill.
India is expected to lead the A320neo fleet in 2031, with 754 of the type flying, followed closely by Western Europe at 731, Asia-Pacific at 659 and Latin America at 654. China drops to fifth place with a fleet of 650, and North America still lags at 577.
MRO spending will mostly follow the same pattern, with India leading at $2.3 billion, followed by Western Europe at $1.9 billion, and Latin America and China nearly tied at $1.3 and $1.2 billion, respectively.
More than 340 A320neos are expected to be delivered in 2031 and with Leap engines to dominate these deliveries, powering nearly three-quarters of new jets.
“The GTF [geared turbofan] has arguably more advanced design and lower fuel burn,” Yeomans says. “However, it has suffered a greater number of entry-into-service issues, which have impacted durability. Engines had to be removed for maintenance more frequently.” Furthermore, CFM International is building on its larger share of Ceo narrowbodies, 60% versus IAE engines.
But given limited operating experience, many questions remain about the long-term maintenance costs of both Leaps and Pratt & Whitney GTFs, according to Dailey. He thus expects early adopters of both types to seek the security of flight-hour contracts with engine OEMs.
As the fleet ages, the pattern of major MRO events will shift. Heavy C checks will dominate, with 40% of events, and 6-year and 12-year D checks will be 14%. The remainder will be engine shop visits with life-limited parts replaced at about a quarter of shop stays.
Material and labor costs for airframe work will also rise with fleet size and age. Overall, $866 million will be spent on materials for all airframe checks and $1.6 billion on 22.8 million hours of labor, implying a significant increase in real labor costs, to $70 per hour.
Daily, weekly, transit checks and A checks will require most airframe labor, more than 70%. Heavy C and D checks represent a quarter of airframe labor. Daily and weekly checks will require 41% of airframe material spending, followed by D and C checks at 18% and 11%, respectively.
Airbus now expects six-year D checks to take less than 10 days and 12-year D checks to require about 15 days. However, Dumas says the OEM is hoping to postpone some six-year tasks to the 12-year visit and some 12-year tasks to the 18-year stop, so some MRO efforts and costs may be deferred.