Upward trend: With domestic travel back to pre-COVID-19 levels, China's MRO industry is on the way to recovery.
China’s aviation industry has recovered to a large extent from COVID-19, thanks to the quick rebound of domestic air travel, but such a recovery will be difficult to replicate in other regions, says Norbert Marx, Chief executive officer and general manager of Chinese MRO GAMECO.
Recovery in any region depends on effective control of the pandemic and access to a large domestic market, Marx said, during his keynote address on the MRO industry in China, at the MRO Asia-Pacific virtual conference organized by Aviation Week. “Regions with large markets such as North America, India, Latin America and Europe do not yet have sufficient control over the pandemic. Regions with effective control over the pandemic such as Singapore, Dubai and Qatar do not have a large enough domestic market,” he added.
Recovery in other regions, when it happens, will be at a lower level compared to China, Marx said, “because no one has this size of the market in terms of the size of the country, the number of people, and control of the pandemic. “My expectation is that, full recovery is only likely after sufficient immunity really has been established. Even in China, recovery of MRO will level off with a negative gap compared to 2019, because of the suppressed international market.”
With the pandemic, MRO has changed from a supplier market to a customer market, Marx said. COVID-19 has resulted in loss of jobs. lower salaries and the industry becoming less attractive to Gen. Z. The ongoing situation will trigger consolidation in the industry and one can expect to see changes in strategy, as well as mergers and acquisitions over the next year. On the positive side, the pandemic has hastened the speed of implementation of digitalization in the industry, besides increasing the demand for freighter conversions, he added.
The COVID-19 situation is under control in China since April, Marx said. The number of passengers has steadily increased since then, with the number in September being higher than what it was in September last year. GAMECO is working at around 80 to 90% on average” now, with the bulk of business coming from domestic air travel.
Recovery in China is good news for OEMs, Marx said. “Before COVID-19, the Chinese market for new aircraft represented about 25% market share. That will rise to 33% after CoVID-19.”
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