WASHINGTON — After years of declining investments in maintaining military transport fleets around the world, experts now expect the global airlift and mobility sustainment market to grow for the first time since 2011.
The global military maintenance, repair and overhaul (MRO) market, which supports aircraft from the Air Force's C-130s to unmanned helicopters, is set to rise steadily from now until 2020, according to Hal Chrisman, vice president with services firm ICF International.
The forecast market growth is due to strengthening defense budgets across the world, healthier economies in Europe, and a spike in global conflicts — particularly in the Middle East and Ukraine, Chrisman said. A growing threat from China is also driving US military spending in the Pacific, he added.
The MRO sector peaked in 2011 at $66 billion, while casualties were declining in at the height of the wars in Afghanistan and the US was pulling out of Iraq, Chrisman said. But The market has sharply declined each year since and has bottomed out at $55.6 billion in 2015, he said.
The US drawdown in Iraq, as well as budget crunches across Europe, primarily drove the market's steep decline in past years, Chrisman said, noting that the US makes up almost half of the MRO market.
"What was happening was that utilization was dropping pretty fast," Chrisman said. "Now we believe that has leveled off."
A C-130 Hercules undergoing maintenance at Robins Air Force Base.
Photo Credit: Sue Sapp/US Air Force
Experts now believe the market will grow to $59.4 billion in 2020, according to ICF International's latest forecast. Some of that expected growth is due to aging fleets, like the C-130 and C-17 transport jets, Chrisman said.
"[Depots are] going to find more work to do, they do their inspections, they are going to find more corrosion," Chrisman said. "So you get a couple percentage points increase in the cost of maintenance every year – not from inflation, but just by the fact that they find more unscheduled work that needs to be done."
One potential area of growth for the MRO market is the Air Force's legacy C-17 transport fleet, built by Boeing. Current contracts on the C-17 ended in the third quarter of 2014, and Boeing delivered the last plane in September.
Although right now the Air Force does not anticipate the need for a full C-17 service life extension program, the service may re-evaluate based on future need, according to one top general.
"Tomorrow may change the story, because we may be — who knows what's going on in the world," Gen. Carlton Everhart, commander of Air Mobility Command, said last month. "We will continue to do continuous studies on that to make sure we got this right."
Conversations the Air Force has had with Boeing engineers indicate the C-17s may be able to safely fly more than 45,000 hours, well past initial estimates for the fleet's service life, according to one Air Force official.
The C-17 was originally delivered with a service life of 320,000 flight hours, which equates to 1,000 flight hours per year for 30 years, according to Col. Mark H. MacDonald, chief of the requirements division at Headquarters Air Mobility Command. In 2013, the Air Force extended the C-17’s service life limit to 42,750 hours, he added.
"Right now, we don't anticipate the need for a C-17 full service life extension program," MacDonald told Defense News in an email last week.
However, the Air Force does anticipate the need to address specific structural issues in the mid- to late-2020s, for example with instance upper wing and aft fuselage re-skin problems, MacDonald said.
"Other targeted fleet programs can eventually be used to refresh aging components, but we'll make sure the C-17 continues to operate safely and reliably," MacDonald said. "It's been a workhorse for the past 22 years and continues to excel in a wide range of scenarios."
In the meantime, major airlift suppliers, like Lockheed Martin, Boeing and Airbus, will also look to capture international sustainment opportunities, Chrisman said.
"[Original equipment manufacturers] at Lockheed, Boeing, Airbus are looking at what can we do to capture more of this international sustainment opportunity and what value proposition can we put out there," Chrisman said, noting that in many countries, a large percentage of the fleet is unavailable as aircraft wait for maintenance.
"A lot of places around the globe don't do a great job with sustainment."
Still, Chrisman cautioned that experts had anticipated the market would stop falling in 2013 – a prediction that turned out to be false.
"In 2013, we thought it had bottomed out at about $60 billion, and turned out that it didn't," Chrisman said. "It kept going down another 3 to 5 percent over the next two years."