Middle East aviation MRO market expected to grow to $3.07bn by 2012, says Frost and Sullivan
15-Feb-2011 The Commercial aviation sector in the Middle East has been witnessing rapid growth over the past decade. Airport development activities in the region and growth in the aviation sector go hand in hand. Airline operators in the Middle East are in the process of expanding their fleets to cater to the surging passenger traffic, thereby driving demand for the MRO market in the region.
For instance, Emirates Airlines, the largest customer for A380 has ordered about 90 A380's from Airbus.
New analysis from Frost & Sullivan (www.aerospace.frost.com), Middle East Commercial Aviation MRO Sector finds that the passenger traffic in the Middle East was about 183 million passengers in 2009; this is expected to increase to about 386 million passengers by 2020. Frost & Sullivan expects the Middle East Passenger Traffic to grow at a Compound Annual Growth Rate (CAGR) of 7% in the next 10 years. However, growth is expected to be higher post 2020.
"Middle East is a preferred business hub due to the world-class infrastructure developed by the governments in this region. American and European companies are looking for emerging markets to expand their business. The geographic and economic aspects of the Middle East have attracted international companies into this region," notes Frost & Sullivan Aerospace and Defence analyst John Siddharth.
Increase in Low Cost Carriers (LCC) in the region post the economic recession is another major driver for this sector. A few full service airlines are using competitive pricing to penetrate into the LCC market. Low cost airlines are on an expansion spree and have huge order pipelines.
The governments in the Middle East are open to investments from western countries. These along with increased tourism, primarily driven by the Dubai Shopping Festival are other factors driving the growth in the sector. The Middle East is well located with easy access to Europe and Asia. The Middle East MRO market is expected to experience an average annual growth of 11% in the next 10 years. This would encourage airlines from Europe and Asia to fly into the Middle East.
The key restraint for the Middle East MRO market growth is the lack of a technically capable work force. Unlike Southeast Asian markets, rich oil reserves have supported the economy. The labor rates are closely associated with the lack of technically capable work; Middle East does not have a competitive edge on labor rates unlike Southeast Asian Countries. The well-developed European MRO market with its technical skill sets and infrastructure is another threat that the ME MRO market must address The European MRO market accounts to about 30% whereas the Middle East accounts to about 5% of the global MRO market.
The Middle East MRO Market is expected to grow to about $3.07bn by 2012 and to about $54.56bn in the next 10 years. "With domestic demand for the Middle East MRO market being very high, MROs need to focus on the Engine Segment where the potential is very high and the supply is less than 5% of the demand," continued John Siddharth.