Lower cost maintenance, repair and overhaul (MRO) hubs in Eastern and Central Europe will benefit from the growing demand for airframe maintenance as Western European companies face rising labor costs, according to Frost & Sullivan consultants, which recently issued its worldwide MRO forecast. The Eastern European MRO market was valued at $105.9 billion in 2005 and is estimated to reach $157.1 billion by 2012.

"Both Eastern and Western European airlines are preparing to absorb the surge in intra-European air travel demand through a combination of network and fleet expansion," said Frost & Sullivan Analyst Patrick Yeung. "In parallel, the upward spiralling of fuel costs will provide impetus for ex-Soviet aircraft operators to introduce Western-built aircraft that provide better operating economies and lower maintenance costs."

The net effect will be increased aircraft utilization and more MRO business. This will be boosted by growing East-West partnerships as Western European/Asian MROs extend their market reach and price competitiveness by forging relationships with Eastern and Central Eureopean MROs. Such partnerships could afford Eastern operators access to capital for the development of existing technology and knowledge base. This will help them maintain cost advantages over the West through maximization of productivity and asset utilization, said Yeung.

Frost & Sullivan also predicted the African MRO business will increase from $1.44 billion in revenues in 2005 to $2.05 billion over the forecast period. The growth will come from continuing liberalization on the continent and the emergence of new airlines aimed at meeting latent demand. Success on the continent will depend on the presence of a valued portfolio of services and a deeper understanding of the unique needs of African airline operators.

"Attractive air traffic growth rates and the expected domestic and regional air transport liberalization will drive growth in the market," said Analyst Diogenis Papiomytis. "Although African MRO suppliers cannot yet compete against their international rivals, their installed base is sufficient to allow them to effectively commercialize their business over time to meet the requirements of African airlines."

Nonetheless, African carriers, especially those in the regional airline market, have much to overcome. (RAN, April 3, p.6) Pockets of regional airline success dot the landscape of the African continent, as slow progress is achieved toward liberalization of its commercial aviation sector. Hurdles include capital constraints, safety, security, disease, and flight and management training. AIDS alone has cost thousands of highly skilled aviation professionals, including pilots, engineers and accountants. Liberalization in Africa has followed the usual pattern of consolidation and liquidation, as well as the development of several strong regionals serving successful commercial centers throughout the continent.