A remarkable renaissance looms over commercial aviation maintenance, repair, overhaul (MRO). Air carriers increasingly and eagerly seek to embrace effective innovations to improve current and future performance. They now show disinterest in rundown, often tatty, practices and solutions of the past. And, that’s the good news!
The bad news is that the recent transformations for the better does not point out to solid and ceaseless successes. Particularly a somewhat disheartening state of affairs emerges when it comes to Artificial Intelligence. The silver lining is that all stakeholders are working tirelessly to improve the situation.
In a November 2025 article, MIT NANDA reported that of $30 to $40 billion spent by enterprises on generative AI, merely 5% of organizations experienced some return. This finding conforms with last year’s Boston Consulting Group report that stated only 5% of surveyed companies were “future-built” and were generating value from AI, 35% were scaling while starting to generate value, and the remaining 60% generated minimal value or none at all. McKinsey also shared in March 2025 that 80% of organizations it researched showed no tangible impact from regenerative AI.
Specifically for MRO, typically numbers stay similar. Somewhere between 72% to 94%, based on published results, is currently projected for the AI failure rate. Many reasons explain for this high rate, with the primary two being data issues (availability, quality, consistency) and resistance to embracing digital transformation.
At the same time, MRO poses a significant cost to air carriers. Oliver Wyman has reported that MRO represents 10% to 11% of the total operating budget. It is also expected this expense item to grow from current $139.6 billion to $193.1 billion by 2036, corresponding to 3.5% annual cumulative increase.
With this backdrop, it becomes clear that current practices must change and improve solidly, along with new business paradigms, as MRO organizations proceed forward in this ever-changing industry. Digital and nondigital transformations must take place, with much better success rate as compared to the current figures. That’s no longer negotiable.
Sun Tzu, Chinese military general and thinker, in his seminal book, The Art of War, wrote, “War without strategy is the noise before defeat.” He famously wrote that 25 centuries ago. Yet that wisdom depicts the today’s quandary faced by MRO players. Without a strategy roadmap, any digital transformation and AI implementation faces demise.
There is an important step before the work for strategy development. Operators need to understand their business fully and have the ability to determine needed resources under different scenarios. Without that, misalignments across the organizational units, even intra-unit, occurs, and that is definitely harmful.
MRO organizations segment the overall work into distinct business lines: airframe, engine, component, landing gear, and auxiliary power unit (APU). Airframe MRO is further broken down into line (field) and heavy (base). Looking into the future, these business lines must be analyzed, investigated, and examined diligently but separately. That doesn’t mean creating silos. It is more about how to create proper processes for each business line and allocate resources directly to it, yet being mindful of shared functions, e.g., materials management, engineering, information technologies, human resources.
The strategy work can then begin. In fact, the task becomes purpose-specific strategy development for each business line – separate strategy for separate business line. The first obvious decision is whether to carry on the work inhouse, outsource, or hybrid.
From there, the overall strategy permeates down to business units. Whereas that overarching top-tier strategy doesn’t need to be rigid and unable to incorporate the dynamics of the MRO ecosystem, certain aspects of it ought to be solid enough so that lower-tier organizational units can plan for execution.
Once the strategy and its roadmap are adopted, then and only then, digital transformation, including AI incorporation, can begin. Those are disciplined developments and methodology-based implementations, undertaken either internally or through outside providers. It must be recognized and noted that internal digital developments can be hugely costly with inconclusive results. People who put the initial requirements or work on the developments change and the incoming persons may not agree with the work already done. They want to do the same work all over again and to their desire.
On the flip side, what outside providers supply the company rarely meets all the requirements. Gaps are identified while “as-is” business processes are reviewed as a matter of necessity for morphing them into “to-be” processes. Extensions and enhancements to the core digital/ AI offering are subsequently discovered and classified. That adds to both the time and cost of successful implementation.
“For every complex problem, there is a solution that is clear, simple, and wrong,” said H.L. Mencken. Creating strategies and implementing AI look deceptively straightforward. It is anything but. There are multi-layers of complications and inter-dependencies. Decisions impact an array of organizational units and their functions, performance, and contributions. Yet, do-nothing is not an option any longer.
The often-used term for MRO, re-manufacturing, delivers a harmful connotation that it is kind of similar to manufacturing. Many strategy practitioners and digital/ AI solution providers took materials from manufacturing in hopes of applying them to MRO, branded as re-manufacturing. That invites nothing but troubles.
In simple terms, manufacturing is based on the principles of Material Requirements Planning, where layers of production activities ultimately lead to the completed product. Not totally but relatively, those are somewhat deterministic activities.
But for MRO, the condition of the equipment that goes to the shop is mostly unknown prior to opening up the unit, inspecting it, and routing it for repair based on the revealed condition and root cause.
Caveat emptor when a digital/ AI provider points out to the success of their platform when applied to manufacturing! A smart MRO operator always investigates those offering as it applies to re-manufacturing/ MRO since often enough, a whole new offering is needed rather that creating lots of workarounds and applying them to the manufacturing solution.
The encouraging message is that the strategy-based and AI-driven transformation prepares MRO operators for the future. Hard work will be required and talented employees will be critical components of that transformation. The end result, however, will be awesome!
About Jahan Alamzad:
Jahan Alamzad is managing principal of CA Advisors. He was previously director of strategy and analytics at PricewaterhouseCoopers. Mr. Alamzad has held senior leadership positions for more than two and a half decades. He specializes in the application of advanced analytical techniques to complex business problems. He has been engaged in a variety of assignments in operations, marketing, planning, and finance functional areas, ranging from mergers and acquisition, strategic planning, decision analysis, business-process reengineering, and organizational restructuring to tactical operation analysis and resource planning.
Before CA Advisors and PwC, Mr. Alamzad was director of airline, aerospace, and operations research practice at Applied Decision Analysis, which was acquired by PricewaterhouseCoopers. Prior to his management consulting career, he worked at American Airlines operations research department in the airline’s finance division, and before that he was at United Airlines maintenance operations division. He was a lecturer of entrepreneurship and innovation management at Notre Dame de Namur University, School of Business and Management. He also taught aviation management classes at San Jose State University, Department of Aviation.
Mr. Alamzad holds an M.S. in management science and engineering from Stanford University, an M.S. in industrial and systems engineering from the University of Southern California, and a B.S. in civil engineering and a B.S. in electrical engineering from the University of Illinois.
