The Global Aviation Engine Crisis: A Generational Opportunity for Tier 2 & 3 Suppliers
The commercial aviation industry in 2026 is facing a clear and persistent problem: there are not enough engines to meet the demand for air travel. What started as a temporary delay in parts and labor after the pandemic has turned into a long-term shortage. This is not a passing phase; it is a fundamental change in how the aerospace economy will work for the next decade. While major airlines and large engine manufacturers (OEMs) are struggling with these delays, this situation has created a significant, long-term business opportunity for Tier 2 and 3 suppliers and smaller, specialized maintenance, repair, and overhaul (MRO) shops. Of note, these Tier 2 and 3 Aerospace & Defense suppliers are the core market of Alderman & Company’s Sell Side M&A practice.
One of the primary causes of this shortage is driven by the performance of the latest-generation geared turbofans and LEAP engines, which are experiencing shop-visit intervals significantly shorter than their predecessors. This durability gap is stark; on-wing life for some new-generation engines has been recorded at up to 50% lower than initial projections in harsh environments [1]. Consequently, as of early 2026, the industry is grappling with a backlog of over 3,500 engines awaiting shop visits globally [2], while the average turnaround time for a full engine overhaul has inflated from 60–90 days in 2019 to over 180–240 days in 2026 [3]. For Tier 2 and 3 suppliers, the producers of specialized fasteners, seals, and sub-components—this creates a “perpetual demand” cycle because OEMs cannot produce new parts fast enough to satisfy both the assembly line and the repair shops simultaneously.
As of the writing of this article, this narrative faces potential headwinds from the war in Iran, where a prolonged period of global oil prices above $100 per barrel could trigger a global reduction in air travel demand and a subsequent sharp decline in the need for new aircraft and MRO services.
The pressure on Tier 2 and 3 manufacturers is further intensified because the traditional “safety valve” of the industry, the secondary market, has effectively dried up. Historically, the secondary market allowed engine users to gather spare parts by taking them from retired aircraft to fix active ones. However, the lack of new aircraft deliveries from Boeing and Airbus has forced airlines to keep their aging fleets (like the A320ceo and 737NG) flying much longer than intended. As a result, the availability of Used Serviceable Material (USM) has declined by an estimated 25% year-over-year as retirement rates hit record lows [4]. Without these used parts to scavenge, the supply chain is being pushed to produce brand-new components for nearly every repair.
This reliance on new production has transformed Tier 2 and 3 industry participants from commoditized vendors into critical strategic suppliers. The “Big Three” OEMs (GE Aerospace, Rolls-Royce, and Pratt & Whitney) have now identified Tier 2 and 3 stability as a critical risk that needs to be carefully managed.
The shortage of specialized components is no longer just a nuisance; it is a constraint on global travel and economic growth.
Because of these industry dynamics, Tier 2 and 3 Aerospace and Defense companies now possess significant pricing power. This leverage allows these suppliers to raise prices and demand other important economic terms, such as short payment terms.
We expect to hear more about these shortages and Tier 2 and 3 pricing power at the Farnborough Airshow in July 2026. We expect to see the focus of the show this year to no longer be just about which giant corporation signs the biggest order for new planes. We also expect to hear about which OEMs have the most successful and effective supply chains and which OEMs can keep up with demand. For the independent aerospace and defense company owner, whether you are providing the “release valve” for an overwhelmed OEM or working directly with a leasing company to bypass the waitlist, Tier 2 and 3 suppliers to the commercial aviation industry have become more essential than ever before.
References & Data Sources
[1] Aviation Week Intelligence Network (2025): Analysis of GTF and LEAP Time-on-Wing Metrics
[2] IATA 2026 Market Outlook: Global Fleet and MRO Capacity Constraints
[3] Aerospace Testing International: The Evolution of MRO Turnaround Times post-2024
[4] Canaccord Genuity Aerospace Report: The Collapse of the USM Market and the Rise of New Part Demand
[5] Supply Chain Management Review: Lead Time Benchmarking in Aerospace Manufacturing
By Troy Medeiros, Vice President, Alderman & Company
