August 05, 2013
Almost 20 years into the program, many Boeing 777 parts are still scarce and expensive in aftermarket trading. This may be what the future looks like for other new models that rely on OEMs and long-term agreements for future support.
A majority of 777 parts are in short supply, according to Zilvinas Sadauskas, CEO of Locatory.com. “Only 20% of 777 inventories may be found on the open market,” Sadauskas notes. Airframe, component and engine OEMs have maintained tight control of the market. Some engine OEMs buy old engines to secure their position in spares.
OEM control affects pricing and availability. Some OEMs maintain aircraft-on-ground (AOG) warehouses around the world, but Boeing's AOG stock is more concentrated. Sadauskas argues this imposes heavy downtime costs on some operators. Parts that are available from non-OEMs tend to be non-critical, not much of a help with AOGs.
Sadauskas sees no end to scarcity. Of more than 1,000 777s delivered, he says only five have been scrapped or written off. Aviation Week data show 1,090 777s are in service, with three in storage. Youth of the fleet and high aircraft values should keep parts rare and expensive for quite a while.
John Avery, director of supply chain services at A J Walter Aviation, distinguishes between 777-200s, for which materials are available but expensive, and -300s, for which materials are very tight and available only from OEMs, selling at manufacturer's list price (MLP) or catalogue price. For -200s, avionics, wheels and brakes, landing gear and line replaceable units (LRU) for engines are costly, “and material lead times from OEMs are not great, but for -300s there are genuine shortages with extended lead times.” With -200s just starting to be parted out, Avery expects more materials to become available in 2013, but sees shortages persisting for -300s for “two or three years.”
Spirit AeroSystems supplies nacelle parts such as thrust reversers, cowls and inlets to the 777 aftermarket. Jeff Tomei, director of aftermarket business development, notes aftermarket demands compete with production of new 777s. On nacelles at least, -200s and -300s are in essentially the same position. “There is some extension in lead times that can create shortages in the aftermarket.”
Tomei notes 777s are newer and much less plentiful than 737s, and its nacelles are much more expensive, so “people do not put 777 parts on the shelf as much.” Especially on 777s powered by GE90s, Spirit thus has pricing power and sells at catalogue prices.