September 23, 2013
Credit: A J Walter Aviaiton
Among airlines, manufacturers and the finance community, news of yet another mid-life aircraft being harvested for parts will rekindle the debate about adjusting the useful life of an airframe. In the aftermarket world, however, word of a part-out brings near-universal agreement on a different industry trend: the growing influence of surplus parts on MRO strategies.
As recently as a decade or so ago, sourcing serviceable parts was neither complicated nor efficient. It did not have to be. Top-tier airlines had larger spares pools and met much of their muted used-parts demand from within, selling off what they did not need. Original equipment manufacturers (OEM) were just starting to see the valuable roles that secondhand parts could play in their aftermarket portfolios.
As a result, part-out specialists could focus on their core competency—ripping planes apart—and earn an extra buck or two selling usable parts to brokers with their own end-user customer base.
“Twenty years ago, we were just supplying parts on an ad-hoc basis,” says GA Telesis President and CEO Abdol Moabery. “That has changed drastically.”
The numbers hammer home Moabery's point. In 2001, the air transport serviceable parts market was worth about $11 billion, with just 10% claimed by surplus parts, according to ICF SH&E data. A decade later, the market was close to $15 billion, while the surplus share had climbed to 18%. By 2015, ICF SH&E projects surplus parts could have 20% of the $17 billion-plus market for serviceable airframe, engine and component spares.
Several factors are playing major roles in this market shift. First and foremost, operators are changing their strategies. “Airlines realize that the increased availability of good-quality, used, serviceable material has allowed them to control costs by avoiding the need to put brand-new material into their engines or airframes,” says Steve Williams, director of aircraft engine services at A J Walter Aviation.
While many MRO-related changes stem from within the hangar, some take place on the flight line. An increase in leased versus owned aircraft also is boosting surplus-parts demand. In 2000, about 25% of the world's fleet was leased, Boeing data show. Last year, the figure was about 38% and by 2020, it will be above 50%.