The Surplus Part’s Starring Role

By Sean Broderick
Source: Aviation Week & Space Technology

Because surplus parts offer comparable reliability to new parts at a fraction of the cost, they are often tapped to keep leased aircraft flying or prepare them for an end-of-lease return. “It doesn't make sense to gold-plate a lessor's aircraft,” Moabery says.

Among owned fleets, deciding to prolong the service life of an older fleet type may have its drawbacks, but surplus-parts availability is not one of them.

Take Delta Air Lines' continued use of nearly 120 MD-88s. Instead of overhauling engines and sourcing new components, the carrier can harvest what it needs from aircraft being phased out elsewhere, such as Scandinavian Airlines' (SAS) MD-82s and MD-87s, which Delta started strategically snapping up last year.

“These are aircraft that are typically purchased by part suppliers who will chop that airplane up and sell it for parts,” explains Delta CFO Paul Jacobsen. “[O]pportunities to acquire older airplanes and harvest them for parts has provided significant savings for us going forward in terms of a lower-cost basis for the overhauls that we have.”

Some of the ex-SAS aircraft may pay for themselves in “less than one year,” Jacobsen says.

Delta's strategy is more nuanced than simply keeping its old metal flying. In addition to parking regional jets, it planned to retire 14 mainline aircraft, including DC-9s, in the second half of this year. The moves will come as new aircraft‚ and new-old aircraft—such as ex-AirTran 717s—enter the fleet. The carrier is upgrading its MD-88s and MD-90s with glass cockpits, which both add capability and save weight, not to mention justify the stockpiling of used serviceable spares.

“Delta does have one of the older fleets in the system,” acknowledges Ed Bastian, the carrier's president. “As a result, we have considerable opportunities to use older equipment to, in effect, improve the overall performance of our maintenance programs.”

Cost-saving opportunities abound throughout an aircraft's service life but are particularly ripe in the engine world. The bulk of engine-maintenance costs come from shop visits, of which 60-70% is in materials.

While performance-based contracts such as power-by-the-hour eliminate the shop-visit cost spike for many operators, some party—an OEM or independent engine shop—is performing, and paying for overhaul work. Independent providers have always sought cost-saving opportunities such as surplus parts or repairs that they can leverage for customers, but OEMs were slow to embrace such tactics.

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