When the primary OEM aftermarket strategy focused on hawking new spares, such resistance made sense. But in a world where OEMs increasingly see broad aftermarket support as a lucrative revenue stream, meeting customer demand is taking precedence over moving new product.
An MRO market assessment released by the Aeronautical Repair Station Association (ARSA) showed that OEMs captured 44% of the $26 billion air transport engine overhaul market in 2012. That percentage should only grow.
A TeamSAI analysis shows an across-the-board increase in the percentage of new-generation engines in long-term OEM support contracts compared to their predecessors. CFM International, for example, grabbed less than 20% of the CFM56-3 overhaul market but has about 40% of -5B/-7B work, and could end up with 80% for the Leap engine.
As expected, the OEM aftermarket ramp-up has been matched by increased participation in the surplus-parts game. The evidence—both at the macro and micro levels—is everywhere.
Last year, the air transport engine services market generated $1.35 billion in surplus-parts business, an ICF SH&E analysis shows. The biggest slices of the pie belong to a pair of OEM subsidiaries, GE Engine Services and Pratt & Whitney Services, at 17% and 10%, respectively. Not surprisingly, they are their own biggest surplus-parts customers.
GE's Engine Services' foray is just part of the company's used, serviceable parts activity. In 2006, the company bought aircraft part-out and surplus-parts specialist The Memphis Group, and tucked it into its Asset Management Services (AMS) business within its GE Capital Aviation Services leasing arm. Last month, AMS unveiled its newest product line: still-flyable Boeing 777-200 parts, courtesy of an in-progress teardown.
“OEMs have adopted what we do as acceptable practice,” says Moabery. “They are very much entrenched in the used, serviceable parts market.”
GA Telesis and its competitors leverage OEMs for more than their massive parts needs. Moabery says his company sends 70% of its repair jobs to OEMs, too, which results in a higher confidence level among GA Telesis customers.
“If you're concerned about my quality, then you're concerned about the OEM's quality,” he says. “There is no call to question [us] about the quality of the parts.”