Parts pooling is used to balance the price of components against the availability of those parts. For instance, while owned parts are generally available 90% of the time, pooled parts are typically available at a 60-70% service level. For that reason, pools are often used for parts and repairs that can be deferred until the next line station. Typically, those are parts that cost $1,000 or more.
The price paid for the pooled part can be adjusted for different service levels, with an airline paying less for parts that are available 50% of the time or more to have parts available 80% of the time.
However, there are other strategic reasons to participate in a pool.
Pool operators like AFI KLM E&M, AeroTurbine and Aclas Global will evaluate and purchase some of the inventory that an airline is holding in its warehouses, which frees up cash. The airline may sell the remainder on the open market. “Rather than have stock sit on an airline's shelf for two or three years, we'll purchase it and move it around to other airlines,” says Aclas Global's Robinson. “It's not dead money.”
Alternatively, very expensive parts with high reliability and low turnover, such as those from Moog, are targeted for pools to reduce the cost of accessing them.
Some airlines will use a pool for their safety stock on an existing fleet, or to reduce the cost of initial provisioning of new aircraft. “An airline may determine that it needs three units of a part and put one in the main base kit and two in a pool,” says Abelson. “On a new aircraft, they may buy 60% of what they need for initial provisioning and put the other 40% in a pool.” Similarly, an airline may put inventory into a pool that supports a fleet that is being phased out. “You don't want to own two years of inventory for a mature fleet,” Abelson says. “We'll take it, depreciate it and move it off the balance sheet so it's not a problem at the end.”
Pools today may be operated by a consortium of cooperating airlines. Other pools are operated by a third party, like Aclas Global, AeroTurbine or AFI KLM E&M, or by an OEM such as Boeing, Airbus or Moog.
In either case, the parts in the pool are available at a guaranteed service level and maintained to a guaranteed standard. The latter is designed to insure that an airline is receiving the same quality of part that it is contributing to the pool. “We determine the optimal pool standard for each component,” says de Vries. “If a part goes into our pool, it has to adhere to the pool standard or be modified to meet the pool standard.”
There are two pricing models for participating in a pool: In a power by the hour model, a fleet operator pays a fixed price for availability and maintenance based on the number of flight hours flown.
In a managed repair, or time and repair model, the fleet operator pays the cost of repair for the part plus a fixed price to lease a replacement part from the pool on a monthly basis during the repair.