Both have their pros and cons. “A power by the hour strategy provides a fixed predictable cost, ensures the quality of the components and reduces the airline's overhead,” says Robinson. “A time and repair model may be appropriate for operators with excellent repair data and a great organization behind them who want to control their own repairs.”

Parts Exchanges

There are a variety of strategies for exchange programs. What they share in common is that in an exchange, an operator removes an unserviceable part from its aircraft and exchanges it for a serviceable part.

Airlines like JetBlue have been exchanging parts with other airlines through an industry-based loans and spares program for years. Many will use a platform such as Aeroxchange to manage the logistics and paperwork associated with scheduling an exchange and repair of a part.

Other exchange pools are managed by third-party providers that offer fixed pricing for an exchange: An operator is charged a fixed price every time it uses a part.

In a third party pool, an airline may make a complete exchange, swapping an unserviceable part for a serviceable part from the pool. In that instance, the part will be repaired or modified to the standard maintained by the pool. Or, the airline may choose a temporary loan/lease arrangement: The airline will use the exchange part until its own part is repaired and returned. In a loan/lease arrangement, the part can be repaired or modified to a different standard.

Parts in an exchange are accessed on an ad hoc basis, based on availability of the part.

“In a pooled arrangement, we guarantee that we will always have a part in stock,” says de Vries of AFI KLM E&M. “If we don't have one, we will source it in the market. In an exchange arrangement, we can say no if we don't have the part available.”

In those instances, prices are likely to be less predictable than in a power-by-the-hour pool arrangement or a fixed-price exchange. Similarly, the business arrangements and the repair standards may be more flexible in an exchange model than in a pool model. “The parts in an exchange model are generally common denominators that are easy to find when you need one,” says Abelson. “But instead of everything being overhauled to a certain standard, the part is serviceable or better. And, there is typically no contractual obligation to have it repaired by a certain shop or repair service.”

The advantage to using an exchange program, Abelson adds, is that “the price is less than the cost of a pooled part with a 60-70% availability agreement.”