The increase in surplus parts availability is altering strategies for both airlines and maintenance providers, giving them more options than simply going to the original equipment manufacturer (OEM), a new ICF SH&E survey shows.
The informal survey of 36 surplus parts users done this summer showed that cost was the biggest driver behind their surplus buying decisions. But close behind was solving aircraft-on-ground (AOG) issues, says SH&E Principal Richard Brown. In AOG situations, cost will take a back seat to availability, and in many cases, the OEM can’t compete with the surplus market. “The last port of call is the OEM,” Brown told attendees of Aviation Week’s MRO Europe conference in London.
Looking ahead, 90% of those surveyed expected to increase or maintain current surplus parts purchasing. Of those that will decrease, the decline will be due to retirement of a specific aircraft type that’s using surplus parts to save costs.
The surplus parts market is booming. In 2001, the air transport serviceable parts market was worth about $11 billion, with just 10%, or $1.1 billion, claimed by surplus parts, according to SH&E data. Today, surplus parts account for about 18% of a $15 billion market, and the share could climb to 20% by 2015.
The biggest share of surplus parts, 65%, is in engines, largely because of the opportunity. Engine MRO makes up about 40% of the global MRO market, nearly twice as much as the next-largest category.
Components--which at 21% of the global MRO market rank second to engines in total spend--account for 30% of the surplus business. Airframe parts--typically motor-driven systems like flaps--round out the balance.
Perhaps the biggest change on the surplus parts front is in sourcing, Brown says. In 2007, half of the surplus parts came directly from airlines or brokers, while the other half were harvested directly from aircraft. Now, the share of surplus parts being sourced directly from part-outs is about 82%.
The array of companies parting out aircraft is broadening, including OEM arms like Rockwell Collins subsidiary Intertrade, GE’s Aviation’s Asset Management Services arm, and more traditional part-out firms like GA Telesis. Regardless of the business model, says Brown, direct access to aircraft plays a key role.
“You have to get your hands on the aircraft themselves,” he says. Otherwise, “you’re further down the food chain.”