Trading aircraft parts is a trader’s business, notes Gamit’s Nadeem Muhiddin. Working with someone who understands the market and knows the value of parts is essential.
The price for a part can fluctuate on an almost weekly basis, based simply on supply and demand. For example a Hydro Mechanical Unit (HMU) in 2010 may have been worth up to $200,000 whereas in today’s market pricing for that part has dropped to circa $80,000. It pays to work with a management company that has its finger on the pulse.
Another factor at play is the timing of a parts delivery. If an aircraft is in the shop for scheduled maintenance, then a standard 3-4 day lead-time to receive a part is acceptable. However if the aircraft is AOG, the need for a part becomes far more urgent, and more effort is required to source the part to be delivered to the aircraft.
Gamit was recently called to support an Airbus ACJ319. The aircraft was in Rome on the Saturday, due to depart on Sunday. An AOG call was received on Saturday at 4pm for a replacement windshield, including adhesives. That was a big ask: for starters, only limited personnel are available on a Sunday in Rome; the adhesives are considered hazardous material requiring special handling; and finally, the windshield would need to be crated in a wood palletised box due to its size and weight.
After much organization, the deadline was met: the parts were sourced from four different vendors, shipped on a dedicated flight and trucked directly to the aircraft.
As you can imagine, this was all highly time-intensive, none of which could be handled by a regular courier service. It’s almost impossible for any single parts stockist company to hold inventory of every component for all aircraft types due to the volume of part numbers there are for each aircraft type. Thus, you are well advised to work with a management company that is plugged into a global supply chain network.
There are a number of transaction types available where aircraft parts are concerned. Due to the high value of component parts, they retain a certain worth (even when unserviceable) and are not thrown away when they break. The typical industry transaction types are as below.
• Outright sale: This is a clear, black and white outright sale.
• Flat rate exchange: For a fixed-price the client will receive a serviceable part and send their unserviceable part back to the vendor. This is typically a more expensive but low-risk strategy because the client knows at the beginning what the costs are. [There have been cases of over and above charges for some solutions. Suppliers may include a standard repair in the flat-rate cost with any other internal damage/work required incurring additional charges.]
• Exchange fee & cost of repair: In this scenario the client typically pays between 8-15% of fair market value for the exchange fee on the first invoice. The unserviceable part is then returned to the vendor who will send it for repair or overhaul. That shop visit cost is passed on to the client as a second invoice, thus representing a higher risk to the operator as the cost is variable, although the cost is typically cheaper than flat rate (above).
• Loan: If the option is available, a component can be supplied on a loan basis to be installed to the aircraft while the defective component is shipped to the workshop for repair. This can be costly as the loan component is charged at a daily rate (1%); plus the cost to repair the defective unit, to change the component out (twice), and test and re-certificate the loan unit once returned. On the plus-side, the client retains their component for the long-term.
• Repair: Remove the part from the aircraft and send to the repair shop for rectification and recertification. If the aircraft is in maintenance for a long period, it is possible to remove the component from the aircraft after establishing the component is defective, send for rectification and recertification, then ship back to be refitted all while the aircraft is in the hangar.
With the available possibilities, operators are wise to discuss their options with somebody who has a thorough knowledge of the parts industry, along with your specific need.
As with all aircraft maintenance, rotable and life-limited components are no different - certification is essential! Without the component certificate, an engineer is not legally permitted to fit the part in the airplane. Gamit has a strict ‘Quality’ mentality to ensure only the highest standards are met. Thus procurement is only done through an approved vendor network.
All vendors should be vetted to ensure they can fulfill the supply agreement, that they are selling accurately, and that they are financially sound.
It has been known for companies to go into administration mid-transactions, for parts to arrive with inadequate paperwork, or for parts simply not to arrive.
Vendor performance must be tracked in terms of delivery times, speed of response to price requests, and price trending, among other areas. Ideally your selected management company would work with vendors to continuously improve customer satisfaction.
Logistics plays an important role in spare parts support. There’s no use in locating the best part available at a price that’s half that offered by all other vendors but being unable to receive it within the required time frame. Procurement will often come from outside of the continent where the aircraft is based, meaning shipping consistently plays an important part in the deal.
While the large majority of freight is done via air transportation, other issues are important to factoring the required timing of a part delivery – for example, within Europe road transport links are also good.
Furthermore, each country has its own protocols in terms of information required for goods to clear customs. In our experience some countries are very easy to trade in and out of, while others are exceptionally difficult - potentially resulting in lengthy delays.
Hazardous goods will typically add fees because the staff handling the goods must be correctly trained – and not all flights are permitted to carry hazardous goods on board. Thus it is essential to plan accordingly, working with somebody who has a thorough knowledge of the nuances of shipping globally.
Handling “Fail on Fit”
Due to the age and complexity of component parts there are occasional instances when the serviceable component fails on installation, or within the warranty period. Are you sufficiently experienced in handling suppliers and repair stations to ensure that any faulty components (when the fault is confirmed under the manufacturer’s test procedures) are repaired with no additional costs incurred?
It is, of course, preferable to minimize the chance of encountering premature failure of a part. Gamit’s QA approved suppliers policy – for example – ensures parts are sourced from OEM-approved, FAA/EASA certified repair stations, thereby reducing that risk.
Aging Aircraft Parts Requirements
With today’s economic climate whereby older generation aircraft are remaining in operational service longer, additional hurdles are experienced with spares supply. Parts that are available in the market have accumulated a high number of hours and cycles, meaning that their MTBF is reduced.
In some circumstances, OEMs either no longer manufacture or are unable to support the component parts due to obsolescence.
That situation reduces the number of available units in the marketplace, makes the repair of defective components difficult, increases costs, and is time consuming.
As with the other aspects of parts supply that we’ve covered, availability of aging components should be firmly managed to minimize the expense and disruption to your flight operations.
Expertise is readily available to help you navigate this complex area of the market should you choose to source it.