Aircrafts are in service longer, parts are in high demand


Not too many years ago, operators would take an aircraft at the end of its use, then salvage and sell what was left in working order for a lot of money. This was an easy way to make a quick return on a decommissioned aircraft, since parting one out would bring in a lot more money than trying to sell it broken down. There has been a shift over the last couple of years as the price of fuel started to drop, and the cost per barrel plummeted to $50 by January 2015.

Due to the drop in prices, many airlines have reevaluated their strategies when it comes to keeping older aircrafts in service for much longer, and some are even ordering new crafts at a slower pace. Since this is causing the owners of the aircrafts to keep them for longer, part outs are not happening nearly as much as they used to.

Now that we’re in 2018, fuel has risen in price to around $76 a barrel. Newer aircraft models are also starting to make their way back into rotation, like the Airbus A320neo and Boeing 737 MAX. Other wide-body aircrafts have become increasingly more popular. More notably, the teardown and part out market has become scarce, and demand on specific engine types has skyrocketed. Basically, the demand has outstripped the supply, and companies are now charging increasingly higher rates for certain parts. If a part is not readily available in the market, the buyer is forced to wait months on end just to get their parts.

Companies like SPI Borescopes, a producer of Aviation Borescopes, have noted that the demand for inspection and repair tools in this specific indusrty is also increasing. As companies choose to put more care into their current line, while also adding new generation models, inspection and repair has become a lot more important — hence the demand for replacement parts.


Engines in Demand

So what exactly is in demand? As far as engine teardown is concerned, the demand varies by different times. At the moment, the V2500 and CFM56-5B and -7B engines have the longest waiting lists because more people are looking for them than are being torn down. When they do become available, they are aggressively sought after and this drives up the price.

Aside from engines, aircraft mechanics are also struggling to find auxiliary power units, landing gear, and thrust receivers. When they show up for sale, if they are in good condition they sell very quickly.

Another issue that might cause this situation to continue is that the profitability of tearing down an aircraft is still not that great, as opposed to what an airline would make by fixing it and putting it back in the air. While the engines and other components listed might go for a premium, the rest of the aircraft is generally not high in demand with many components scrapped instead of sold.


How to Level Out Supply and Demand

The situation is pretty simple, but the solution is complex — more airliners are keeping airplanes in service for longer, so they need working parts to keep them going. And since the airliners are being kept in service longer, not as many are being torn down, and therefore fewer vital parts are available.

Universal Asset Management (UAM) is one of the largest asset management companies in North America — they are responsible for the teardown of over 300 aircrafts. They don’t perform specific engine part-outs, like some of the other teardown companies like AerFin and AerSale.

UAM President Shawn Kling doesn’t seem to think this trend is that unusual, noting that “There’s always going to be demand for avionics and mechanical components with high failure rates such as wheels, brakes and slides.”

Kling did acknowledge that the demand for widebody craft components is high and the teardown is noticeably slower. “Anything that is beyond a two-engine market is a tough asset to place right now,” says Kling. “There is high demand for aircrafts to operate, and we are also seeing more aircraft entering and leaving storage rather than seeing aircrafts going with the purpose and intent to disassemble,” he adds.

What’s happening right now is more of a result of how stripping down and selling aircrafts in parts was handled back a few years ago, it has very little to do with the environment now. However, change is on the horizon.

augusta free press

Related Content

Shop Google


%d bloggers like this: