The worldwide aircraft component aftermarket business represents today more than USD 13B, meaning that every actor of the aerospace industry can have a piece of the pie.
You may think this figure is mainly generated through outright sales of aircraft components to airlines and different actors of the aerospace industry, but actually a big portion is generated through the MRO organization which actually performs aircraft component repairs. Let me guide you through some good tips to boost your aircraft component repair flow.
When I looked at the market trend, I have identified that airlines have several ways to manage their aircraft component repairs:
- Using an integrator offering both aircraft component assets and aircraft component repair capabilities, so called Integrated Component Solutions.
- Using a set of tools to source both parts and aircraft component repairs on a daily basis, and choosing suppliers on a case-by-case basis, depending on prices and turnaround time.
- Managing it themselves on a standalone basis by contracting many aircraft component repair
Integrated Component Solutions – Airlines first choice for Aircraft Component Repair
The integrator or Integrated Component Solution, enables operators to have a single point of contact for both aircraft component availability and aircraft component repair management. In that case, the integrator has the responsibility to contract with several OEM in order to cover the full work scope requested by the airline.
This alternative can offer improved aircraft component maintenance cost predictability and also transfers some of the risks (price adjustment) to the integrator. Indeed, the integrator will be responsible for compiling all the aircraft components and all the prices linked to the aircraft component repair in order to build a unique price per flight hour offered to airlines.
With this in mind, it is key for an OEM to contract an aircraft component repair agreement with the integrator in order to increase its visibility and therefore generate additional aircraft component repair revenues from this solution.
Standard Exchange – Develop your Aircraft Component Repair business on event basis
The second option for aircraft component repairs is to use standard exchange on a single event basis in order to keep the aircraft flying. Many airlines use this model when they have the workforce to pilot and compare prices on the market. In that case and according to the criticality of the request, airlines will select its suppliers based on its prices, turnaround time, component availability and proximity to the airlines’ main base(s).
Once again, the integrator is a strategic partner for the OEM. It plays a major role as it will increase the OEM’s airline customer base through the signature general term agreements with airlines (GTA). These GTA will enable the integrator to expedite the aircraft component exchange dispatch and retrieve the core unit to send it to an aircraft component repair station.
As an example, in Russia, in order to import aircraft components efficiently, the Russian authorities need to have a view on the signed contract (GTA) between an airline and an Integrator in order to clear customs. Otherwise the aircraft component might be blocked for a long period of time.
For an OEM, offering serviceable components on the market will definitely generate a significant flow of aircraft component repairs.
Standalone Solution: The Integrator can Boost your Aircraft Component Repair Presence
When airlines purchase aircraft, they also often purchase a stock of aircraft components in order to secure availability and avoid operational interruptions. In that case, the airline is the owner of the asset and will only be looking for aircraft component repair capabilities on the market.
If the first option (using an integrator to manage the repair) is not chosen, the airline will do it in-house and therefore contract with several OEMs to perform the aircraft component repairs. The airline will focus on turnaround time (TAT) and prices and will closely monitor the TAT in order to avoid putting at AOG risk its own stock. From an OEM standpoint, such a scheme implies having contacts and a sales force everywhere in the world in order to contract as many aircraft component repair agreements as possible. Likewise, it is mandatory for the OEM to have an accurate shop processing time (SPT) to avoid penalties.
In order to support the OEM, integrators can offer sales support and representation for aircraft component repair business, which will help promote and sell repair capabilities worldwide on the OEM’s behalf. The integrator can also offer to measure the SPT and offer exchanges free of charge to secure the service level agreement with airlines. By doing so, OEM will benefit directly from the integrator’s customer portfolio and boost its chances to contract with an airline located in regions where the OEM has no sales office.
As I described it through this article, there are several schemes for an airline to do its aircraft component repair management. With the help of an integrator, the OEM can avoid investing in the resources needed for customer service and also maximize its chances of generating additional revenue of the aircraft component repair business.
If you would like to get additional details on such product and how to set it up, please feel free to contact us!
Paul GROS, Sales Manager OEMServices
