Archives: insights

One of the key MRO trends over the past decade has been the growing importance of Used Serviceable Material (USM) – also known as Surplus Parts. The past decade saw aircraft acquired, retired, parted-out, and their parts and engines sold to operators and MROs.

The majority of USM is sourced from retired aircraft/engines. Thinking about what types of parts are involved in USM, we should consider parts with a high price or parts with high annual spend (so meaningful savings can be made).

Pricing of USM is highly dynamic (based upon supply and demand), priced against OEM new, and the availability of new OEM material.

But why should we care about USM? Well, USM allows airlines and MROs to reduce material expenditure (e.g., 20-40% cheaper than new parts). However, USM may compete with profitable OEM provisioning rotable spare sales and repairs if USM substitutes for the repair.

OEM participation in USM allows them to gain valuable information on part pricing and availability. It also allows them to serve a price-sensitive customer segment that might not be current customers.

Since airlines are laser-focused on cash conservation, many will evaluate ways of saving money on maintenance, and USM provides one option.  #NAVEO #Aerospace #aircraft  naveo.com

 

After our recent post about % fleet active/stored by region, NAVEO was asked about key aircraft models and whether narrowbodies are indeed showing higher levels of activity compared to widebodies, etc., and, whether cargo and regional aircraft were holding up well?

Overall, (passenger & cargo) 60% of the fleet is now in-service, and 40% is parked/stored. Narrowbodies lead the way with 64% of aircraft in-service and 36% stored. 53% of widebodies, impacted by reduced long-haul travel demand, are in-service. 58% of RJs are in-service, as are 57% of turboprops.

But, the devil is in the detail. Aircraft activity depends upon their size, age, operating costs, maintenance requirements, region, operator business model, etc.

In the chart below, you can see that 73% of 737NGs are in-service, as are 75% of A320neos. Only 5% of A380s, 41% of A330s, and 46% of 777-200/300s are active.

Of course, even if the aircraft are active, utilization is down (as are load-factors), and recovery is sluggish.

Regarding Cargo, 79% of cargo aircraft are active. Of this, 88% of cargo widebodies are active, and only 12% are stored. But, as a % of the fleet dedicated freighters are less than 10%, so for MRO, it’s the passenger fleet that is key to watch.