Supply chain problems have plagued both aircraft OEMs and the aftermarket during the recovery from COVID-19, and inflation is also worrying many MROs. Lags in deliveries are not across the board, but concentrated on certain parts. Many parts, especially low-value consumables, are delivered on time, and pricing challenges may also be easing.
SkySelect’s December 2022 Part Price and Lead Time Index reports that third quarter 2022 prices for the parts SkySelect sources averaged 13-15% above fourth quarter 2020 levels. This same average had jumped to 20-25% above end-of-2020 levels in early 2021, but now seems headed for 10% above that baseline.
Prices of less expensive parts have been the most volatile, with small hardware, consumable and expendable parts costing less than $100, swinging 40% above late 2020 levels in early 2021, but now returning toward earlier levels. The majority of these parts are new.
Parts costing more than $5,000, in contrast, have remained much steadier, at around the same levels as at the end of 2020. These more expensive parts are mainly rotables and can be either new or used.
However, these increases must be viewed against the backdrop of general inflation in the past two years. For example, U.S. all-item prices averaged more than 12% higher toward the end of 2022 than at the end of 2020, and European consumer prices have risen more than 17% over the same period. So, ‘real’ prices of aircraft parts are roughly stable or even declining in some cases.
Nevertheless, SkySelect Chief Operating Officer Nauman Saeed expects further price escalation in 2023 as material and labor costs continue to increase.
Interestingly, lead times have actually been declining for the parts SkySelect purchases. These lead times have recently been only 70-80% of end-2020 levels. But while the part acquisition platform supports acquisition of many parts, it currently deals mainly in consumables and expendables, not the electronic and other aircraft parts subject to severe supply chain delays.
Saeed says SkySelect will continue to report pricing and lead-time data as the recovery continues. The platform combines self-service functionality with artificial intelligence to enable airlines and MROs to purchase parts and view and control their supply chains. More than 2,500 suppliers offer parts on the platform, and SkySelect says it can reduce manual efforts by 90% and part costs by up to 20%.
Airlines are increasingly turning to automated systems for parts procurement. For example, Azul Brazilian Airlines chose SkySelect to decrease manual processes and save money, according to Supply Chain Process Manager Wilson Pereira do Amaral Junior.
Azul uses the platform for many kinds of parts, but mainly for expendables, for which it previously used manual methods via emails and OEM portals. The carrier has been developing and implementing the self-service capabilities of SkySelect for four months. Azul now automates much of the sourcing process, including creation of purchase orders. Junior estimates this has sped up acquisition, achieving on-time delivery on 95% of acquisitions and saving 8-10% of acquisition costs. “We are building together a new supply chain mindset and way of work,” he adds.
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