Panelists discussed the impacts of inflation on the aftermarket.
From left: Richard Brown, NAVEO Consultancy; Patrick Markham, Heico; Miguel Martins, TAP Maintenance & Engineering; Eric-Jan Schmidt, Inventory Locator Service; Scott Symington, AJW Group
AMSTERDAM—Pricing trends for overhauled parts are now almost identical to those for new OEM kit, Eric-Jan Schmidt, vice president of global marketing for Inventory Locator Service, has told conference attendees at MRO Europe 2023 in Amsterdam.
A surge in prices for used serviceable material, particularly on popular narrowbody models, has resulted from new aircraft delivery delays and the extended service lives of legacy equipment as airlines seek capacity cover for these delays and for new engine reliability problems.
Meanwhile, OEM parts pricing was roundly criticized by a panel discussing inflation in the aftermarket, and while price escalation is a longstanding bugbear of airlines and MRO providers, it has become particularly acute amid big bumps in labor and energy expenses as well.
A common complaint is that long-term maintenance agreements start to become unviable when parts prices increase beyond escalation clauses in the contract.
“It’s very hard for MROs to cope when the OEM increases [parts prices] by one quarter,” said Miguel Martins, business development manager for TAP Maintenance & Engineering, adding that it is a challenge to ensure older contracts remain profitable. “Certain fixed prices on longer-term agreements have assumptions about how much prices will increase, and these may not be true anymore.”
PMA parts prices are also rising, noted Patrick Markham, vice president of technical services at Heico, adding, “but maybe not by as much as everyone else.”
As the world’s biggest parts manufacturer approval (PMA) company, Heico keeps tabs on OEM parts pricing, which has shifted in emphasis, Markham believes.
“OEMs are not being as tactical as they used to be,” he said, having observed blanket price increases as opposed to smaller rises in the past on components where OEMs faced competition.
Scott Symington, chief commercial officer for AJW Group, offered a tentative forecast that airframe parts prices would rise 6-8% next year, while Martins was more pessimistic, predicting a double-digit rise.
These rises are driving demand for alternative parts, said Schmidt, noting that more operators are using PMA, and for increasingly critical applications.
Just as well this is happening, as “inflation will be with us for some time,” he concluded.
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