Surplus Parts Costs Forecast To Drop

 - October 1, 2014, 10:45 AM

The retirement rate for commercial aircraft is expected to reach 1,000 aircraft per year in the coming decade, ushering in a new reality for all industry players. Today more than 80 percent of surplus parts in the aftermarket come from part-outs (up from 55 percent a decade ago), and that number is likely to rise in the next 10 years, according to ICF International.

Naturally, the availability of spares will increase, pushing the current prices downwards and making the already tense aftermarket even more competitive,” said Zilvinas Sadauskas, CEO of Locatory.com. He pointed out that operators currently spend approximately $3.5 billion on aviation surplus components each year and the sum is expected to grow at a compound annual growth rate of 5.5 percent at least until 2023.

He further noted, “While the increasing use of surplus parts spells cost savings for operators, it might present new challenges for OEMs,” Sadauskas said, pointing out that manufacturers might be forced to rethink their parts strategies, especially for the support of mature aircraft. According to Sadauskas, engine parts now account for more than 60 percent of the segment; surplus airframe components account for 30 percent.