Call for tighter intercommunication within the region
The US-Finland trade seems to be relevantly moderate – the USA accounts for only approx. $6-7 billion of the total $145 billion export and import trade of Finland. However, over one third of all the imported aircraft parts reach the Scandinavian country from the American aviation suppliers. As many of the local air carriers continue seeking for ways to restore their broken balance sheets, they should reconsider whether acquiring aircraft inventory from another side of the Atlantic is still an effective and cost efficient solution. After all, there are plenty of alternatives, such as buying, leasing or exchanging the required parts from regional and local suppliers and these can help to save both time and money.
‘Despite the fact that the USA market players have historically been one of the major suppliers to the Finnish aviation companies, it is high time that the local carriers realize that there are plenty of other spare parts suppliers for the American aircraft much closer to home. The same goes to the European aircraft. Why should an airline order an engine part, left alone a minor component from France or the USA, when it can be easily found locally, in Scandinavia?’ ponders the CEO of Locatory.com Zilvinas Sadauskas.
According to the Finland’s main airport administrator Finavia, the national air travel industry topped 19 million passengers in 2011. These figures clearly indicate a healthy recovery of the local industry, as they are higher by over 8% compared to the previously record-braking 2008 results. The latest data suggests that this year the air travel industry has also got the potential to achieve the same or even higher results, meaning enhanced opportunities for the Finnish airline market players.
Table 1. Finnish passenger traffic, January-September, 2011-2012. Finavia data.
‘Unfortunately, the rising air traffic cannot solve the issue of airlines’ losses alone. It is vital to optimize every possible process within an airline, starting from the parts procurement, since it accounts for approx. 30% of all maintenance costs. Acquiring spare parts within the region would definitely assist airlines in diminishing their expenses, first and foremost, the logistics-related ones. Another issue is the components’ price itself. It is no secret that the majority of aircraft are assembled from 95% overhauled and repaired parts, and the price difference between a new and a restored part may be as high as 10 times. For that reason, instead of shipping components from overseas, carries should first address a guy next door and inquire about a required part locally,’ comments Zilvinas Sadauskas.
Moreover, local airlines could optimize their expenses not only through cooperation with regional suppliers, but also with each other. With regard to the entire Scandinavian Peninsula, local airlines operate quite common fleets, which include both general and commercial aviation aircraft. For instance, over 40 Airbus A320 family aircraft are operated by Finnish and Norwegian carries, while Boeing 737s are widely presented in Sweden and Norway. Left alone the market of smaller commercial and general aviation, with over 1000 aircraft, produced by the American Cessna company, or over 120 Grob aircraft, which are popular in Finland, Norway and Sweden.
Table. 2. Local fleet structure, Sweden, Finland, Norway
‘Considering the number of aircraft operated in Finland and other Scandinavian countries, many of the local aircraft operators are more than likely to maintain their own stock of parts and components, meaning that they are all potential suppliers to each other. Whether it is a sudden malfunction of a big commercial jet or a small private propeller aircraft, operators can lease or exchange the required part in order to minimize the downtime of their airplanes. In any case, establishing a tighter intercommunication within the local aviation market would certainly accelerate the development of way faster and more cost-effective spare parts procurement than acquiring components directly from the manufactures outside the region,’ commented the CEO of Locatory.com.