Increasing aircraft retirement – niche for parts suppliers?


Two decades ago the global aircraft fleet was enlarged by around 700 new aircraft per year. The number of no longer exploited aircraft constituted only about 50 at the time. Ten years ago this ratio was 1150/300. However, nowadays approx. 400 aircraft retire every year, although the number of deliveries remains almost the same as a decade ago. experts point out that since 2009 an average aircraft age in the world decreased from 12.9 to 11.9 years. The increasingly young fleets are largely the result of the increasing fuel prices that encourage airlines to look for rational ways to optimize costs. But does it necessarily spell good news for spare parts’ suppliers?

‘About 1000 of the most popular Boeing and Airbus CL type of aircraft worldwide were disassembled for parts four years ago. During 2008-2010, aircraft retirements have increased by approx. 450, i.e. about 20 aircraft were being parted out each month. This year aviation experts expect to tear down 300-400 aircraft,’ comments the CEO of Zilvinas Sadauskas ‘On the other side, aircraft retirement is a natural process. Aviation experts expect that there will be a wave of single-aisle retirements starting around 2016 as a number of aircraft are to become 25 years old then – a typical retirement age for jets.‘

About 1000 of the most popular Boeing and Airbus CL type of aircraft worldwide were disassembled for parts four years ago

According to Z.Sadauskas, although the global aircraft fleet is renewing, airlines’ spending on MRO is expected to grow by 5.7% this year - to $49.5 billion. The major factors affecting the MRO sector are the demand for diversified services and the use of spare parts supply chain:  inventory stocking and destocking, use of surplus components, expedition of delivery, warehouses, the use of surplus components, etc.

‘80% of available surplus parts come from parted-out aircraft and the other 20% from excess airline inventory. This ratio a couple of years ago was 60/40. Air transport spending last year on surplus was about $2.3 billion and on the cost of new parts amounted to $12.3 billion‘ says Z.Sadauskas.

On the other hand, lately, despite the demand, the aircraft spare parts market as well as the entire MRO sector has been largely affected by the increasing fuel prices. The surge in prices contributes to the rapidly renewed fleets with airlines opting for less fuel consuming new generation aircraft and kick-starting the retirement of older generation units.

According to Z.Sadauskas, a sudden drop in fuel prices would encourage airlines to start exploiting a large number of the older aircraft again. However, having in mind the current economic situation, such scenario is highly unlikely. Thus more and more airlines will continue exchanging the older generation aircraft with younger models which will cause both an increase in the number of aircraft tear-downs as well as the expanding spare parts and consumables market.

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