A prerequisite for the successful growth of aviation industry in the Asian Pacific region

Feb 10th, 2012

In the next two decades the global MRO profits should increase from USD 40 to 100 billion. Although today the Asian Pacific region accounts for a fifth of the entire market, the MRO industry in China and India grows by on average 8% per year. Passenger flows have already reached 700 million annually. Therefore, with the expected 11 thousand new aircraft within the next 20 years, the number of air passengers should grow to 2 billion. The number of low cost airlines is expected to increase accordingly (by 50%). However, the optimistic growth scenario is still being clouded by increasing costs attributed to unscheduled aircraft downtimes. According to aviation experts, AOG situations will be the major factor determining the upturn in the demand for one of the largest MRO segments – parts and components. Aviation industry participants need to find ways of preventing that optimistic scenario from being ruined by too many questionable suppliers offering dubious quality services.

“We all know that an unexpected downtime of an aircraft can lose a single airline up to USD 10-150 thousand per hour or even more. The final amount depends on the length of cancellation period which hinges on the time it takes to locate and deliver the required spare parts. There have been a number of instances when the required components could reach aircraft in no less than a couple of days. In such cases airlines seek to rent a substitute aircraft from their partners. One way or another, the final cost can end up adding to a very ‘impressive’ sum of money. A single aircraft contains hundreds of thousands of parts making MRO companies simply unable to stock all necessary components in their warehouses all the time,” says the CCO of Locatory.com Vytautas Vorobjovas.

An ordinary delivery of a spare part from Western countries to the Asian-Pacific region usually takes several days. An express delivery can drive the price up by 2-4 times. V.Vorobjovas has observed that lately aviation companies, especially those based in the emerging markets and re-sellers have been particularly exploiting the aforementioned situation without granting any added value or benefits for airlines and MROs. Having in mind that the Asian Pacific region is undergoing rapid development, MRO companies and carriers lack the appropriate knowledge to evaluate and select high quality parts and components – not only does it require adequate human resources but also time and expertise. Hence many market players within the region tend to chose Western suppliers as they might seem more reliable.

According to V.Vorobjovas, with the current situation in mind, the aviation businesses worldwide will increasingly rely on e-commerce provided solutions thus minimizing the time spent on searching for components. Furthermore, this way airlines and MROs can evaluate and consider up to 200 offers from different suppliers at a time. By selecting the highest quality parts and services, the related costs can drop by up to 20%. E-commerce solutions that have been long used in the Western aviation industry, shall gain popularity in the Asian-Pacific market in no time.

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