Russian air companies accumulate up to $25-30 mln. worth of stock inventory annually

Feb 29th, 2012

According to Locatory.com, Russian airlines spend over $170 mln. on foreign-manufactured aircraft spare parts. But there are no common practices or procedures regarding the dismantled aggregates, which have been changed due to defect detection or have exceeded their service life. Generally, spare parts in ‘As Removed’ condition cost about 15-20% of the original price. Thereby, Russian air companies accumulate $25-30 mln. worth of dismantled spare part inventory per single the year.

Airlines ussually tackle the ineligible for use inventory issue by scraping the spare parts or stocking them in in-house or rented facilities. However, it may prove to be quite expensive. As an alternative, these aggregates may be profitably sold. According to Locatory.com experts, airlines have several ways to turn such spares into profit. First of all, spare parts may be sold in ‘As Removed’ condition to other air carriers or MRO companies, which are conducting spare part repairs and overhaul. Another way is to invest into those spares’ overhaul approx. $40-90 mln. and then sell them in ‘Serviceable’ or ‘Overhaulted’ condition for $110-120 mln.

‘The obstacle for the Russia based airlines is that they lack adequate information resources, which would help them to evaluate spare part price and to find potential buyers, As a way out, they can resort online-solutions which are getting more and more popular with every year.’ – says the CEO of Locatory.com Zilvinas Sadauskas.

Specialized aircraft spares’ buy&sell online-platforms may provide Russian airlines with a highly profitable advantage. Exchanging inventory stock information helps the carriers to buy and sell spare parts within the Customs Union and thus save up to 20% due to customs fee bypass. Such internet-based platforms also provide airlines, MRO companies and spares’ suppliers with more effective usage of inner Customs Union resources. This is very important especially in AOG situations or during aircraft maintenance when an MRO provider may suddenly find itself in a desperate need of a certain component.

‘When single region players are actively using the same Internet platform, airlines may help them to cut all customs-related expenses by providing customs-cleared spare parts. Online-solutions are also a very useful tool for indicating market prices for a certain component or analyzing the pros and cons of ‘As Removed’ selling and spares’ overhaul investment. Local MRO providers gain an opportunity to see the actual demand for a certain spare part on the local market and thus may shift their development according to relevant market changes. Therefore, applying online-solutions by every player of the aviation industry will promote the development of the MRO market in particular regions’ – explains Z.Sadauskas.

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