Suppliers Struggle to Keep Up As the Aftermarket Expands

Performance of the supply chain, barring an unforeseen catastrophe like the coronavirus. The aftermarket grows, but suppliers struggle!

The near-term prospects for almost all operators, aftermarket service providers, and commercial aircraft manufacturers will be influenced by one major factor: supply chain performance, barring an unanticipated global calamity like the coronavirus. Airlines rely on new aircraft deliveries to operate existing scheduled flights.

Manufacturers require parts that enable them to push engines and airplanes out the factory doors that reach monthly goals of production. Maintenance repair and overhaul aviation require personnel and supplies to keep the fleet in operation. They also assist airlines in filling gaps by confirming that older aircraft made of the best aircraft parts can fly a few more cycles than expected. Concerns about how to meet demand have taken the place of worries about whether there will be demand.

Supply chain issues start with traffic jams in international transportation and labor and material shortages. But factors that suppliers can influence, including capacity and staffing, are getting better. But as demand rises, gaps remain despite these advancements. Demand is surpassing supply despite the latter’s increasing growth.

That time corresponds with the basic expectation for when traffic will globally resume pre-pandemic levels. There are already several main markets present, most notably the US. China and most long-haul parts have been the biggest outliers, both as a result of ongoing travel restrictions connected to the coronavirus. All indicate that demand in these regions is strengthening and is continuing to do so in markets that are strong now.

This prognosis is supported by reports from the front lines from a few main actors. Both Safran and GE Aerospace anticipate an increase in aftermarket revenues of at least 20% from the previous year. For the foreseeable future, AAR Corp.’s aircraft maintenance and repair business is nearly at capacity. Although the supply chain of the company is planning to become predictable, modifications are still crucial to reducing turnaround times.

The growth of USM (used serviceable material) could be a development for the components market. Because there haven’t been any retirements, several aircraft made of the best aviation parts and engine types don’t have USM, which puts extra strain on parts suppliers and raises turnaround times. A recent rise in transactions enhances the possibility that airlines are removing some storied aircraft from their balance sheets.

AAR revealed its plan to buy 9 ex-American Airlines Boeing 757s with Rolls-Royce RB211 engines. Although the target market for the resulting USM feed, which consists primarily of 757 freighter operators, is small, it is well-established and eagerly accepts OEM alternatives for parts and repairs. As demand continues to surpass the capacity made available by new aircraft deliveries, recent TD Cowen research predicts that extra platforms will come under this class in the coming years.

The aviation sector, including its associated services, including aircraft parts for sale, Boeing aircraft parts for sale, aircraft surplus parts for sale, mro aircraft maintenance, leasing of aircraft, aircraft consignment inventory, aviation logistics companies, and AOG air freight, are vigilant over the market revolutions.

Strong aftermarket demand is being increased by several causes. The largest of these is the continually growing world traffic. A higher requirement for maintenance is directly correlated with increased aircraft activity. Aftermarket sales have solid underlying basics when you factor in many suppliers raising the price of parts above average to counteract inflation. There is no immediate danger posed by the biggest intra-industry macro risk, which is the acceleration of new aircraft deliveries and the retirement of maintenance-intensive older types.

The Cowen research predicts that aftermarket momentum will halt once retirements rise, but that this won’t be an issue in 2024 or 2025. To make up for the delay in new aircraft delivery, older jets are being put back into operation, which has resulted in an all-time low in aircraft retirements.

New-generation engine dependability is an issue that also contributes to capacity problems. Some operators have aircraft that are almost brand new lying around waiting for engines due to a glut of quick-turn performance restorations and associated supply chain issues.