Most airlines and maintenance providers plan to increase their use of used serviceable material (USM), and some are shifting their policies to include sourcing more alternative parts, a survey from Naveo and ILS shows.
“We had over three quarters of the respondents to the survey indicate that they were expecting to increase their use of USM over the coming years,” Naveo Managing Director Richard Brown said on a recent webinar discussing the survey and broader USM market.
Only 2% of respondents expected to utilize fewer used parts. But Brown said those respondents linked their responses to an anticipated lack of availability as part of fleet transitions to newer models that have less USM.
The survey, which Brown said generated responses from more than 50 operators, lessors, and maintenance providers, also sought insights on purchasing policies. Some confirmed that they have introduced protocols, such as a minimum part price, that triggers going to the used and alternative parts markets as well as the original manufacturer.
“We expect that to continue, where you’ve got the option of used and new and you can compare,” Brown said, noting that factors other than cost, such as warranty and lead time, are taken into consideration.
Sales of new and used parts have fallen across the board during the pandemic, a consequence of aircraft flying less and needing less frequent maintenance. USM activity has shifted to reflect the current environment. ILS says that while activity on the most popular platforms—such as the CFM56-5B and -7B engines—remains brisk, parts driven by freighter activity—such as GE CF6-80C2 material—are in high demand. The company also has seen a recent uptick in demand for sensors and lights—a trend it attributes at least in part to aircraft being readied for service after extended downtime.
As activity increases, both demand and supply for USM is expected to follow. Brown estimates that more than 80% of USM is sourced from aircraft teardowns, with the rest coming from parts inventories.
Heading into the downturn, teardowns numbered between 400-500 annually, he estimates. The figure fell in 2020 and again this year, in part due to supply-demand uncertainties as airlines determine their fleet compositions going forward. Similarly, the number of official retirements has not jumped, despite the increase in stored aircraft linked to the pandemic.
Naveo projects that as many as 2,000 of the current stored and parked fleet of nearly 10,000 commercial aircraft are effectively retired. They will be among the 5,500 formally removed from the fleet through 2026. Not surprisingly, narrowbodies will lead the way. Of the expected retirements, 21% are coming from the Airbus A320ceo family and 14% from the Boeing 737 Next Generation fleet, Naveo projects.
The rise in official retirements combined with increased activity and fleet-composition certainty will help jump-start teardowns. Naveo projects an average of 600 teardowns annually during the next three years.
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