MRO Memo: A Seller’s Market For Used Parts
Pricing for used serviceable material is on an upward trend, writes Steven Ades, chief strategy officer at AerFin, in Engine Yearbook 2024.
He says this trend is most evident on CFM56 and V2500 platforms, primarily due to increasing levels of demand, decreasing levels of supply for both new parts and used serviceable material (USM), and due to rising repair costs.
“At a macro level it is a near perfect storm for price escalations on both piece part and green-time engine lease rates," he says. "Base costs for piece parts are also increasing due to rising repair prices in the piece part supply chain,” he adds.
Another consequence is a sharp spike in demand for serviceable green-time engines as retirement and lease return dates are pushed back.
Engine lessor ELFC has also noted surging demand, with incoming CEO Richard Hough saying: “We are currently getting customer commitments for these engines up to 12 months before they come back off lease, something I have never seen in my 27 years of working in ELFC.”
Ades, meanwhile, expects the situation to persist. “With no quick fix to fleet issues in sight, we expect life extensions to be required over a three-to-five-year period, in many circumstances leaving operators in a position where they need to either consider avoiding high shop visit costs through short-term-lease engines or potentially even ‘short-building’ engines, which triggers demand for parts such as lower-life-remaining LLPs or modules that usually would not be prevalent.”
For more analysis of the engine parts market and the knock-on effects of aircraft delivery delays and new-gen engine problems, see the forthcoming Engine Yearbook 2024.