Friday’s Fast 5: Rising To Aftermarket Challenges

Shane Tingey, a partner at consultancy Interlogik, discusses what’s on his agenda in the lead up to Aero-Engines Europe in Lisbon next month.

You will be speaking at this year’s Aero-Engines Europe conference. Can you provide some details about what your main focus will be?

The engine market is in a transition phase with new products and services--and at the same time the volume of engines and material demands are affecting the maintenance cost structure. OEMs are dominant in the maintenance and service provision, but there is a customer backlash at the level of control. OEMs are seeing the residual values changing in the wrong direction. Our lessor customers are also seeking solutions for their older equipment while it becomes very hard to provide solutions for monopoly products. We need to understand where the market is heading for the quality suppliers who struggle to provide quality products at the prices desired or the engine lease rates demanded.

What would you say are the main challenges in the aftermarket at the moment?

Cost per flight hour programs have been the market drivers but are they still as profitable for the supplier--and is the cost and availability of material challenging for them and the market? Are all of the aftermarkets suppliers driven by a sustainable business model? 

Are margins a problem?

There’s too much cheap money in the market, which has driven asset values up and lease rates down, similarly with engines for lease or disassembly, so margins are very challenging.

What do you consider the positive drivers in the aftermarket?

We all need to work on the key deliverables-- costs, safety and the combination--to drive on-time dispatch reliability. There is a place for most of the players in the market and we have all managed to deliver in one of the most dynamic and safe industries there is. 

We also have to think about the consumer. The world has become accustomed to cheap flights and this will gradually erode if the aftermarket reduces and products become more expensive. It is all part of the cycle.

What are the key messages you would like people to take away from your contribution to this year’s conference?

There is a space and a need for all types of suppliers, but we need to be cognizant of the standards that we all live and work by to make this industry a place where we can enjoy a long and productive career. Aftermarket providers and OEMs need each other to keep as many aircraft, airlines and consumers flying as possible. 

TAGS: Europe
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