Southwest Airlines is keeping a close eye on the used-parts market, and may ramp up its spares stock if Boeing 737NG part-outs pick up and prices on harvested parts begin to fall.
“At some point, the cost curve is going to start bending down,” Peter Requa, Southwest’s senior director of supply chain management-technical operations, told Aviation Week at MRO Americas. “We can’t predict when that is, but we’re watching for it.”
Requa emphasized that the carrier has plenty of spares on hand and is not actively looking to add much beyond its forecasted needs.
“We don’t have the need to buy large packages unless we’re opening up a new maintenance line station or we have a lot [beyond economic repair parts] forecasted—something to drive the large purchase,” he said. “The way we’re set up right now, we’re in pretty good shape.”
The carrier has purchased several packages of NG parts in the past few years, and “we’ll probably do something similar as we go forward,” Requa said. “For the right price, we might want to increase our service levels. It’s a price/availability play.”
Data from a recent Canaccord Genuity survey of nearly 50 MRO providers suggests a recent uptick in used-parts purchasing. The survey said that 27.5% of parts purchased in the first quarter were used—the highest figure in the quarterly survey since the firm began asking the question three years ago.
The trend isn’t expected to hold, but a full-year projection of 20% is not out of the question, Canaccord said—a notable jump from the midteens figures from a few years ago.