Airline Parts Market 2015

Airlines Seeking OEM-Part Alternatives Seeing More Options

FAA rules favor agility, and alternative-parts providers are stepping up

Airlines, seeking more and cheaper options to OEM parts, are discovering new ways to leverage alternative suppliers, including parts manufacturer approval (PMA) parts providers, to keep aircraft flying and their MRO costs down.

The PMA market, once considered a significant threat to OEM-parts revenue streams, has settled into a comfortable niche. An ICF analysis shows that PMA sales to airlines generated about $550 million in 2015, or about 4% of the $13.4 billion alternative-parts market. It is by far the smallest of the alternative categories, which together account for about 30% of the total materials market (see table). 

While tiny compared to other non-OEM parts sources—the next-smallest category, designated engineering representative (DER) or non-OEM repairs, is four times as large by revenue—PMA is steadily growing. ICF calculates that of the 1.1 billion PMA part numbers available, about 450,000 have been added since 2011. 

Several factors are boosting PMA parts prospects, among them the growing number of midlife and legacy aircraft in the world’s fleet. PMA part makers continue to thrive on supplying hard-to-find parts for older or out-of-production aircraft, but as airlines explore ways to stretch their aftermarket dollars further, PMA suppliers are increasingly seen as partners in innovation, not desperation.

“Oftentimes, the PMA producers are agile and nimble enough to quickly respond to our needs and add reliability improvements,” says Kent Horton, director of engineering for Southwest Airlines. “The airline, having operating experience, can inform them of known issues or conditions that we would like to see improved upon. We can [provide] that input to the PMA producer, and they can incorporate that into the design, making the part better.”

For example, a major U.S. carrier was struggling to keep coffeemakers functioning in its new galleys. The coffeemaker’s design included a sensor susceptible to breakage in real-world conditions—quick removal and replacement of a coffee pot. A patent issue rendered the sensor untouchable by anyone but the OEM. PMA specialist Wencor worked around the issue by redesigning the system’s base plate to move the sensor out of harm’s way.

Like older aircraft, the cabin environment has long been fertile ground for PMA part suppliers, thanks to both high wear and tear and customization. Another major roadblock is anti-PMA stances by some airlines and many lessors that limit PMA parts. This, too, is changing. American Airlines, long a PMA part proponent, now strikes anti-PMA language from its aircraft leases.

“We see it as giving us the option to help manage the life cycle of the airplane,” says Craig Barton, American’s vice president of technical services. “It can’t be, ‘Here is the sole source for maintaining the product.’ We like to have options. Give us a choice in how we’re going to go about it.”

American also is among the carriers that make extensive use of FAA regulations permitting owners and operators to make and install parts on aircraft without part manufacturer approval. “It’s a great way to be able to react quickly to things,” Barton says of the owner-operator parts (OOP) process. “It capitalizes on our technical ability and knowledge gained through operating aircraft, knowing what’s breaking.”

OOP is not new, but PMA providers are finding new ways to leverage the requirements to help customers. An airline with a leased fleet approached Wencor with an integrated drive generator (IDG) problem. An expensive component was failing often, but because the lease prohibits PMA parts, the airline’s options were limited. Wencor and the airline worked around the PMA issue using OOP: Wencor makes the part but licenses it to the operator, which installs it on the aircraft. The cost difference: $7,000 per IDG repair compared to the OEM’s default option. 

The FAA has similar rules that apply to repair stations, permitting them to make parts and use them in a customer-approved repair. Wencor is among the suppliers in this space as well, giving MRO shops more cost-effective options to present to their customers.

The choice between PMA and OOP comes down to tactics as much as strategy, says Patrick Markham, vice president of technical services at Heico’s parts group. The lead time for an OOP part can be shorter, since no FAA certification is required, but an efficient Organization Designation Authority—or internal team approved to act on the FAA’s behalf managing certification projects—can reduce both the time gap and cost between PMA and OOP.  

Some operators choose OOP to keep an improvement out of competitors’ hands, while suppliers embrace it because they know they have a customer for the part. In cases where a part is highly customized, OOP may be the only logical choice.

Increasing levels of cabin customization and rising costs of spares on the newest-technology aircraft may present still more opportunity to PMA suppliers. “The new products tend to be extremely expensive,” Eric Mendelson, president of Heico’s flight support group, told analysts on an earnings call. “There are fewer suppliers, and those suppliers tend to have a greater amount of content on the aircraft. That provides greater opportunity for companies like Heico.” 

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