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Keeping them flying

AAR has had a busy year with its component support business, expanding its facilities worldwide to keep close to a growing customer base. Ian Harbison reports

Deepak Sharma, President International Supply Chain at AAR, says the company’s advantage is being the largest independent aviation services provider in the world, which means it can offer power-by-the-hour (PBH) programmes, MRO and engineering services tailored to each customer’s requirements. Most of the others are attached to an airline, which means they are supporting their parent while also trying to get some benefit out of their inventory holding. There are also some private companies, but they do not offer a broad portfolio or the ability to integrate services. He says the company is third out of the top five players in the market and that is probably the maximum that can provide a good service. Adding more players will not give the market a competitive advantage.


AAR has always had an interest in PBH as a natural extension of the company’s parts supply history, and leverages its distribution of OEM parts. This has been scaled up recently because it sees that airlines do not want to own assets or manage spare parts themselves. Airlines would rather have a large aggregator and integrator like AAR who can manage spares for them. AAR has made significant investments to meet the market’s need for this solution.


One source of inventory is from the scrapping of aircraft and engines. The rotable parts, in a majority of cases, can be revitalised by putting them through the shop maintenance process. The only alternative is to buy new parts from the manufacturers, which will increase the base cost of what can be sold to the airlines by two to three times. There is always a value attached to the parts regardless of an airframe’s operational life, Sharma adds. 


The PBH agreements vary in size and complexity, from a relatively simple arrangement with Bluebird Cargo of Iceland, to support of a fleet of five Boeing 737 Classic aircraft, signed in January 2017, to a five-year agreement with South African Airways Technical (SAAT). This deal, which started in October 2016, is a very interesting project as it extends well beyond nose-to-tail component and repair management to consultancy and job creation.


AAR has teamed with a local joint venture partner, JM Aviation South Africa, which will provide day-to-day, on-the-ground account management and technical support, and will work closely with AAR’s global parts supply warehouse team in Brussels. JM Aviation is a certified Broad-Based Black Economic Enterprise business (BBBEE), so the arrangement fulfils a key objective of the South African government to extend aviation services contracts to black-owned companies. Another part of this social programme is the provision of airframe and avionics skills training to SAAT and JM Aviation workers, as a knowledge transfer to support the growth of BBBEEs in aviation.


AAR will assist in growing SAAT’s MRO services to third-party customers across the continent, providing technical assistance for MRO and access to its operational analysis, as well as warehouse facilities and integrated IT solutions. Further help will support the expansion of SAAT’s component repair capabilities, including landing gear, and could potentially support a new MRO facility in west and central Africa.


A sign of how important the continent is to the company (it also has a number of government contracts throughout the region) was the appointment last year of Cheryle Robinson Jackson as its first President, AAR Africa, who was working with the US Department of Commerce’s Doing Business in Africa initiative while acting as AAR’s Vice President of Government Affairs and Corporate Development. This resulted in a PBH contract with Kenya Airways for 737NGs and was followed in May last year by a contract for nose-to-tail management of Airbus A319 airframe components and repairs, including deployment of its proprietary predictive-maintenance software, for fastjet of Tanzania. Day-to-day operations of AAR Africa, which is based in Johannesburg, are run by Director Donnadelliah Maluleke, who is responsible for government relations and business development for both commercial and government customers, and reports to Jackson.


Sometimes, the customer can also be an equal partner. When, late last year, Air New Zealand signed a long-term contract for nose-to-tail, cost-per-flight-hour rotable inventory support covering 740 parts for its 15 Boeing 777 aircraft, it also became AAR’s exclusive component repair provider for selected parts in the Asia-Pacific region and preferred supplier for selected parts worldwide.


Another important area is the Middle East. In February 2017, the company opened a parts warehouse at Dubai World Central airport. Adding to a network that includes Brussels, Chicago and Singapore, this holds a wide range of factory-new aircraft components from OEMs such as Eaton, Meggitt, LORD, Unison and UTAS. One local customer is flydubai, which signed a long-term, multimillion-dollar contract last year for PBH component inventory management and repair services to support 53 Boeing 737-800s, increasing to 60 aircraft as new deliveries arrive. >>


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