Plane Profit: From Passengers to part-out

There are many factors that impact the size and age of today’s commercial airline and freighter fleets. Everything from the cost of fuel to the cost of money drives decision-making about how long an airplane remains in service. Eventually, every airplane is retired, parked, or simply becomes too expensive to operate. Although the average airplane age at retirement is about 25 years old, aircraft part-out companies are seeing significantly newer airplanes—some as young as six years old—sold for teardown. In short: The sum of their parts is worth much more than the whole.

While it seems counterintuitive, used aircraft parts actually maintain their value longer than the airplane as a complete flying machine. Properly managed, commercial airplanes can become a significant revenue stream even after their final flight, rather than becoming a financial burden as they age. Recovering that revenue is easier with the right MRO partner—and that partner is AerSale^®.

To Park, or Not to Park

Every aircraft must pull its own weight in terms of continuously generating revenue through its lifetime. Often, aircraft parking is only temporary prior to changing owners. For some it is the first step before de-registration and recycling. Yet sometimes parking and storing an airplane makes the most financial sense. Consider these two scenarios where parking can help an airline avoid significant cost impacts and preserve revenue:

• An airline/lessor needs to temporarily flex or right-size its fleet to maintain profitability during an economic downturn, yet be able to scale up quickly as demand for air travel increases
• Several airplanes in a fleet are due for D-check heavy overhauls, but are parked instead, avoiding millions of dollars for parts, labor, and facility utilization

Of course, parking an airplane and aircraft storage require careful preparation in order to preserve it for a safe return to revenue service. Openings and inlets must be sealed, engines and windows tightly covered with reflective materials, and the weather must be warm and dry to prevent corrosion.

AerSale’s facilities in Goodyear, Arizona, and Roswell, New Mexico, have a combined parking and storage capacity for up to 650 aircraft on paved surfaces in a dry desert climate perfect for long or short-term storage.

De-Parting

The global market for airplane used serviceable materials is huge, with demand for particular parts tied to their function. In China especially, many airlines maintain very young fleets. This has generated an even larger stream of mid-life and older aircraft available for part-out, with the trend expected to increase for the foreseeable future.

This is a win-win revenue scenario for airlines parting-out planes from their fleet, and airlines who want parts at a lower cost. The number of reusable components depends greatly on the age of the aircraft, with the engines making up 80 to 90 percent of the overall part-out value. Avionics, black boxes, navigation equipment, and high-pressure turbine parts are high-value and in high demand, along with life-limited parts (LLPs). Understandably, pricing for LLPs is based on the number of cycles remaining on the part.

AerSale has purchased over 100 aircraft for disassembly and part-out since 2010, and is a reliable source of competitively priced and fully documented aircraft components and parts for major airlines and MROs worldwide. AerSale has also developed a strong infrastructure to meet the increasing demand for OEM used serviceable replacement parts. We offer a range of customized exchange, lease, consignment, and purchase programs to ensure that our customers get the parts they need, wherever, and whenever they need them. 

Parts + Paperwork = Peace of Mind

Despite extensive safeguards and regulatory oversight of the global parts market and its network of intermediaries, some counterfeit parts eventually do end up in the supply chain. So it is important, now more than ever, that every airplane part is legal, certified, and traceable 100 percent of the time. Safety, airworthiness, and quality are nonnegotiable. AerSale provides complete aircraft records management, inspection, audit, archiving, and storage—providing peace of mind and the right paperwork to support part-out opportunities. All of AerSale’s customers receive the highest quality parts, unsurpassed service and attention, and unparalleled certification and trace documentation for every asset transaction. As part of AerSale's commitment to quality, suppliers doing business with us must also meet our stringent requirements.

For more information on how AerSale’s integrated solutions and global network can keep your aviation assets airborne and working for you profitably from first flight to final flight, visit www.aersale.com.

About AerSale

A global aviation leader celebrating its 10-year anniversary, AerSale specializes in the sale, lease, and exchange of used aircraft, engines, and components, in addition to providing a broad range of integrated maintenance, repair, and overhaul (MRO) services and engineering services for commercial aircraft and components. AerSale also offers asset management services to owners of end-of-life aircraft and engine portfolios. Headquartered in Coral Gables, Florida, AerSale maintains offices and operations in the United States, Europe, and Asia.