INDUSTRY PROFILE
ACS – Commercial Aftermarket Update
Aviation Component Solutions (ACS) designs, certifies, manufactures and distributes PMA parts for airframe and engine components and accessories for Boeing, Airbus, Bombardier, Embraer, Fokker, ATR and Saab aircraft. Over the last few months, ACS President Dave Kvasnicka has been interviewed on several occasions regarding trends and developments in the commercial aftermarket, in the PMA parts industry and at ACS. Below are excerpts from those interviews:
How is the PMA industry doing in this tough economy? How is ACS doing?
Fortunately, the PMA market is growing. According to AeroStrategy, the PMA industry declined in 2008 and 2009, but has since recovered to pre-recession levels. Over the next several years, they are forecasting annual PMA industry growth in the 9 to 13 percent range.
As for ACS, we’re doing very well. We continue to outperform the market as we introduce new products and expand our customer base. So, has the recession and the subsequent slow recovery helped or hurt ACS?
Both. On the downside, we saw a reduction in ASMs (available seat miles) which, of course, led to a reduction in demand for MRO services and spare parts. We also saw more aircraft being removed from service and parted out – reducing demand while increasing the supply of competitive surplus parts. And, we saw some of our customers changing their maintenance, inventory or supply chain practices.
On the positive side, the recession increased the focus on cost reduction. Of course, PMA parts can be a big part of an airline’s or MRO shop’s cost reduction strategy. So, ACS has been able to add many new customers during this tough economy. And, we don’t expect them to revert back to buying only OEM parts once the recovery kicks in to high gear.
Has the ongoing European debt crisis impacted your business?
So far, we haven’t seen much of an impact, but we’re keeping an eye on it. Of course, we’re concerned about a stronger dollar making our parts more expensive to our European customers. And, we’re concerned about the long-term viability of some of our European customers in light of reduced governmental support. Certainly not related directly to the debt crisis, but also of concern, is the potentially negative impact on ASMs of Europe’s carbon trading scheme. We really would like to see that go away.
What changes to the competitive landscape have you seen over the last few years?
Well, in general, competition is increasing. On the OEM side, we’ve seen a few OEMs get more serious about engaging in good, old-fashioned competition on price and customer service. This, of course, is good for our customers and we’re ready for it.
On the PMA side, more parts have multiple PMA companies offering the same part. And that makes sense – a part that is attractive for ACS to develop will also be attractive to one or more PMA competitors. This, of course, heightens competition on price and customer service. Again, a win for the customer.
In recent years, OEMs seem to be winning more long term agreements to provide MRO services or to be the exclusive part supplier to major airlines. How does this impact your business?
One advantage the OEMs have over PMA companies is their breadth of line. They exploit this advantage when they offer these MRO or spare parts deals. We, however, are not without some advantages of our own. We offer significant savings, better customer service, flexibility and, where possible, an improved design with better reliability. And, we have another big thing going for us – most airlines are committed to maintaining a certain level of competition in their supply chain. They remember the era of OEM monopolies and they don’t want to return to it. And, keep in mind, total PMA market share is still in the mid-single digits. We believe we still have ample opportunities to compete and grow.
Looking forward, how optimistic are you about the PMA industry and the broader economy?
We are cautiously optimistic. Absent a major shock to the system, we expect slow growth in the broader economy with slightly better growth in the MRO marketplace. As for the PMA industry, we think we’ll see a short-term boost because short term supply chain strategies, such as reducing inventories and deferring maintenance, have largely run their course. And, longer term, the trend toward greater PMA acceptance will continue. So, all in all, the PMA industry is a pretty good place to be.
Relative to the broader economic recovery, what are your major worries?
Several things could slow or derail the recovery. So, where to begin? Certainly, high fuel prices would hurt. So, in the short term, let’s hope the Strait of Hormuz stays open and peaceful. In the longer term, politically motivated constraints on oil exploration and transportation are very unhelpful. Also unhelpful are excessive taxation and overly-burdensome regulation. And, of course, the high levels of public and private debt will remain a concern for the next several years. So, there is plenty to worry about. That said, we are still cautiously optimistic and we expect the PMA industry to outperform the broader MRO industry in any scenario.
Contact details
Aviation Component Solutions Dave Brooksieker, Business Development Manager
26451 Curtiss Wright Parkway, Suite 106 Richmond Heights, OH 44143
p: 440-295-6590 f: 440-295-6594
e:
brooksieker@acs-parts.com www.acs-parts.com
Aviation Maintenance |
avm-mag.com | February / March 2012 47
Aviation Maintenance |
avm-mag.com | February / March 2012 45
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