Aircraft parts industry
Encyclopedia
The aircraft parts industry is defined as companies that focus on the aerospace
parts market
. These include, for example:
Establishments primarily engaged in manufacturing aeronautical instruments and electronic navigational equipment are not considered part of this sector.
The aerospace industry is divided into two main sectors: the civil sector and the military sector. The military sector has declined sharply since the end of the Cold War
. There has also been a decline in overall expenditures in the aerospace industry in general. This trend has led to consolidation and restructuring worldwide. The aftermarket sector today is a substantial source of income. All Aerospace primes and suppliers have a major stake in this market.
Internationally, the market for aircraft parts in the civil aviation
sector is dominated by Boeing
(60 per cent of the global market) and Airbus Industry (30 per cent of the market). This oligopoly
controls the standards that aircraft parts suppliers must meet. In addition to this concentration of companies, the aerospace component industry and market is concentrated geographically in the United States
(75 per cent), although Europe
(14 per cent) and Japan
(5 per cent) are important centres. The military aircraft parts industry is dominated by large aerospace and defence conglomerates in a small number of large, industrial countries such as the United States, France
and the United Kingdom
.
Aircraft hydraulic and pneumatic assemblies comprise 6.7% of total industry shipments. The split between civilian and military hydraulic and pneumatic assemblies is 78% for civilian and 22% for military applications. Aircraft power transmission equipment comprises 6.1% of total industry shipments. The split between civilian and military power transmission equipment is 56% for civilian and 44% for military applications.
The parts business requires a high degree of service and local interaction with the airline companies. Parts are more customized, and are not the high volume commodity type of parts found in the automotive sector, for example. Because of currency fluctuations, tariffs and similar import limitations, price controls
and labor regulations can have a major impact on the sectors financial health. This is exacerbated by the fact that the industry is capital intensive compared to other manufacturing concerns.
The manufacture of aircraft parts and auxiliary equipment encompasses a variety of manufacturing processes. The industry is under pressure to switch to alternative materials and processes which comply with changing domestic and international standards. As well, the industry must develop more efficient and environmentally friendly aircraft parts products to meet environmental standards aimed at reducing aircraft noise and engine combustion emissions.
Boeing, Raytheon
, and Lockheed Martin
announced an Internet
trading exchange for aerospace parts in March, 2000. Aerospace and defense companies will bid, buy and auction original airplane parts and replacement parts. Several companies such as Partslogistics.com, StraightAERO.com, Avref, OneAERO, fipart.com and ILS provide list price part reference, technical, and marketing data which help users to understand the volume and basic economic metrics such as supply and demand of specific parts.
In 2009, Benjamin Yen of Harvard Business Review reported that supply chain management of aviation spare parts is characterized by stringent regulations, tight turnaround and lead time, large numbers and expensive parts. Managing spare parts in the aviation industry, thus, has always been a challenge for all airline operators. Spare parts operations covered procurement, inventory management, repair management and logistics management. These processes are either kept in house or outsourced to supply chain and trade management companies.
United States: M International Inc.
Canada: Airborne Engines
Aerospace
Aerospace comprises the atmosphere of Earth and surrounding space. Typically the term is used to refer to the industry that researches, designs, manufactures, operates, and maintains vehicles moving through air and space...
parts market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
. These include, for example:
- list price reference providers (StraightAERO.com, AvREF )
- manufacturing ( BoeingBoeingThe Boeing Company is an American multinational aerospace and defense corporation, founded in 1916 by William E. Boeing in Seattle, Washington. Boeing has expanded over the years, merging with McDonnell Douglas in 1997. Boeing Corporate headquarters has been in Chicago, Illinois since 2001...
, AirbusAirbusAirbus SAS is an aircraft manufacturing subsidiary of EADS, a European aerospace company. Based in Blagnac, France, surburb of Toulouse, and with significant activity across Europe, the company produces around half of the world's jet airliners....
, MeggittMeggittMeggitt PLC is a leading British-based engineering business specialising in aerospace equipment. It has its headquarters at Bournemouth Airport in Dorset. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.-History:...
) - aircraftAircraftAn aircraft is a vehicle that is able to fly by gaining support from the air, or, in general, the atmosphere of a planet. An aircraft counters the force of gravity by using either static lift or by using the dynamic lift of an airfoil, or in a few cases the downward thrust from jet engines.Although...
assemblies, aircraft engine components (Rolls-Royce plcRolls-Royce plcRolls-Royce Group plc is a global power systems company headquartered in the City of Westminster, London, United Kingdom. It is the world’s second-largest maker of aircraft engines , and also has major businesses in the marine propulsion and energy sectors. Through its defence-related activities...
, General ElectricGeneral ElectricGeneral Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
(GE)) - equipment and parts (Thales, Teledyne, Gables Engineering, Timken)
- aircraft (parts)
- aircraft interior refurbishment and completion companies
Establishments primarily engaged in manufacturing aeronautical instruments and electronic navigational equipment are not considered part of this sector.
The aerospace industry is divided into two main sectors: the civil sector and the military sector. The military sector has declined sharply since the end of the Cold War
Cold War
The Cold War was the continuing state from roughly 1946 to 1991 of political conflict, military tension, proxy wars, and economic competition between the Communist World—primarily the Soviet Union and its satellite states and allies—and the powers of the Western world, primarily the United States...
. There has also been a decline in overall expenditures in the aerospace industry in general. This trend has led to consolidation and restructuring worldwide. The aftermarket sector today is a substantial source of income. All Aerospace primes and suppliers have a major stake in this market.
Internationally, the market for aircraft parts in the civil aviation
Civil aviation
Civil aviation is one of two major categories of flying, representing all non-military aviation, both private and commercial. Most of the countries in the world are members of the International Civil Aviation Organization and work together to establish common standards and recommended practices...
sector is dominated by Boeing
Boeing
The Boeing Company is an American multinational aerospace and defense corporation, founded in 1916 by William E. Boeing in Seattle, Washington. Boeing has expanded over the years, merging with McDonnell Douglas in 1997. Boeing Corporate headquarters has been in Chicago, Illinois since 2001...
(60 per cent of the global market) and Airbus Industry (30 per cent of the market). This oligopoly
Oligopoly
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek ὀλίγοι "few" + πόλειν "to sell". Because there are few sellers, each oligopolist is likely to be aware of the actions of the others...
controls the standards that aircraft parts suppliers must meet. In addition to this concentration of companies, the aerospace component industry and market is concentrated geographically in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
(75 per cent), although Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
(14 per cent) and Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
(5 per cent) are important centres. The military aircraft parts industry is dominated by large aerospace and defence conglomerates in a small number of large, industrial countries such as the United States, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
and the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
.
Aircraft hydraulic and pneumatic assemblies comprise 6.7% of total industry shipments. The split between civilian and military hydraulic and pneumatic assemblies is 78% for civilian and 22% for military applications. Aircraft power transmission equipment comprises 6.1% of total industry shipments. The split between civilian and military power transmission equipment is 56% for civilian and 44% for military applications.
The parts business requires a high degree of service and local interaction with the airline companies. Parts are more customized, and are not the high volume commodity type of parts found in the automotive sector, for example. Because of currency fluctuations, tariffs and similar import limitations, price controls
Price controls
Price controls are governmental impositions on the prices charged for goods and services in a market, usually intended to maintain the affordability of staple foods and goods, and to prevent price gouging during shortages, or, alternatively, to insure an income for providers of certain goods...
and labor regulations can have a major impact on the sectors financial health. This is exacerbated by the fact that the industry is capital intensive compared to other manufacturing concerns.
Trends
A number of regulatory and market access issues negatively affect the industry including the lack of harmonization in standards around the world, e.g., air worthiness and environmental standards; impediments to licensing and transferability of personnel between company sites in different countries; and the existence of international subsidy programs and various non-tariff barriers.The manufacture of aircraft parts and auxiliary equipment encompasses a variety of manufacturing processes. The industry is under pressure to switch to alternative materials and processes which comply with changing domestic and international standards. As well, the industry must develop more efficient and environmentally friendly aircraft parts products to meet environmental standards aimed at reducing aircraft noise and engine combustion emissions.
Boeing, Raytheon
Raytheon
Raytheon Company is a major American defense contractor and industrial corporation with core manufacturing concentrations in weapons and military and commercial electronics. It was previously involved in corporate and special-mission aircraft until early 2007...
, and Lockheed Martin
Lockheed Martin
Lockheed Martin is an American global aerospace, defense, security, and advanced technology company with worldwide interests. It was formed by the merger of Lockheed Corporation with Martin Marietta in March 1995. It is headquartered in Bethesda, Maryland, in the Washington Metropolitan Area....
announced an Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
trading exchange for aerospace parts in March, 2000. Aerospace and defense companies will bid, buy and auction original airplane parts and replacement parts. Several companies such as Partslogistics.com, StraightAERO.com, Avref, OneAERO, fipart.com and ILS provide list price part reference, technical, and marketing data which help users to understand the volume and basic economic metrics such as supply and demand of specific parts.
In 2009, Benjamin Yen of Harvard Business Review reported that supply chain management of aviation spare parts is characterized by stringent regulations, tight turnaround and lead time, large numbers and expensive parts. Managing spare parts in the aviation industry, thus, has always been a challenge for all airline operators. Spare parts operations covered procurement, inventory management, repair management and logistics management. These processes are either kept in house or outsourced to supply chain and trade management companies.
Aircraft Parts Suppliers
UK & Ireland: Launch AviationUnited States: M International Inc.
Canada: Airborne Engines