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The market for used serviceable material | Aircraft Commerce

30 Nov 2017

Used serviceable material (USM) and time-continued material are parts derived from scrapped or parted-out aircraft. Operators with ageing fleets that are near to retirement, can use USM to exchange parts in a fleet and subsequently avoid costly repairs and shop visits (SVs) or the purchase of new rotable components.

Operators use USM to make MRO more cost-effective, by avoiding costly repairs that are uneconomic for a fleet approaching retirement. "Teardown does not limit repair activity; rather it actually keeps it going," says Conrad Vandersluis, senior vice president strategic material & asset management at AJW Group. "Parts still need to go through the MRO shop after teardown, and may still need repairs performed. Aircraft teardown and the development of USM within the market therefore maintains a healthy MRO environment as fleets mature."


The market for used serviceable material | Aircraft Commerce

AJW harvests 750-1,000 part numbers (P/Ns) from the average aircraft teardown, depending on the type. "These include line replaceable units (LRUs), nacelle components, and flight control systems, which represent some of the most valuable airframe components," explains Vandersluis. "We estimate that 60% of teardown value is tied up in the engines, 30% in airframe rotables and components, and 10% in airframe and structural parts. This varies depending on the age and residual value of the engines however. The value of USM for an aircraft is directly related to the number of part-outs that have taken place versus the number of the type in operation, so it will fluctuate according to the number of part-outs. USM marketability depends on fleet renewal activity."


According to Vandersluis, certain 737CL material is currently in short supply as the retirement rate has slowed, so components are holding good value in relation to the demand for such material. "If there is a sudden rise in teardown activity for the Classics however, then USM providers will try to claw value from the components quickly, which causes a value drop," he continues. 737NG engine components are another area seeing high demand activity.


"Meanwhile demand has dropped significantly for older generation CRT cockpit displays on the Airbus aircraft because they have been replaced on newer generation with LCD/LED displays, with upgrades proving costly," says Vandersluis. "Operators therefore want to replace these with new model aircraft for operational costs that comply with upcoming regulatory changes."



Read the full article here



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