Surging demand for used serviceable material (USM) from airlines and maintenance companies has attracted private equity, institutional and lessor capital to the parts market.
Yet new players must be wary that the modeled and realizable values of aircraft teardowns can vary enormously, depending on factors such as inventory turn times, repair costs and customer networks.
Given the vast amounts of data generated in the parts aftermarket, such as from historical trading, repair events, market movements and customer behavior, there is considerable potential for artificial intelligence (AI) to provide meaningful analysis that optimizes investment decisions, inventory placement and parts pricing.
“Automated inventory tracking and forecasting can help reduce errors and delays, while our own inventory management system, Apollo, uses probabilistic modeling to help balance service levels with capital investment,” notes Scott Symington, chief commercial officer at AJW Group, in an interview with Inside MRO.
“I expect that predictive capability to become increasingly important, helping businesses identify demand and position material before it is required.”
Darren Naughton, engines vice president at APOC Aviation, a USM supplier, agrees, though he cautions that human judgment remains vital to assess a part’s condition and traceability. “The differentiator over the next few years will be the quality of in-house data, rather than the model sitting on top of it. Nevertheless, its functionality can offer significant improvements to [turnaround times] on certain tasks—we are already seeing that throughout the business, not just trading,” he adds.
Abdol Moabery, chief executive of GA Telesis, has observed numerous “paper tigers” in the AI space, whose claims do not match up to the reality of their products. “A chatbot attached to an [Enterprise Resource Planning] system is not an AI strategy,” he says. “The competitive advantage will belong to companies that have proprietary data, understand that data, have the infrastructure and people to use it, and can demonstrate that AI is actually changing decisions and financial outcomes.”
GA Telesis began investing seriously in AI in 2022. Today, the company incorporates a specialized arm to assess how to use data, analytics and AI capabilities to improve how it prices, buys, repairs and positions inventory.
“I think AI will ultimately have a profound impact on parts trading, but we should be intellectually honest about where the industry is today,” Moabery says.
For a full analysis of the parts trading market, see the next issue of Inside MRO.
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