Fewer flights are bad news across the aftermarket, but as the response to coronavirus plays out, different types of suppliers will suffer and rebound at different times.
PMA parts providers face an initial shock as airlines and MRO shops halt purchases to burn through existing inventories, and potentially a later one as aircraft are retired and torn down, creating a flood of cheap used serviceable material (USM) to compete with their new products.
On the other hand, past crises have pushed airlines to economize and embrace a range of alternative support solutions—such as PMA, DER repairs and USM.
This has encouraged some of the main players in PMA, who cite several other reasons why they may even emerge stronger after the crisis.
For one thing, they say, competition with USM only becomes an issue for parts worth more than $5,000. HEICO, the biggest player in the PMA market, says that less than 10% of its sale volume is driven by parts above that price point.
Second, HEICO points out that two-thirds on if its sales are in the component market, which it (and many others) expects to recover quicker than that for engine overhauls or heavy maintenance.
Third, many airlines are deferring or cancelling new aircraft order positions, which is likely to depress production rates at Airbus and Boeing for several years. Since new, within-warranty aircraft are not candidates for PMA, this depression may leave a larger market for PMA suppliers to cater to than would otherwise have been the case, even accounting for early retirements.
“Even if a chunk of [the global fleet] come out … we don't think we're going to be hit as a result of cannibalization that badly,” said HEICO co-president Eric Mendelson on an analysts’ call.
“There will be a short-term impact, but we think that as the lion’s share of the aircraft that remain in service age, that will provide plenty of opportunity for us in terms of our sales, whether it's parts or repairs.”
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