ILS Expects Part Price Increases to Continue in 2022

Credit: ATR

Aerospace part prices are undoubtedly increasing, but the pattern of increases appears to be mixed. At Aviation Week’s request, ILS reviewed more than 300,000 prices for new and surplus new rotables in 55 ATA chapters over the last 12 months. New rotables are parts sold directly by OEMs, while new surplus rotables are parts with no operating time or cycles, often being sold by an airline to a distributor.

ILS spokesperson Eric-Jan Schmidt says a large majority of ATA chapters saw modest prices, and prices for new surplus parts increased slightly more than prices for direct-from-OEM parts. That looks like demand is driving prices more than increased costs at manufacturers.

The great majority of parts sold to business aviation saw price increases, up to nearly 10% over 12 months. There were hardly any decreases in part prices for business aviation, consistent with the continued strength of business aviation during the pandemic.

Although part prices for government aviation mostly increased, the tendency to increase was less than for other aviation sectors.

For new parts only, ILS looked at the strength of price increases by ATA chapter.

Prices for landing gear parts increased for all markets, commercial, business and government aviation. So, too, did prices for engine ignition parts.

Prices for electrical systems increased generally, but especially for business aviation. Price increases for auto flight parts were strong for business aviation and government markets.

Prices for hydraulic power parts increased generally, but especially for government aviation. Towing and taxi part prices increased in 2021 for all markets.

Prices of tail rotor parts for rotorcraft increased for business aviation, as did prices for vacuum parts.

Price increases during 2021 appear to be mostly linked to demand increases, particularly for the relatively strong business aviation sector. But OEM costs are mounting and demand continues to increase.

ILS thus expects further price increases in 2022. “Utilization is picking up, and recovery continues,” observes Schmidt. “Watch for business aviation, cargo and narrowbody- related parts to be in highest demand.”

Schmidt also expects increases in new part prices to accelerate retirements, which should in turn increase the supply of used parts—so the net effect on overall part prices is still to be determined.

And then there are the economy-wide increases in costs of raw materials. Sooner or later, these should feed through to new part prices.

Uncertainty about future part prices explains some hesitancy by OEMs to predict pricing. Transdigm execs said in their last earning call that they would pass on cost increases to customers. A GE spokesman says the engine-maker was able to offset most of its cost increases in 2021. GE expects continued inflationary pressure in 2022 and will continue taking countermeasures to offset it. Other OEMs declined to say how they would deal with increasing material costs.