As seen in Airside International, December 2013
There are two main customer groups that require the provision of spare parts for GSE: the owners of the equipment (including handling agents, airlines and lessors) and maintenance providers. But while the equipment mix and market conditions may vary, the principal demands of customers are pretty much the same across the board, as Megan Ramsay finds out.
As an original equipment manufacturer (OEM), Chicago, Illinois headquartered aviation equipment provider JBT sells parts, convenience kits and product upgrade kits to those who own, operate and repair JBT equipment worldwide, says Josh Parkin, global aftermarket manager.
“Aviation is a very schedule-based market and JBT is determined to drive customer success through fast response times,” he affirms. “Based on our industry experience and customer feedback, we find the following most important to our customers: part availability (the time it takes from an order being placed to the part arriving at a customer’s location); part quality (when parts arrive they need to be the right parts and be dependable for the strenuous demands of ramp support); and knowledgeable sales/support staff (sales and service staff need to understand the equipment and parts to be able to provide quick and accurate advice in order to restore a piece of equipment to service on time and cost effectively).”
Parkin believes that OEMs have “a special responsibility” to their customers, their relationship extending well beyond the initial equipment sale to include a lifetime of support, from part support to service repairs to equipment refurbishment. By offering global support 24 hours a day, seven days a week, 365 days a year, JBT aims to go beyond just selling a part to make sure that customers have the tools at hand to ensure they get what they really need. He feels that this is “a unique service that only the OEM can provide. The value that this offers helps reduce our customer’s total cost of ownership (TCO) and helps keep our customers’ fl eets performing effectively for many years to come.”
GHH Fahrzeuge’s biggest customer, TCR, is a lessor and maintenance provider that leases the German GSE manufacturer’s aircraft movers to airline operators like KLM, as well as provides maintenance services. However, GHH general manager Mortimer Glinz informs: “We also have customers like airberlin who own our machines and operate them directly. I believe that GHH customers are long-term users of their equipment. They prefer the low operating cost and the long lifetime over the low-budget equipment with high operating cost of other manufacturers.
“Customers want fast delivery, sometimes installation and training, and budget solutions. As an OEM we are able to offer service and operator training, customised on-site service solutions, rebuilds and custom modifications. These services enable our customers to further optimise the cost and performance of the equipment. For instance, we have upgraded our machines for new aircraft types or retrofitted existing units with energy saving kits,” he observes.
Some OEMs are venturing into the provision of spare parts for equipment manufactured by other companies. Brad Streeter, responsible for administration, sales and marketing at Boise, Idaho-based GSE provider AERO Specialties, comments: “We do not (currently) do a lot with parts outside supporting our own, AERO Specialties-manufactured GSE. This is a growing aspect of our business that we are just now gearing up to pursue, though. Most of our customers are owners predominantly, as we specialise in the corporate, FBO (fixed base operator) and general aviation market. We have some maintenance provider customers, but with the kinds of equipment we provide the majority of our customer base tends to fall into the owner category. Leasing options have become more attractive with the tightening economy and some newer tax incentives and these categories are on the rise.
“Customers demand a quick turnaround on quotes and order shipments. The accuracy of shipments and meeting delivery deadlines when equipment is down and out of service is always very important as well,” he adds.
Summing up, Michael Bloomfield, executive vice president at Melville, New York-headquartered aviation GSE parts supplier Sage Parts, remarks: “The main demand from our customers is ‘right now’. If equipment is down, then availability is the priority. In general, this is followed by a demand for quality, with price being less important. After all, the price of having idle equipment sitting around is significant as the customer might need to rent a replacement.
“Our prime strategy is to provide parts as close to the point of use as possible. Value-add is a huge purchasing motivator – things like being able to offer high quality, a lower
price, faster delivery or good customer service. We often help with evaluating inventories or technical issues. We also analyse why some items are frequently used and can redesign them to reduce the need to replace them so often.”
Sage supplies all parts for all brands, with demand depending on the operator. For example, smaller airlines like the low-cost carriers predominantly carry out narrow– body operations, so the mix of equipment they use is very different to transcontinental or freighter operations. Climate also plays a part – de-icers, for instance, are not always necessary.
Bloomfield goes on: “Each geographical area is dominated by a certain type of customer. For example, in North America, almost exclusively airlines do their own ground handling and maintain their own equipment; the second biggest customer base in that area is ground handlers maintaining their equipment, and separate maintenance companies come in third. In the UK, the vast majority of our customers are maintenance and/or leasing companies, followed by ground handling agents and then airlines (very few of whom handle themselves or do their own maintenance in the UK).
“In Europe, it depends on the country. For instance, in France we deal direct with Air France, and then also with ground handlers, while in Germany it’s almost always handlers. Asia is the same as Germany but in some countries airlines self-handle – as they tend to do in Latin America.
“As for Africa, it’s a mix of handlers and airlines. Sometimes this is due to how airports are structured, perhaps. It’s a cross between evolution and economics; also, labour requirements come into it – for example, in North America there are quotas for airline employees to do a certain amount of this sort of work.”
And there are challenges that arise from such geographical differences. Thus, there are varying brands of equipment requiring different parts that may be more or less commonly used in some countries but must all be sourced as rapidly and cost-effectively as possible. Language barriers can also create challenges.
But JBT’s Parkin feels that “customers’ spare parts requirements and purchasing methods are not country specific, but differ from customer to customer. One advantage of having a global spare parts warehouse network is that our sales and support staff get to know customers in their region better so that JBT can stock the right parts and are knowledgeable about local Customs regulations and shipping requirements.”
REGULAR MAINTENANCE VERSUS URGENT REPAIRS
There are two distinct models when it comes to ordering and supplying GSE parts. First, spares are required on an ongoing basis for regular, planned maintenance work. Second, a part may be needed urgently for an unscheduled repair to a piece of equipment. The mix differs across suppliers; for example, at AERO Specialties approximately 80 percent of orders are for regular, non-urgent maintenance and repair work, with the remainder being for immediate requirements, while at GHH Fahrzeuge about 25 percent of business relates to unscheduled repairs.
At JBT, Parkin considers: “While it is diffi cult to ascertain an exact percentage, I would say that we have seen an increasing trend of customers reducing their on-site spares inventory and looking to their parts suppliers to provide just-in-time parts support. As a result, JBT has had to expand our inventory and fill more orders with shorter lead times. We have adapted to this challenge by studying parts purchasing trends and pre-positioning parts globally to be closer to customer equipment. JBT also benefits from a strong global distributor network to further support our customers and further reduce lead times.”
Bloomfield believes that Sage was at the root of the trend towards just-in-time parts provision for GSE. “We created an option for customers to get a full array of parts from one supplier as opposed to going to OEMs. This has forced lots of OEMs to rise to the occasion. Parts at the point of use never really existed before us and this has been a positive change – there is now a focus on high value-add and getting our customers to appreciate that.”
Of course, the associated costs may be higher, but Bloomfield points out: “The focus on price all depends on circumstances; a lot of repairs are unexpected and urgent so there is no time for price comparison, but in the case of planned repairs or maintenance, of course price can be considered much more carefully. Repairs are completely unplanned, whereas maintenance is more preventative, planned and therefore more price-sensitive. Some providers change their pricing according to the urgency of the demand but we have a very structured price policy that does not take advantage of those customers needing parts urgently,” he stresses.
A significant part of Sage’s business is contract-based, with around two-thirds of turnover relating to the company taking responsibility for inventory control on behalf of its customers. In many cases, Sage owns the inventory until the customer asks for it – truly a just-in-time service. “Managing stock level requirements is one of our specialties,” Bloomfield says.
The provision of spare parts that meet customer demands is not always easy and there are several difficulties that must be overcome. One particular hurdle is the sheer range of items that are needed to support the many different types, models, manufacturers and ages of equipment currently in service with the world’s GSE users. Streeter feels this challenge is similar in some other industries but he pointed out that aviation does have “a very large range of fairly specific equipment used to service both the aircraft and passenger services”.
Another problem occurs when a customer has changed a part number and can therefore not provide the manufacturer’s part number when ordering a replacement. This can be resolved, for example, if the customer submits photographs of the damaged part for identification by the manufacturer – but this, of course, takes time, and if the repair is urgent then it can potentially cost the customer a lot of money in idle equipment and hiring fees to keep operations running.
Glinz notes that this sort of issue can happen in any industry. More specific to aviation, perhaps, is the problem of obsolescence, where a specific part may not be available anymore and an alternative has to be sourced. This can be more common in the aviation industry because some parts and pieces of equipment are very specialised.
Bloomfield agrees, elaborating: “GSE lasts a very long time but parts and suppliers come and go. For instance, if an item was originally intended for other industries like automotives, which change more rapidly, then the obsolescence rate is greater. But we can recreate obsolete items for our customers. Also, some items may not hold up well in GSE, even though they are fine in their originally intended use; we can modify them as necessary. GSE is made in low volumes in comparison to other industries like trucking, so for a manufacturer to create parts specifically for GSE is not always economically feasible. But we can do it because we are so big in the market, and we work on aggregate,” he adds.
Manufacturers of GSE and parts are also concerned about “the prolifi c use of substandard parts in our equipment”, Parkin notes. “We frequently receive calls from customers concerned about the degraded performance of their GSE after replacing genuine JBT parts with substandard substitutes. Researching and discovering the cause of the issue may take a while, which increases the time the unit is out of service, not to mention the cost to repair damage potentially caused by the use of these substandard parts.”
He stresses that while many parts suppliers claim to supply OEM parts, the only way a customer can know for sure they are getting what they ordered is to buy direct from the GSE manufacturer or one of their authorised distributors.
The continuing shift towards electrically powered GSE is an issue that is regularly discussed at industry forums, and one that providers of spare parts cannot afford to ignore. With government bodies such as the US Environmental Protection Agency (EPA) introducing ever tighter regulations relating to emissions levels, the gradually increasing use of ‘clean’ electric vehicles at airports is inevitable – although Streeter points out: “It has not spilled over to the older items out on the ramp so much as of yet, but as the newer equipment sees more service it will trickle down.”
Picking up on the EPA’s regulations, Bloomfield says: “In terms of ecology, not much comes into play although we do get involved. For example, in the US there are still lots of petrol engines but there are changes relating to emissions so we have worked with the EPA to develop retrofit parts that comply with new legislation.”
He believes that the shift to electric equipment will change the spare parts industry because this sort of GSE does not use as many parts as petrolpowered GSE. However, he is confi dent that while the mix of work his company undertakes may change, the volume will remain steady. “It’s about product management,” he states, explaining: “We will evolve our expertise, provide training programmes and watch trends. Since two-thirds of our business is contract, as our customers change, we change with them.”
This sense of optimism is by no means universal, though. Glinz is of the opinion that while environmental concerns are very important, and his company is able to offer “new solutions with a substantially improved environmental footprint”, the truth is that it is “very time-consuming and exhausting to get everybody involved around the table. And in the end nobody in the industry really wants to pay for it,” he considers.
In general, Glinz finds the inflexibility of the GSE industry disappointing. This is mainly with regard to the regulations that apply to the sector, but also the parties involved, whether aircraft manufacturers, airlines, airports, pilots, users or authorities. He concludes: “As all parties always have to be involved, the ground support processes are very much like they were 50 years ago. For an innovative German supplier that is a very unsatisfying situation.”