-T / T / +T | Comment(s)

Friday, December 1, 2006

PRIVATE Progression

IAN PARKER

An aircraft stuck on the ground for technical reasons can be a very expensive thing both in lost business and the extra costs of its temporary grounding. Very often, the major controlling factor in getting it airborne again is the acquisition of replacement parts — the correct spares must be at the right place in the minimum time. Any company in this business must react quickly and get the order right.

The UK’s A J Walter has been in the aircraft component supply industry for almost 75 years. Established in 1932, it is said to be the largest privately owned repairer, stockist and distributor of aircraft spares in the world. Its global network of repair and supply centers has an inventory of over 400,000 line items.

Aviation Maintenance
recently visited the company’s headquarters, not far south of London’s Gatwick Airport.

Many of the senior staff have been with company a long time, which is always a good sign. This is combined with a workforce that has a very low average age, bringing together experience with keenness and energy. This has come mainly from the company’s recent expansion which has been quite rapid.

But the company doesn’t spread itself too thinly by trying to support too wide a range of aircraft. It supports the Airbus A300-600, A310, A320, A330, A340, the Boeing 737, 757, 767, and 777.

Company chief Christopher Whiteside told AM “Our history includes support of aircraft such as the DC-3, Viscount and then aircraft of the jet age, but now we operate in a relatively refined product area. We’re focused on commercial aircraft of 150 to 350 seats. We do some 747 support, but it’s not a main business for us.”

The company leases and loans components, provides power-by-the-hour (PBTH) services and ground support for some of the most demanding operators in the industry. The investment in stock is combined with experienced and knowledgeable sales administrators throughout the world who visit customers and work with them to tailor-make flexible solutions to meet their individual purchasing and repair requirements. A J Walter has over 150 employees and conducts business in more than one hundred countries

All spares supplied by the company have full traceability and come with either FAA Form 8130-3 and/or EASA Form 1 release certification, complying with the latest aviation industry standards (EASA is the European Aviation Safety Agency). Every item is quality assured in accordance with A J Walter Aviation’s ISO 9001:2000 and AS 9120 approval. Additionally the company is in compliance with the FAA’s AC00-56A voluntary industry distributor accreditation program and also International Aerospace Standard EN9120 for Stockists/Distributors for its Airbus supplier approval. The company is also a founding member of the European Aviation Suppliers Organization (EASO).

So what are the latest trends in airliner support that the company is seeing? Whiteside told AM “India is a growing market for us. Unlike previous growth markets such as Africa, India is seeing mainly new aircraft which are well funded by brand new operators many of whom have subsequently gone public. They are sticking to what is the golden rule of start-up airlines — one aircraft type with new equipment, one engine type.
“The new Indian airlines, such as Indigo and Kingfisher, are starting with a blank sheet of paper with no legacy issues. It’s easier for us in India than in many other countries because of the pro-British tendencies. Strong success for us in India will take a couple of years once the existing support contracts that our rivals have expire with the airlines.
“Most of our business in China is with the MROs, selling into China from Hong Kong, the U. S. and Singapore. Our business is growing there after years of nothing really happening.”
Despite what’s happening in India and China, these are not the strongest areas of growth for the company. “Our biggest growth areas continue to be North Africa and the former Soviet Union. In places such as Kazakhstan, Georgia and Russia, etc. western aircraft are filling in and that will continue for the next 10 to 15 years,” Whiteside said.

A J Walter around the globe

The company has a highly international business. In its main base in the UK the company employs 19 nationalities and there are 40 international offices worldwide. Whiteside said “We trade in 111 countries. Doing so is an acquired taste with specific cultural awareness and respect being a pre-requisite for success. And of course English is the official language of aviation.”

As ever in aviation, complying with the rules is a major workload. “One of our main concerns is airworthiness regulations — FARs from the U. S. and now those from EASA,” Whiteside said. “Dealing with EASA can be bureaucratic. When they merged, all of the independent bodies in the UK, France, Italy, Germany, etc., I don’t think they realized how much work there would be to take on. There’s a tremendous backlog now. For example it’s taken six months to transfer an aircraft from the US register to a G registration.”

Who are the main competitors? “Our market is very competitive and an increasing major factor is the manufacturers themselves coming into support the product that they make at a vendor level — Honeywell, Thales and Smiths for example on Boeing and Airbus aircraft,” Whiteside said. “But our main rivals are the airlines own maintenance departments such as Lufthansa Technik.
When we’re competing with an airline’s own maintenance department we promote our flexibility, being private, and the additional service we can provide. Our standard product incorporates more material than most of our competitors. We can pick and mix for the duration of the contract. We can provide sale and lease back of inventory to support PBTH contracts. We sell the personality of our business. Dealing with a large organization can be fairly faceless on a daily basis.”

Power by the hour

The company has involved with PBTH for many years; it’s a concept more familiar outside the U. S. than within. Whiteside told AM “We’ve owned a company called Power-By-The-Hour Ltd. since the 1970s. It goes in and out of vogue. Depending on scale, it may not be the most economic way of doing things, but it does give that surety of cost. The Americans don’t seem to be as familiar or comfortable with the PBTH concept. But for new airlines, one of their earliest priorities is to set their cost base and PBTH is a way of doing it.

“What we’re seeing on the latest programs, A380 and 787 Dreamliner etc., is the maintenance has been signed up by the manufacturer for products we now offer. For example the A380 is on a PBTH contract with Singapore Airlines. The 787 will on Boeing GoldCare and similar programs.”  A J Walter opened an office in Thailand in June. The company has a PBTH contract for a 767 operator in Thailand. “With new low cost carriers in Bangkok it’s a pretty good hub to be at,” said Whiteside.

Attitudes to PMA

PMA parts have been an issue in the maintenance business for years, with much rivalry among PMA providers and the OEMs. A J Walter has its opinions, but keeps a fairly low profile on the matter. Whiteside said “Pratt & Whitney have said that they are going to PMA parts for the CFM56. PMA started in America after the Second World War so that older aircraft could be supported and design improvements could be made.

“The taboo of PMA comes from two areas — The OEMs rubbishing the product and a very few examples of where PMA parts have not been manufactured correctly,” said Whiteside. We see that a lot of PMA parts are a significant improvement on the original design. However, we don’t offer PMA parts generally, but we can if the customers require them.

AJW has a couple of direct competitors in Europe but they’re more Boeing focused and much smaller. “Airbus-wise we are way ahead of the game in terms of inventory. When we’re shortlisted it’s usually against the airline’s maintenance company such as Singapore Technologies or SR Techniks,” he said.

The company prides itself on its links with Airbus. “We have ex-Airbus employees here. We probably have the best working relationship with Airbus of any independent company.”
A J Walter also buys aircraft to strip for spares. The company is planning to buy more aircraft all for disassembly for parts. “Now we’re buying aircraft with engines whereas previously we were buying them without. The parts go out on lease or exchange or to feed our PBTH program.”

According to Whiteside people want fixed price support and off-balance sheet financing — they want to lease material and exchange material and have PBTH contracts. “One of the strengths of our business is our size and we are private, which gives us a lot of flexibility,” said Whiteside. “We don’t have a double signature syndrome in which everything has to be countersigned. We can supply elements of what new airlines in emerging areas want because they may wish to train their own people to get expertise and technology transfer issues.”

Sales director Andrew Colbran is typical of the employees that A J Walter prides itself on. He told AM “We’re 24/7 which is very important for the contracts we have worldwide. Teams work with different countries and contracts. Some 20 percent of spares come from tearing down aircraft and it’s a new trend for the company over the last 7-8 years. The company now has the finance to buy the aircraft, strip it and have the parts sent for re-certification.”
Live chat by BoldChat