AerFin’s James Bennett has had a career spanning over 16 years in the aviation industry. This includes senior commercial and sales and marketing positions within a leading engine consultancy services business, a rapidly growing aerospace and electronics parts manufacturer, and Chromalloy, the worldwide manufacturing and repair services provider of gas turbine engine parts.

    He has extensive experience in an engine and MRO environment, including eight years in Thailand leading sales and customer services.

    Fluent in Spanish, James joined AerFin in July 2016 as a senior member of the management team and is responsible for group sales and marketing (airframe and engines).

    How significant are the regional and low cost airline sectors to AerFin?

    AerFin views the regional and low cost sectors as hugely significant to its ambitious growth trajectory. This is largely due to our involvement in the Embraer E-Jet market, where we offer operators a breadth of bespoke service solutions.

    The most notable of these is our BeyondPool service, which is a completely tailored flight-hour component programme, offering operators a substantial cost saving without sacrificing the quality of material and reliability of dispatch.

    In addition, with competition squeezing passenger yields, coupled with rising fuel prices adding further cost pressure to airlines, we understand the importance of offering a service that gives airlines some relief on maintenance cost exposure.

    We are, therefore, very active in acquiring aircraft and engine assets for tear-down, allowing us to maintain a comprehensive inventory holding. As a result, we can offer extensive ad hoc and contractual support to our airlines at an extremely competitive price point.

    Clearly AerFin is ramping up activities with Embraer products. What is driving this?

    In a market that has historically been controlled by the Original Equipment Manufacturer (OEM), AerFin identified a niche opportunity to support Embraer E-Jet operators through an array of aftermarket service solutions.

    This foresight drove our decision to purchase an entire fleet of 15 Embraer E170-LRs from Saudi Arabian Airlines in 2017, along with 10 spare engines, which also included an inventory of more than 24,000-line items and all the tooling and equipment from the airline’s CF34 engine shop.

    The acquisition provisioned AerFin with the largest stock of E-Jet inventory of any third-party business in the world.

    The acquisition’s biggest success has been the cost-saving opportunities that it has presented to E-Jet operators around the world.

    AerFin provides customised contracted supply chain solutions (BeyondPool) to E-Jet operators, at a substantially reduced cost. This has allowed us to ramp up activities significantly and really grow our presence in the regional segment.

    AerFin James Bennett interview
    We are very active in acquiring aircraft and engine assets for tear-down says Bennett

    What trends are you seeing in the remarketed secondary market for regional aircraft today?

    With the introduction of next-generation aircraft such as the A220, Embraer E2 series and Mitsubishi MRJ aircraft, plus rising fuel prices, operators are deciding to phase out existing regional equipment, particularly the E190 variant.

    Take the recent announcements from JetBlue and Air Canada as two examples. Not only are we seeing an abundance of these aircraft being remarketed, we are also seeing these aircraft being remarketed at a much younger age than the traditional phase-out one would expect from first-hand operators.

    We expect that a lot of these aircraft will be rehomed with either airlines that do not yet exist, or with airlines that do not yet operate E-Jet aircraft.

    We also expect that a number of these potential airlines will be situated in emerging markets, with regional jets being utilised on either tester or development routes, as airlines will often not want to fly a larger narrowbody that they may not potentially be able to fill.

    This presents AerFin with an excellent opportunity to support these airlines with cost-saving maintenance solutions, primarily via BeyondPool.

    For small regional airlines what’s the best approach for inventory management?

    When it comes to supporting the operating fleet with inventory, an airline has the option to purchase inventory based on recommendations made by the aircraft OEM.

    These recommendations are predicated on various factors and aim to ensure an optimal supply chain process, and minimise the downtime in AOG (Aircraft on Ground) situations.

    However, this could lead to an airline, even one with just two or three aircraft, facing a capital expenditure of several million dollars, and would still not guarantee avoiding technical delays or AOGs.

    Other necessities, such as setting up approved vendors to repair components and organising the logistics of shipping parts to and from operational base to MROs, require added financial and human resources.

    The good news is that there are alternative solutions for an airline looking to control overhead costs. The most common of these is to use FHA component pool contracts, which effectively replace the need for ownership and tied-up capital.

    This means that the airline avoids the initial investment in stock, as well as the human and capital resource of managing the component supply chain, as it is all outsourced to a third-party provider.

    If the airline does proceed down an FHA route for component support the added benefit is that, if the airline decides to add more aircraft, it will know what costs for component support are required for that aircraft.

    AerFin James Bennett interview
    AerFin identified a niche opportunity to support Embraer E-Jet operators

    Tell us more about the BeyondPool support programme?

    The industry’s Embraer component pool offering has, up until now, been largely controlled by the OEM, which has given E-Jet operators little alternative when it comes to selecting their contractual maintenance service provider.

    The services provided by BeyondPool go beyond component support to include an array of engineering-related services managing reliability programmes, warranty, and component repairs to meet service level guarantees.

    We also offer support to meet dispatch reliability targets, stock placement at base maintenance and line stations globally, and engineering services including AD/SBs, modifications evaluation and reliability monitoring.

    By working closely with aircraft lessors and airlines seeking to grow an E-Jet regional aircraft fleet, our BeyondPool service allows for a lower cost of spares support, which many airlines look for.

    With operators such as British Airways CityFlyer already moving away from an OEM Pool programme in favour of an AerFin BeyondPool agreement, operators are becoming increasingly aware that there are high-quality alternatives available to support E-Jet operators outside of the OEM.

    Evidently, Boeing 737NG materials are in great demand. What supply and demand trends are you seeing for this inventory?

    Deferred retirements, where mid-life commercial aircraft are remaining in service longer, resulting in unscheduled maintenance activity, coupled with a lack of feedstock means the demand for USM (Used Serviceable Material) is at record highs.

    However, with EIS issues looking to be resolved and fuel prices now on the up, we expect that these retirements will accelerate in 2019, which will intrinsically increase the supply of USM feedstock.

    Let’s not forget that 50per cent of CFM56-7Bs are yet to see their first shop visit, so USM as a maintenance solution will continue to grow.

    According to ICF International, it is anticipated that by 2026 the USM market will be valued at around $7.7 billion, rising from $4.5 billion estimate in 2016.

    How do you forecast the demand for aircraft spare parts?

    The emergence of new aircraft and engine types will certainly affect demand for spares. Next generation aircraft and engines will be much more reliable, especially as digitisation will optimise predictive maintenance, meaning that maintenance intervals will be less infrequent and require fewer man hours.

    That being said, in the short term, we expect demand for spare parts to continue to grow, particularly as we are going through a period of fleet transition, where operators require their maturing fleets to operate for longer than originally planned, as they wait to take delivery of new aircraft.

    What is your view of the aftermarket services sector in 2019?

    I think we will continue to see increased consolidation in the aftermarket sector, particularly as OEMs are innovating new ways of gaining market share through the acquisition of independent third-party providers, or indeed acquiring complementary businesses that allow them to expand their range and depth of service offering.

    This will continue to place pressure on independent MRO providers, particularly as the Intellectual Property (IP) of new generation aircraft and engines will be far less available and open to businesses outside of the OEM, which will give them a huge advantage in controlling the aftermarket service sector.