New aircraft parts online marketplace to lead to cost-savings for airlines: IATA

Sep 25, 2019: IATA MRO SmartHub has been launched by airline trade group IATA to address the challenges related to costly aircraft components and parts.

The airlines and maintenance, repair and overhaul (MRO) providers that subscribe to the online tool can transparently list items to buy or sell on the new platform, ensuring greater transparency on fair market value (FMV).

This will reduce over-payments by making the assessment of fair market value (FMV) more accurate.

What really leads to higher costs, according to IATA, is the absence of single central reference for the value of surplus aircraft parts, nor upfront visibility of a part’s cost or timely availability.

The new tool helps to overcome the challenge of accurately valuating inventories, reselling surplus material or calculating the cost and timing of repairs.

The total MRO market is estimated to be $81.9 billion annually, a significant portion of which is attributed to material costs.

IATA MRO SmartHub is expected to shave 10-15 percent of these material costs through efficiency gains in the supply chain and more accurate assessments of FMV.

Further, IATA MRO SmartHub will enable the accurate valuation of parts inventories at any point in time, in addition to increasing confidence in planning, procuring or selling aircraft components and parts.

‘’This new service will make the supply chain for aircraft components and parts more efficient. Greater transparency will enable airlines and MRO companies to buy and sell the right components and parts at the right price. This is a major modernisation that will lead to significant and much-needed cost savings for airlines,’’ said Gilberto Lopez Meyer, IATA’s senior vice president, Safety and Flight Operations.

“The IATA MRO SmartHub is a global platform that is useful for all players in the MRO sector. The market really needs this. By creating greater transparency, it will generate real fair market values. It will rebalance the aviation value chain and help airlines save money,” said Fabricio La-Banca, Lufthansa Technik’s head of Group Purchasing Surplus, one of the launch customers for this new platform.