IATA's New Parts Portal Meant to Shave Procurement Costs

The International Air Transport Association has launched an online tool designed to reduce over-payments for aircraft parts called MRO SmartHub, the industry group announced Monday. Designed to make the assessment of fair market value (FMV) more accurate, the platform will allow subscribing airlines and maintenance, repair and overhaul (MRO) providers to transparently list items to buy and sell online. 

IATA estimates the value of the global MRO market to total $81.9 billion annually, a significant portion of which it attributes to material costs. The association said it expects MRO SmartHub to shave 10- to 15 percent from material costs through efficiency gains in the supply chain and more accurate assessments of FMV.

Other benefits include the ability to accurately value parts inventories at any point in time; increased confidence in planning, procuring, or selling aircraft components and parts; allowing better-informed decisions on which aircraft components and parts to procure and use; and engendering more trust between buyers and vendors.

According to IATA, the lack of a central reference for the value of surplus aircraft parts or upfront visibility of a part’s cost and availability leads to challenges associated with accurately assessing the value of inventories, reselling surplus material, or calculating the cost and timing of repairs, thereby increasing costs. 

“The market really needs this,” said Lufthansa Technik head of group purchasing surplus Fabricio La-Banca. “By creating greater transparency, it will generate real fair market values.  It will rebalance the aviation value chain and help airlines save money.” Lufthansa Technik has signed on as one of the launch customers for the new platform.