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After announcing a recent landing gear exchange deal with Avion Express Malta, Karolis Jurkevicius, from APOC Aviation, provides Keith Mwanalushi with further market insight as the industry looks for greater efficiencies and cost-saving initiatives.

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In February, Rotterdam-based APOC Aviation sealed its first landing gear exchange deal with Avion Express Malta, the Maltese based ACMI and aircraft leasing operator. A freshly overhauled A321-200 from stock replaced their ran-out gear which APOC took in exchange.

Following that announcement, Karolis Jurkevicius, VP Landing Gear Trading & Leasing at APOC Aviation tells this publication that exchange has always been a popular option for those customers who want to renew their asset pool and, at the same time, limit their stock of assets that require maintenance. “Previously, airlines always wanted to keep the same landing gears (LDGs) that came with the purchase of the aircraft and the same was also true of lessors. If they leased an aircraft with its original equipment, they have tended to want to keep the same LDG on the aircraft and not exchange it to another, but the current situation puts airline operators and lessors in a position where liquidity is the most important factor.”

Jurkevicius says the market is still extremely hard to predict, so holding assets on the balance sheet can be challenging when prices are volatile making it impossible to accurately predict values- “Exchange can be better for those customers who need to know fixed costs ahead of time so they can better align their operational budgets,” he adds.

According to Jurkevicius, creating a dedicated landing gear division was a logical step for APOC’s expanding asset portfolio. He says it offered repair management as a service to operators and has a portfolio of audited LDG repair shops with whom it manages repairs as needed. It also works with third-party experts to tear down LDGs for piece parts for sale, or to support customers’ on-going overhaul projects. “The lessee can place our LDGs on lease in workshops of their choice – they are not tied into repair contracts as part of the lease agreement. Our customers like this flexibility which is unusual in the marketplace” he says.

The MRO and aftermarket sectors have seen several changes in customer requirements during the COVID pandemic some of which might linger on after the crisis is long over. Jurkevicius says APOC receives more requests these days from operators that used to have long term LDG overhaul agreements with various MRO providers. “Now these airlines are looking for more cost-effective options, and interest in serviceable, green-life, LDGs is much greater than before the pandemic. Sometimes a customer is looking for an LDG for a younger aircraft, so the natural option is to install an overhauled gear, but we see many requests for LDGs where the customer is planning to only operate the aircraft for few years, then part-out the aircraft. At APOC we always focus on having diverse asset pool, so we can assist both customer types.”

Jurkevicius also explains that long term relationships and multiple planning steps shaped the company’s ability to deliver the best option to Avion Express Malta. “About a year ago we discussed their forthcoming requirements for LDGs end 2020/early 2021, and we developed a good understanding of how APOC could tailor our flexible services for their operation. So pre-COVID we knew what would be needed and due to APOC’s careful business strategy we had the financial ability to source the right assets and have them ready to go in overhauled condition.”

Some airlines are swapping landing gears between stored and active aircraft to postpone the expenses of overhaul. Assumingly, there could be a surge in demand for landing gear overhaul once air travel starts to return to normal. Jurkevicius reminds that internal fleet component asset swaps were not quite common pre-COVID, because very few aircraft were stored or unemployed. He now observes however that it has become common practice. “I think that we will definitely see increased demand for overhaul slots once air travel ramps up. We can see that many LDG MROs think the same way as they are increasing their capabilities and volume of operation. APOC has an advantage here because we already have agreements and slot bookings with various MROs to fulfil our asset pool requirements thus ensuring we are able to provide overhaul management services to our customers,” he continues.

The latest industry statistics show increasingly younger aircraft are being decommissioned. APOC Aviation observes that the market clearly shows a good supply of landing gears with lower utilisation than usual. This indicates that the value of older landing gears will decrease significantly. Latest market examples according to APOC demonstrate that younger gears decreased in value far less (approx. 25%) than older gears (approx. 45-50%). APOC’s focus is on younger generation gears to minimise the risk of having assets with little to no demand, and the long-term goal is to have most of the stock focused on younger and less utilised gears in the asset pool. However, APOC can assist operators with all kinds of requests, including older gears.

The biggest concern for anyone sourcing LDGs is strict back-to-birth trace-ability standards, informs Jurkevicius, saying solving technical trace questions is not only time consuming, but also a high-risk task if the requirement is urgent. “There only needs to be a minor gap in the trace and the landing gear might not be deemed airworthy. This would require some components to be changed prior to installation, causing time delays sand incurring extra costs for the end-user. That is why APOC has a sustained acquisition policy from the market to meet customers’ urgent requirements.

“We understand that the landing gear is just one part of an aircraft, and that airline engineering departments have a multitude of components to worry about at the same time. So, at APOC, our standard of paperwork is one of the highest in the industry, not only for landing gears, but also for the aircraft that we purchase for part-out. We take care of all mandatory regulations before offering units to the market.”