Because It's Breakable

IT'S HARDER THAN EVER AMID THE CURRENT financial crisis to find a buyer for a commercial aircraft, let alone one that's been grounded for some time or retired. Most of the hundreds of planes parked in the desert boneyards of the western US never again will return to revenue service. Boeing projects more than 8,000 aircraft will be retired by 2025.

While roughly 75% of an aircraft's value is lost when its owner decides to break it, the potential to reclaim parts and metals on a widebody could yield much as $7 million. It can take up to three months to dismantle a 757 properly, according to Air Salvage International MD Mark Gregory. "The price depends on what's removed and if the parts are recertified," he says. It costs about £60,000 ($87,637) to remove resellable items and "tag, blank, bag and box parts to be dispatched."

Gregory founded ASI in 1997 and since then the Hampshire-based company has parted out more than 250 aircraft. It disassembles some 25 each year and business, he says, is booming right now. "We've always got about two to three aircraft being torn down at any one time. Currently we're breaking a 747, 757 and A310 and we still have several other aircraft lined up and ready to come in."

P3 Aviation, a parts distributor in Hertfordshire, outsources its aircraft dismantling work and, like ASI, is trying to keep up with a strong stream of demand. "Now is the perfect time," says Sales and Business Development Director Phil Donohoe. "The market for aircraft including next-generations is coming down and the leasing companies are looking to offload some of their stock. We can market products on their behalf and return value to them that they might not get if they sold an airframe as a whole."

About $2 billion per year is spent on serviceable used parts for aircraft, according to AeroStrategy. More than half of this spending is for engine parts (55%), while components (30%) and airframe parts (15%) take the rest of the pie.

"The engine parts are certainly the most lucrative," confirms Donohoe, "but there is going to be an awful lot of money in the carbon fiber market down the road." As greater volumes of composite materials are extracted from aircraft during disassembly, applications across multiple industries will be developed. "It's a good sign that right now carbon fiber and all of its associated products seems to be steadily holding its price," he adds.

Best Management Practices

Boeing has said it is aiming to achieve 90%-95% recyclability of the world's fleet by 2012. Most of the materials recovered will be directed toward high-value commercial manufacturing applications. In 2006, the aircraft maker and 10 other aerospace companies established the Aircraft Fleet Recycling Assn., a nonprofit organization focused on developing and implementing environmentally progressive recycling procedures while maximizing the return on retired aircraft.

Last year AFRA published a guidance document, "Best Management Practice for Management of Used Aircraft Parts and Assemblies," defining essential activities and performance standards for retired aircraft part-out and scrapping. "The association assembled a bunch of industry experts who looked at various disassemblies from the perspectives of asset owners, disassembly companies and recyclers," explains Michele Dickstein, AFRA's executive secretary and president of the Aviation Suppliers Assn. "They came to a consensus on the starting point the industry should be working from and established ways for companies to improve over the next few years and raise the elements within the best management practices."

In July 2008, after conducting audits that confirmed practices were in step with its BMP, AFRA accredited five companies: Air Salvage International, P3 Aviation, Europe Aviation, Southern California Aviation and Volvo Aero.
"Our association's strong belief is that end-of-service aircraft owners will preferentially seek out companies with operations that have been independently reviewed and accredited to embody the expertise and process fidelity that will realize the greatest value for their aircraft at the lowest risk," AFRA Executive Director Martin Fraissignes said in a statement.
BMP addresses such disassembly aspects as facility operations, parts management, training, tooling, asset and parts documentation, recycling and environmental controls. "Quality and traceability are key," recognizes Donohoe. "You have to maintain the security of the parts all the way through the process."

Preparation prior to disassembly factors significantly into how smoothly a dismantling project tends to run. "If you can have an agreement in writing up front with your tear-down facility, it sort of negates half of your problems," he says.

Piece by Piece

When an aircraft commissioned to be
broken arrives at ASI's dismantling facility, various part number checks and paperwork procedures are conducted to help systematize the task ahead and encourage transparency. "The first thing we take off is the batteries and make the aircraft safe to work with," says Gregory. "We drain all the fuels, but we don't touch the hydraulic fluids initially because we like to keep the pressure in the system until we remove the flight controls."

The engines and APU are removed first, followed by the avionics, air conditioning units, flight controls, hydraulic systems and landing gears. Parts targeted by the owner receive priority. If an airline, for instance, owns the asset, it may need avionics or landing gear for its inventory. If the owner is a finance company, distributor or repair station, parts that can be sold immediately may take precedence.
Removed parts are tagged to reference the registered asset they came from, but no airworthiness determination is made initially. "The disassembly contract really just covers the disassembly of the aircraft," observes Dickstein. "Disassembly companies do not make a determination as to the condition of the part." That's up to engineers and ultimately government regulators.

Metals extracted from aircraft are crushed and melted into bars that can be made into products and sold to other industries. The strength of the metal usually determines where it ends up. "We hope to get all the precious metals back into industry," says Dickstein. "Maybe not all back into aerospace, but we can see a lot of applications for other manufacturers."

AFRA emphasizes in its BMP that responsibilities for recycling costs need to be specifically addressed and detailed in contracts. Usually the asset owner pays for the expense of, for instance, extracting and shipping out hazardous material such as depleted uranium or properly disposing of insulation or worn seat covers. AFRA estimates its member companies currently process 150 aircraft, 1,000 tons of aircraft specialty alloys and 25,000 tons of aircraft aluminum per year.

"We always try to recycle as much of an aircraft as we can," says Gregory before admitting that about 60% of the interior on "some of the older 747s will probably go to the landfill because you cannot recycle these types of plastics."

All of the companies AFRA has audited have said they've experienced increased productivity in their processes and have seen improvements in how their company operates, points out Dickstein. "The BMP has been out for less than a year and we've already had companies say they've seen commercial value through clients selecting them for disassembly because of their accreditation."

P3 Aviation hopes its accreditation not only will show it is thinking responsibly about older aircraft, safety and sustainability but will help position it ahead of environmental regulation or legislation. "If we set a good professional benchmark, they can buy into it," says Donohoe.

Solidifying partnerships is also a fundamental outgrowth of the coalition. P3 Aviation says it is more likely to hire an accredited dismantling company to break its aircraft than one that hasn't established environmental and safety protocols and best practices. "Our process calls for us to first look at an AFRA-approved and accredited facility," recognizes Donohoe. A dismantling company also could fly workers to a remote location to conduct a tear-down, "but if they are not available in a certain region, say Nigeria, where we've acquired an aircraft, we would follow the best management practices for using local labor and insist they observe those practices."

Although one of the major elements of BMP specifies that those conducting the disassembly must be trained properly, the practices do not require workers to be certified as mechanics. "Disassembly is nothing like a C check in terms of cost or labor," emphasizes Dickstein. "You're pinpointing certain parts and certain metals. You're extracting materials in an efficient and responsible way."

Personnel performing the disassembly should have access to model-specific manuals and properly calibrated and maintained manufacturer-specified tools. The more detailed and comprehensive the contract is, the better the chance the project will be carried out to the satisfaction of the asset owner.

"There is a unique difference between doing a disassembly at a remote location and doing one at a fixed location," says Dickstein. "At a fixed location you may have the same process for every plane, but at a remote location you may have to deal with many other factors," possibly labor issues, possibly tooling and recycling matters. If a disassembly company damages a valued asset, the asset owner will expect to be properly compensated. "So you can see why the contracts get very sophisticated."

Moving Forward

At press time, the industry group within AFRA was working to expand the existing BMP with additional practices focused on engines and APUs. "We have more closely analyzed the needs of those markets," points out Dickstein. Also, the organization was conducting audits for another group of companies expected to receive accreditation in mid-May.

Rolls-Royce, a founding member, is on AFRA's board of directors and has been instrumental in facilitating development of responsible engine disassembly processes. Pratt & Whitney also has participated in the BMP and assumed an active role in the spare parts market.

AFRA estimates its members have processed 6,000 commercial aircraft to date, bringing billions of dollars in parts back into the market.
"Disassembly companies are incredibly busy right now," observes Dickstein. "As you see more aircraft being grounded, the demand for disassembly work will grow accordingly."

More than 1,000 aircraft were grounded last year, a large majority in North America. For some and perhaps many, their next trip will be their final oneto the boneyard. If the supply of, say, MD-80 parts spikes, pricing will go down and influence how much owners can sell the asset for and ultimately how much revenue is generated from disassembly. "It's a tough time for everyone at the moment," admits Donohoe. "But there are some silver linings. We've seen the 737 pricing come down quite considerably. The aircraft are becoming cheaper to maintain. It must be showing on the operator's budgets as well."