WITH A HISTORY dating back to 1932, UK-based A J Walter Aviation today lays claim to being the largest privately owned stocker of aircraft spares in the world, with more than 4 million parts of some 400,000 line items. It currently boasts a staff of 140 at the world headquarters, located in a small village in the heart of the Sussex countryside not far from London Gatwick, and another 40 at more than 30 offices around the globe.
WITH A HISTORY dating back to 1932, UK-based A J Walter Aviation today lays claim to being the largest privately owned stocker of aircraft spares in the world, with more than 4 million parts of some 400,000 line items. It currently boasts a staff of 140 at the world headquarters, located in a small village in the heart of the Sussex countryside not far from London Gatwick, and another 40 at more than 30 offices around the globe. The team is largely young and internationalthe main ops room hums with telephone chatter in a number of different languagesand even though it is the lunch hour, everyone is taking their sustenance "on the hoof."
Perhaps the most staggering statistic relating to this small, busy enterprise is that in 1994 it boasted a turnover of about £5 million and last year that had soared to £140 million ($280 million), making it one of just a handful in the world in that league (joining the likes of AAR Corp. in North America and Volvo Aero in Europe). By 2009, MD Chris Whiteside is confident it will break through the £250 million mark.
So what is the secret of its success? Whiteside attributes it to staying dynamic and keeping the stock current and specific. "We only basically stock spare parts from modern commercial jet transport aircraft meeting a minimum of Stage 3 standards," he tells Airline Procurement. "This essentially means that everything we stock is either Airbus or Boeing. We don't handle military aircraft, we don't stock parts for older aircraft and we don't handle anything under 100 seats. In addition, we do not make or repair anything we stock. All our assets are managed and maintained by third parties, usually the original equipment manufacturer."
The parts, which essentially include everything from a rivet to a spare engine, are purchased from a variety of sources. These include buying aircraft for breakdown, buying up redundant airline or maintenance company stocks (e.g., when an airline goes out of business or makes a fleet change) or buying from other trade suppliers.
"We purchase items speculatively and our main bread and breakfast items are rotables," says Whiteside. Aircraft breakdown is generally done on site by a specialist company, which then ships the parts back to the UK headquarters. Here they are sorted to ensure they have the appropriate paperwork and certification, and anything that needs repair or overhaul is duly dispatched accordingly.
AJW then will sell, lease (generally long-term, minimum three years) or lend (generally short-term) a part or exchange it for refurbishment. The company also can offer sale and leaseback or lease/purchase contracts with guaranteed residual values, but customers generally acquire the inventory on an operating lease basis and return it at the end of the term with no equity stake being built up.
AJW does not handle engine life-limited parts, only engine accessories. But increasingly it does acquire aircraft for breakdown complete with engines. It then buys, sells or lends these engines-a significant chunk of business because they are high-value items. It also generally does not handle interior products because they traditionally are operator-specific and there often are difficulties with nonstandard parts. Contracts specifically exclude buyer furnished equipment. "AJW was originally a surplus redistribution business," Whiteside says. "Now, we are more of an integrated service supply business."
The company began in 1932 when founder James Walter imported his first Piper J2 Cub into the UK from America. Realizing the commercial potential, he secured for himself sole distribution rights for all Piper aircraft in Europe and shortly afterward became the sole British agent for Continental Motors.
Since then, AJW has been through four major periods of growth: The first during World War II when it began supporting the DC-3, then later on the Viscount, then the BAC 1-11 and now finally the Airbus/Boeing combination. It always has been a family-owned business and Whiteside's family acquired it in 1961, with his grandfather and then father running it before he stepped into the MD's shoes in 1992.
Today the company lists its particular areas of specialization as the supply, repair and lease of commercial aircraft spare parts; aircraft inventory management; power-by-the-hour; consignment stock; global 24-hr. AOG support; component MRO; logistics, and cost-effective freight management.
About 30% of the revenue comes from formal contract business, the most dynamic of which is power-by-the-hour, or AJW-FIX as the program is known. This essentially is a contract for spares based on the number of hours an aircraft operates in a year. Typically, for a narrowbody aircraft this is about 3,000 hr. and for widebodies around 5,000. The company currently has more than 160 aircraft under contract for AJW-FIX contracts and is adding about four a month. Operators have 24/7 access to any part anywhere in the world at a fixed cost. "If there is a problem, they are underpinned globally," says Whiteside. "It is an all-embracing support program."
But this is just one element of AJW's core component supply and management service, which ranges from the stock inventory and exchange pool to far-reaching overhaul and repair via its logistics support department.
Its component sourcing network is online 24 hr. a day and its inventory is updated and can be accessed on a real-time basis. It maintains live EDI connections to FedEx, UPS and DHL and a dedicated logistics team is on hand to ensure that critical parts are delivered promptly anywhere in the world using the fastest available means. If necessary, couriers are used to collect parts individually, or there is a special "hand-carry" service where customers require it. In the most critical cases, AJW will even charter an aircraft to ensure a part or parts reach their destination with minimal delay. Full Internet tracking is available for all major suppliers, as is a "track-and-trace" service with all the larger airlines.
The logistics team is familiar with international customs and hazardous goods regulations and formalities, and goods are dispatched with full certification and packaged appropriately.
A J Walter is a known shipper to all airlines, which also helps minimize delay.
All spares are fully traceable and come with either FAA Form 8130-3 and/or EASA Form 1 release certification, complying with the latest aviation industry standards. AJW is ISO 9001:2000 approved and complies with the FAA AC00-56A voluntary industry distributor accreditation program. It is also an approved supplier for both Airbus and Boeing, for which it has to meet International Aerospace Standard EN9120 for Stockists/Distributors. It is a founding member of the European Aviation Suppliers Organization and a member of the US-based Airline Suppliers Assn.
As part of its own in-house quality control measures, the company has developed a set of standards guaranteeing reliability and safe transit with which all third-party workshops and freight forwarders must comply. It has developed partnerships with FAA/EASA 145-approved international MRO facilities, meaning that it is able to offer a comprehensive component supply and management service to such customers as HAECO, Singapore Technologies Aerospace, GAMCO, British Airways and Airbus. It operates in 111 countries around the world and key new markets include India, China, Russia and other former Soviet Union states.
Whiteside acknowledges that there are "thousands of companies in this business," but breaks that down to fewer than five in the £150 million turnover bracket. Apart from Volvo Aero, most of the other big players are based in the USa marginal market for AJW. "We do very little in the US and what we do there is mainly trade business," he says. "Admittedly when the US is shut, the phones are quieter, but only 2%-3% of our revenue comes from that market."
In terms of competition, he says there is increasing market penetration by airlines and their maintenance organizations, such as Lufthansa Technik. But he stresses that nonaffiliation to a particular airline is one of AJW's strengths. "We provide an alternative both to the manufacturers and to the airlines' own facilities. We are not specifically affiliated to anybody and we provide parts across the whole vendor spectrum."
In addition, AJW can act as a full service center for customers procuring their parts from other suppliers. Working closely with leading airlines and freight forwarders worldwide, it is able to pass on substantial discounts, offering good value for money. Weekly or monthly consolidation schemes provide cost-effective options for the movement of lower-priority items.
With such a success story behind it, and ostensibly steady growth ahead, Whiteside says expansion in the future primarily will concentrate on growing the contract side of the business and power-by-the-hour, along with continued focus on modern aircraft and increased acquisition of complete aircraft to boost the engine sales/lease stream. Acquisition of other businesses also is a possibility because AJW always has grown organically, he says.
A recent diversification, formalized earlier this year, is a move into education with the company becoming the exclusive global sponsor of a new industry qualification, MSc Aircraft Maintenance Management, launched by City University in London. Whiteside says it is the first course of its type in the world and is targeted at "experienced aviation industry professionals." He notes that the course "enhances career progression in the maintenance management field by improving knowledge of the complex disciplines required to enable full understanding of the various technical, operational and financial pressures impacting on flight operations through the aircraft maintenance program. The objective is to equip maintenance and other specialists within the aviation industry with the management skills they need to be effective in both their current and future roles, irrespective of which branch of the industry they come from." The course covers technical, legal, legislative, safety and maintenance-focused general management skills, many of which, he says, will be "equally applicable and transferable to other sectors of the industry."