Executive Summary
Airline profitability has taken a serious hit. Fuel costs, which consume 25%–27% of total operating expenses, remain stubbornly high with the ongoing conflict in the Middle East.
Major U.S. carriers have shed 20%–26% of their market value since hostilities escalated. Procurement leaders are being asked to find savings and find them fast.
The natural impulse is to reach for familiar levers: renegotiate contracts, push payment terms, consolidate vendors. But in most mature airlines, the easy wins from that playbook are largely gone. The real opportunity sits in MRO spend, particularly across Line Replaceable Units (LRUs) and Consumables & Expendables (C&E) where years of OEM-driven sourcing have inflated costs.
The place to start is mapping the parts portfolio for substitutability: identifying which LRUs and C&E items have FAA- or EASA-certified alternatives that meet airworthiness standards at lower cost. From there, building a PMA-certified parts pipeline reduces exposure to both OEM pricing and supply scarcity.
On the C&E side, procurement should review incumbent suppliers and evaluate approved equivalent products from alternative manufacturers that already exist in regulatory databases. Consolidating the remaining spend into preferred agreements with contracted pricing and volume rebates compounds gains.
Finally, connecting procurement to predictive maintenance data gives teams the lead time to source strategically rather than always paying crisis prices.
Done right, this stops being a cost-reduction project and starts being the way procurement runs — carrying a leaner cost structure into every future cycle, wherever fuel prices go.
FAQs
Many airlines do use PMA parts but that’s largely to manage supply constraints. Most lack a structured strategy to maximize savings from them. The real barrier is the absence of a formal qualification workflow — technical review, regulatory sign-off, operational validation — combined with the inertia of entrenched OEM relationships.
Map the LRU and C&E portfolio on two dimensions: spend concentration and substitutability. The highest-spend, most-substitutable categories offer the largest and most achievable savings — that quadrant is the right place to begin.
Most C&E buying happens through fragmented, catalog-based purchasing across dozens of vendors. Approved equivalent products from alternative manufacturers exist in regulatory databases but they’re often not evaluated simply because there’s an established supplier already delivering what’s needed.
Getting ahead of demand is what separates reactive buying from strategic sourcing. When maintenance signals arrive months in advance, teams can pre-position inventory from alternative suppliers at contracted rates — avoiding the spot-buy premiums and AOG crisis pricing that OEMs typically command.