Q: Can you take us through a brief history of Constant Aviation?
SM: It began for us as a small MRO in Cleveland, consisting of some 25 people, which we acquired in 2006. From those beginnings we have seen double digit growth year on year for the past 12 years, to the point where we now have 850 employees across five locations. We have made an acquisition along the way but the majority of our growth has been organic.
Q: What do you put the success of the company down to?
SM: We have had the same leadership team from the beginning and we have focused completely on delivering the vision that we had at the start. This has two main thrusts. The first is to provide a unique experience for our customers and for our employees. The second is to ensure that we retain a stable leadership team committed to growing the company at a manageable but rapid pace, while retaining the culture and customer focus that defines Constant Aviation.
Our five locations are in four major cities. We have facilities at two Cleveland airports. We acquired our Orlando facility in March 2013. We have a facility at Mesa, Arizona and one at Las Vegas.
In addition, we have an extensive nation-wide AOG network in the US. This has some 60 technicians based in 22 cities across the USA. That means that we always have one or more technicians that can respond, with more available as needed. We also do a fair amount of international travel to recover aircraft, including going to Mexico and the Caribbean.
Q: How do you manage to quality control such a far flung network?
SM: This is one of the features that is very unique about our AOG network. The teams are very experienced and they all report to a Vice President whose sole responsibility is the smooth functioning of the AOG network. It also has its own chief inspector who is responsible for quality control, and it has separate East Coast and West Coast directors. There is also a dedicated 4 x 7 dispatch office that takes all the AOG calls and supports the teams. We have dedicated AOG vehicles but not every vehicle has every possible tool that it will need, so parts and tools are shipped as necessary from one of our five main locations.
This attention to detail is not just present in the AOG network. From an oversight perspective we have invested heavily on the management side. We have a corporate quality and safety oversight team that oversees all our facilities.
Q: One of the down-sides of running an MRO operation is the volume of spares that need to be held. How do you keep this side of things in proportion, so you are not tying up huge sums in inventory?
SM: We have a separate parts division. And yes. We do have to hold a very significant parts inventory. In our case we are holding around $60 million of our own or consigned inventory. However, we are able to keep things in proportion because we have a tremendous relationship with the OEMs and with other brokers and distributors. However, by owning and sourcing a lot of our own inventory we are able to provide a value added service for our clients in that we can often provide them with parts at a lower cost.
We have around 600,000 parts and $60m in our inventory and our annual spend on parts is significant, so that allows us to leverage discounts from our suppliers that we can pass on to the client.
Q: What kind of capacity issues are you having or do you see coming up as the industry gears up for the 2020 mandates?
SM: The challenge right now really is all about capacity and finding ways of supporting the industry’s capacity requirements. But it is not just the 2020 mandates. Today, aircraft are flying longer distances than in the past, and owners and operators are putting more hours on them than they ever have. So this naturally means that maintenance events are coming round more frequently, and that too puts pressure on the available capacity in the MRO space.
Today, everyone is struggling to find enough qualified and experienced technicians. This is right across the park, from interior technicians to paint, avionics and structural technicians. There is just not enough skilled labour to support all the demand out there. However, that has an up side to it in that now is a great time for young people to come into the industry and build technical careers for themselves. The pay and benefits are great and this is a very rewarding industry to be a part of.
Q: What are you seeing so far about people’s willingness to put their aircraft in for ADS-B fittings?
SM: Just about every aircraft that comes into one of our facilities for maintenance will also have requested to have ADS-B fitted. However, there is no doubt that there is still a lot of people out there hoping that the FAA is going to push the mandate out further. In our view, and the FAA has said this time and again, the mandate will not be extended and whoever doesn’t get ADS-B fitted in time will find themselves having to leave their aircraft on the ground until they do get it fitted.
Another point is that precisely because the industry is capacity constrained, prices are going up fast. The OEMs cannot keep up with the parts production requirement so they are raising their prices. Both the OEMs and the independent MRO houses are trying to get owners to get their aircraft scheduled in for fitting, but there are a lot of customers delaying and waiting. That will not end well for them.