You’re leaving time and money on the table if you only focus on the technical details and price, here’s why…
If you have an aircraft or do maintenance on one, there’s one thing for sure; you’ll need an APU.
According to Aviation Week, the world fleets will need $4,059,422,121 worth of total MRO demand for all APUs in 2018.
That’s a 4 with a B. Billion!
At Skylink, we’ve seen an increase in aircraft APU replacement and repairs for our clients. Maybe you too have an upcoming APU need.
Boeing, Airbus and Bombardier aircraft lead the demand, for obvious reasons.
In the following sections, I’ll show you a few fundamental ways to make sure you’re buying the best APU for a long-term value strategy.
Technical details are critical to the value of your APU purchase but so is supply and demand.
An APU with 1,000 CR is a lot less “valuable” to your present-day needs than an APU with 13,000 CR.
That’s also true with the current supply and demand environments.
If there’s more demand than supply, you’ll see the price of APUs increase. It’s economics 101.
If you fell asleep reading the word economics, fair enough, I did too.
Much like our APS 2000. Demand exceeds supply, for now. We’ve seen these APUs go from $200,000 to $350,000 in the matter of a year.
Before you go into any APU purchase, know the supply and demand environments. Know what you’re up against.
Offering $100,000 for an APU worth $350,000 will not buy you credibility or negotiating power.
Instead, it’ll get you some laughter.
When buying an APU it's imperative you work with someone you know, like and trust. There’s too much money at stake to make a mistake.
Know and understand your total purchase cost. Price is a vanity metric by itself.
Price is important. Why spend $300,000 on an APU when you can buy one for $250,000.
This is considering the cycles remaining, trace and logbooks are all comparable.
It’s also important to understand, your total purchasing cost. Buying an APU is more than just cutting a PO.
You have the time spent reviewing the mini-pack, pictures, and various quality assurance processes. You’ll want to work with someone who can make this as simple for you as possible.
In every purchase, you’ll want to determine your credit limit.
If you can get $300,000 worth of terms, that may be more advantageous to you than having to prepay $350,000. It’s the value of your money.
If you’re an operator, your finance structure may exceed a 15% interest rate (annualized).
Apply that to the $250,000, and you’re spending roughly $3,100 a month to tap into your lines of credit.
If you can leverage a payment plan, or terms with your material partner, that’s an ideal scenario.
The last piece of your processing cost is shipping.
Make sure the party you’re buying your APU from knows logistics. There’s nothing worse than getting something stuck due to HAZMAT issues or the wrong paperwork that get’s it stuck in customs.
It’s also safe to say, large crates take up a lot of cargo space and are known to get “bumped.”
Prepare for this!
As you navigate your purchase, you’ll also want to know…
Price is important but be sure to factor in your long-term repair strategy.
You’ll eventually need to repair a damaged APU. Surprise!
Maybe the repair calls for a component, fixing a hydraulic leak, or you need to send the entire APU out for repair.
Whatever the reason, you’ll want to ask yourself these critical questions:
-Can the company who I’m buying this APU from support my future rotable needs?
-Can they handle future expendable and consumable requirements?
-Are they proficient with international HAZMAT?
-Can they handle my future APU repairs?
-If needed, can they handle all the logistics?
Sure, some of these capabilities you’ll keep in-house. But the more a trusted material partner can support your future repairs the better you’ll be at handling other aspects of your operation.
You have too many demands for your time…simplify it as much as possible.
Don’t tie up millions of dollars in APU safety stock. Tap into an exchange and loan pool.
You may stock APUs as safety stock, not a bad strategy, but this also ties down capital for your organization.
Or, you may rely on a PBH or pooling strategy. Typically a costly proposition unless negotiated with a win/win outcome.
Another strategy you can adopt is a temporary loan. Let’s say your current APU needs to be removed for repair.
You can take another APU on a short-term loan or exchange as your APU get's repaired.
This will reduce your total costs compared to an outright purchase.
There you have it.
By adopting these few strategies, you’ll be equipped to purchase your APU with a solid approach. You’ll reduce your total cost and increase your productivity.
Yah for you!
Now buy an APU you’re confident in!