The aviation industry is no stranger to innovation. In fact, adaptation has practically been a constant factor for airlines, investors, and everyone in between. But moving into 2024, the nature of the changes in the industry may be different than even the most seasoned insider has ever dealt with.
For instance, the industry will need to contend with new technologies like generative artificial intelligence (AI). It will also face shifting market factors brought on by the economic and social volatility of the past few years. Plus, we foresee a growing emphasis on proper documentation throughout the year.
How the aviation industry handles used serviceable material (USM) may become the defining trend in 2024. Factors like technology, procedural changes, and documentation management are all shifting to facilitate USM management specifically.
When it comes to adapting to these new norms, staying ahead of other industry players will be paramount. This is especially true for those facing steep competition in the coming year. So, it’s important to map out a practical response to these industry changes before they really take off. Let’s look at the four most prominent trends that will likely take the aviation industry by storm this year.
Trend 1: 2024 Will Be a Sellers’ Market for the Aviation Industry
When the government lifted COVID-19 pandemic restrictions, the surge in travel was a major boon to the struggling aviation industry. Demand was at a high as people made up for all the travel opportunities they missed during the first two years of the decade. Today, the market’s zig-zagging is just beginning to stabilize from the “revenge travel” boost.
Despite the fact that major demand spikes are leveling out, experts still predict the industry to grow at an annual rate of 2.95% between now and 2029. So, all told, demand will likely sustain growth in the coming years.
Of course, the mitigating factor here is that many airlines can’t get the components or aircraft they need to drive growth. Years after the pandemic’s shutdown, bottlenecks in production and supply chains continue to play a role in the market’s supply and demand ratios.
Still, demand from airline customers has spiked. We just haven’t yet seen the steady buildup of aircraft and infrastructure necessary to fill this heightened need. At the same time, geopolitical challenges are driving a renewed demand for aerospace and defense (A&D) products and services.
Simply put, the demand for manufacturing is likely to be much higher in 2024 than the actual output. That’s why we anticipate this year to be a sellers’ market. To answer the call, many aviation industry players are turning to aftermarket products—specifically USMs—as an alternative source of critical components.
The Shifting Dynamics of USM Markets
The sellers’ market that’s widely predicted to characterize 2024 impacts USM options as well as their original equipment manufacturer (OEM) counterparts. This means buyers should prepare to face a more competitive landscape than they may be used to, even when sourcing used materials.
Essentially, OEM production won’t have the capacity to fulfill demand. So, airlines are seeking USM alternatives now more than ever, which could lead to more costly conditions for buyers all around. In response, existing fleets and serviceable parts are going to be central to the operations of many airlines as they try to keep up with demand.
Tight markets are further stretched by the heavy pressures currently impacting maintenance, repair, and overhaul (MRO) capacities as well. Plus, airlines are likely to extend leases and pay more to retain aircraft due to engine durability issues and quality problems affecting OEMs. This trend could raise lease rates and extend the economic lives of existing aircraft models, indirectly impacting the USM market.
As you can see, airlines have limited choices in potential options all around. What’s more, all routes seem to lead back to the USM market in 2024, possibly driving competitive conditions. That said, navigating this environment can still be fruitful.
Airlines that can fulfill growing customer demand successfully in spite of supply chain issues will gain a competitive advantage and foster future brand loyalty. Adopting an agile response to the growing importance of the aviation industry aftermarkets will likely be well worth the investment. Many leading airlines have already begun to adapt to these changing market circumstances. In fact, the results of this mass effort to gain a buyers’ edge in USM markets are fueling three of the other leading trends in aviation.
Trend 2: Tighter Documentation Over Falsified Documents
Regardless of the year, safety is a paramount concern for the aviation industry. But the increased reliance on aftermarket components poses new risks to airlines. So, airlines must address these issues to successfully secure reliable used resources.
The documentation that comes with a part is the best way to authenticate the history of the purchased component. Yet an issue buyers still face in the USM market is falsified documentation.
Irreputable sellers may try to create a false paper trail to pass off counterfeit parts that may not be up to the safety standards that authorities require. The results of this scam can, of course, be deadly. That’s why ensuring that the documentation detailing the history of USM parts is accurate and complete is a vital form of risk management for any company sourcing aftermarket components.
To this end, the processes surrounding documentation management are changing in 2024. Namely, the aviation industry markets still rely on traditional, paper-based record-keeping—which is easier to falsify—all too frequently. But in 2024, digital record-keeping, particularly through cloud-based solutions, is likely to replace outdated, slow, and risky paper processes.
Finding Software Solutions to Aviation Industry Documentation Issues
There are multiple reasons why digital record-keeping is an improvement. First, digital systems reduce the likelihood of human error in record-keeping. These systems can automate data input, eliminating transcription errors that could pose significant risks to buyers and sellers alike.
In addition, software solutions can mitigate issues with lost documentation. It then becomes possible for a seller to store a master copy of a comprehensive part history in their database.
This also speeds up the timeline of potential transactions, as documentation can be accessed from anywhere. Not to mention the potential savings—in terms of both time and money—that automated record-keeping grants companies.
In short, highly advanced and sophisticated systems will instead handle the time-intensive, repetitive, and error-prone record management tasks that were once done manually. As a result, airlines can reduce their company overhead, while also easing the burden of ongoing labor shortages. Airlines can also build advanced cybersecurity measures into their digital solutions to prevent bad actors from tampering with documents.
All in all, the switch from paper processes to digital solutions doesn’t just support operational efficiency and cost-effectiveness. It also significantly enhances safety and compliance standards in the industry. Considering this, it’s no wonder that digital record-keeping solutions are likely to become a preeminent trend in 2024. Additionally, many digital solution providers are forming partnerships to provide more robust offerings to the aviation supply chain.
Trend 3: Better Supply Chain Automation Through New Technologies
Supply chain issues are at the core of many of the most pressing problems the aviation industry faces. Resolving these challenges—and, in turn, restoring the balance between supply and demand—is a pressing concern in 2024.
In response, many companies are turning to automation to help streamline the sourcing and utilization of USM components. Specifically, tasks like inventory management, waste reduction, maintenance, and even the coordination of operational processes can all integrate automation to increase their efficiency.
One of the most notable advantages of aviation automation is its increased visibility into supply chain processes. Digital tools can monitor factors like sub-tier supplier relationships, factory locations, and the supply chain’s depth to augment decision-making with key insights.
Automating the maintenance of USM components can also reduce friction in operational processes. In addition, this approach ensures the maintenance of all aircraft to the highest standards.
But while this trend is shaping the aviation industry in 2024 specifically, the implications of automation extend beyond this year alone. In fact, the widespread implementation of automation is more than just a technological upgrade. It represents a paradigm shift in how aviation companies approach their operations. Basically, it provides a pathway to a more agile and adaptable future.
Low-code platforms also allow for the quick implementation of applications, enabling companies to adapt to rapidly changing market conditions. This, of course, can be invaluable during periods of market volatility, such as the last few years. And for the sourcing and use of USMs, such platforms can streamline processes, connecting previously separate systems for better management and tracking.
At the end of the day, advancements in automation are necessary for companies that want to remain competitive in 2024 and beyond. The efficiency gains and waste reduction potential alone are enough to provide unparalleled advantages to users.
Trend 4: Generative AI Will Impact Aviation Industry Supply Chain
It seems that AI technologies are taking over every industry. But these new digital tools offer unique advantages to the aviation sector in particular. For instance, generative AI can augment USM utilization and decision-making processes to enable more efficient, data-driven approaches in several key supply chain functions.
AI tools can also analyze large sets of historical sales data, market trends, and other variables to create real-time demand models. The outcome of this analysis can then be used to inform strategies for everything from inventory levels to distribution plans. Simply put, AI enables a level of granular insight into operational processes that isn’t otherwise possible. Airlines can pinpoint and address anomalies, inefficiencies, or even potential safety risks that might ordinarily go unnoticed.
In addition, generative AI tools can negotiate cost and purchasing terms with vendors. This reduces costs by bringing structure to complex and difficult processes. Beyond negotiations, these tools help airlines manage supplier relationships, extract key information from large contracts, and prepare for renewal discussions.
AI tools facilitate predictive maintenance as well, enabling companies to make the most of how they use USM components. At the same time, AI-generated training simulations can enhance the practice of emergency scenarios and reinforce best practices. These capabilities combined create a safer environment for passengers and employees, reducing risk for the companies overall.
What’s more, AI tools can analyze historical data, market conditions, weather patterns, and geopolitical events to identify potential supply chain risks. Then, advanced solutions can present these findings—along with mitigation suggestions—to help ease internal supply chain issues.
As you can see, the applications of generative AI touch on many different pain points in the aviation industry. Its use can optimize diverse processes, making it a vital tool for airlines in 2024.
Adapting to New Trends With Aviation Technology
Buyers in a sellers’ market need to remain agile to maintain positive returns on investment (ROIs) in their sourcing of materials. And make no mistake, the USM market is shaping up to favor sellers in 2024. So, those in the business of utilizing USM components will need to go the extra mile to outwit competitors.
Adopting new technologies such as generative AI and supply chain automation will help companies source and implement USM components in a streamlined fashion. For instance, it will ground decision-making regarding USMs in fact-based analysis and ensure that parts are obtained and utilized in a timely manner without overtaxing a company’s existing workforce. It’s clear that aviation technology adoption will likely be essential to many airlines in 2024.
In this effort, previously less-emphasized aspects of the sourcing process like documentation management will provide a significant and lasting competitive advantage to buyers and sellers alike. At the same time, airlines can avoid prevalent issues within the USM market like document falsification.
By leveraging specific technologies like ProvenAir, companies can boost their navigation of aftermarket services. This digital tool combines increasingly critical technologies like AI and automation to help users increase the value of their data as they source and utilize aftermarket parts.
What’s more, ProvenAir streamlines documentation management with these technologies. It allows for the back-to-birth tracing of components, guarantees the accuracy of records, and speeds up the notoriously slow paper processes that halt USM acquisition. Contact ProvenAir today to learn more about its unique aviation aftermarket solutions.