Scalable, Accurate and Automatic is their mantra for enhanced customer service. It is this, what makes them a cut above the rest. It’s been six years since APOC Aviation started their business and today they are one of the world’s newest aircraft, engines and landing gears trading, leasing, and part-out companies. APOC Aviation CEO & Founder Max Lutje Wooldrik speaks about their green time management solution, ambitious expansion plans and post-pandemic lessor market recovery in an exclusive interview with Swati.k
Q – Can you elaborate on ‘Green-time’ management solution(s) provided by APOC to support your customers?
A – At this point in time there is a higher demand for leasing of engines. Operators are seeking to delay expensive overhauls in favor of green-time leases from APOC and we are meeting that growing requirement.
We’re also receiving more requests nowadays from operators that used to have long term LDG overhaul agreements with various MRO providers. Now these airlines are looking for more cost-effective options, and interest in serviceable, green-time LDGs is much greater than before the pandemic.
Q – As airlines continue to delay full engine shop visits due to COVID-19 pandemic, what solutions would you give the airline customers to save maintenance costs
A – With airlines delaying full engine shop visits, APOC’s engine division is focused on two main strategies. One is to provide ‘green-time’ lease options to support operators as they begin to transition to normal service. The other is to fulfil the demand for AR and OH parts as engine shops perform lighter workscopes to save maintenance costs whilst keeping the global fleet flying.
Q – APOC Aviation has ambitious plans to expand the new engine division. Can you elaborate on the expansion strategy
A – We have a close network of airline customers with whom we are developing discreet lease agreements for older engine assets. The V2527-A5, alongside the CFM56-3/5a/5b/-7b engine variants are in high demand. With the delivery delays and groundings of new aircraft we are currently seeing postponed shop visits and reduced tear-down activity for mature engines which is testament to their reliability and on-going marketability.
We are building capability for the future and evaluate our engines on strict criteria – in particular maintenance history & records, LLP status and QEC Inventory. We have been very active in the engines marketplace over the past 12 months and have built a portfolio of five CFM56 engines that we have purchased for leasing, trading and teardown.
Q – APOC opened a new dedicated landing gear division just before pandemic. How did the division fair in the pandemic and how is the picture changing post pandemic?
A – The entire industry did go on hold, and with all the airlines focusing on preserving cash and minimizing their expenses, opening a new division might have seemed bad timing. But we had a great belief in our vision to have a specialized LDG unit where our customers could find all they need in one place. The results show that it was a very good decision. Even though the pandemic has obviously impacted the industry and we delivered less, than we originally predicted, it was still more than it was before the pandemic. Our LDG division closed the year with greater profits that we achieved in 2019.
Q – APOC is a fairly young company, currently in its sixth year of business. Can you tell us some important milestones in the five years.
A – APOC Aviation has historically enjoyed triple digit annual growth year on year results from our different approach. Inevitably along with the industry in general we have been negatively impacted by COVID-19. However, the significant growth of the business alongside global market recognition and our excellent reputation of closing successful deals, secured by our solid finance credentials has enabled us to solidify our position in the market.
2015 APOC achieved accreditation to ASA100/ISO 9001/AS 9120
2016 Pioneered crowd-funding to raise capital
2017 Industry bench-mark proprietary software platform ‘Alicanto’ updates stock in real-time every 5 seconds. Unique secure online log-in
2018 Exceptional quality control with a rejection rate of 0.7% – well below the industry average
2019 Euro 4m raised in 15 minutes via crowd-funding. We opened our new engines division. We moved to a brand new facility close to Rotterdam.
2020 – Opened our dedicated landing gear division. We secured a new equity partner that can help us grow significantly.
In 2021 we will triple the size of our facility with the opening of a new purpose-built facility adjacent to our current site within 6 months. We also opened our first stock hub in Singapore and this will be followed by North America and China soon. In addition, we are exploring options on opening a new MRO division as well.
Q – MROs and OEMs across the world are evolving and changing their ways of work to offer better customer service. What are your strategies to adapt to this changing environment
A – We have been finding new ways to business right from the start at APOC Aviation. The customer experience always remains our focal point and being a technology driven business we turn to those solutions to deliver something special.
From a customer perspective APOC can offer services to customers that other systems technically cannot do. Everything is tracked in real-time. Every click is traced and registered. Our data analysts continually strive for better ways to process tasks – this is a huge strength for APOC and makes us different.
Scalable. Accurate. Automatic. This generates excellent customer feedback ‘the best paperwork in the industry’. We never stand still. Machine learning methods have created our new algorithm that is five times more accurate than our previous one. Because of this scalability we have the power to grow the business with minimum additional manpower.
Also, our customers receive little gifts when they order a package of spares. If there is anything we can do to improve our service and make the experience of working with APOC an outstanding one, we explore it with enthusiasm.
Q – How soon do you see the aircraft lessor market recovery given the current situation?
A – Although we offer some leasing solutions for engines and LDGs, APOC Aviation is not an aircraft leasing company. But we do have some observations. Optimistic thoughts of airline recovery this Summer look to be premature and predictions for a ramp up to flight operations worldwide have now been pushed back to 2022. But as soon as the signs are there it will happen quickly. Currently aircraft lessors are holding onto their assets rather than dumping them into the marketplace or selling cheaply. They have confidence in the underlying strength of the aviation market and are keeping them on their books. At APOC we believe that leasing transactions at one point will shoot up again – and there will be new dry and wet lease options to help airlines to operate profitably once again. Investors remain confident in the sector for the long-term.
Q – As more and more aircraft go into retirement, do you feel the USM market is positioning itself to be the fastest growing MRO segment?
A – There was a shortage of USM before the crisis. Currently more aircraft are being retired – but as soon as recovery starts this will diminish. I do not see a significant long-term effect of over-supply in the USM market because making cost efficiencies will be the primary task for airlines as they struggle to survive. They have always been cost conscious of course, but now the imperative to make savings will override almost everything else. USM will always offer a lower-cost alternative to new parts.
Q – According to you what kind of predictive tools could be leveraged to meet the growing demand for USM parts?
A –From APOCs perspective we are always looking at new trends in supply and demand. We model this forward so we can be sure to meet predicted demand – buying the right narrow body aircraft assets and building the right inventory is crucial for our business.
In any business, scalability is vital to future growth. APOC is a very data driven business and our proprietary software has been the main driver of our success. At the outset we decided to create our own software from scratch rather than use the industry standard. Amongst other features, this uses bespoke algorithms that ensure we buy the right assets at precisely the right prices.
With a rising number of aircraft retirements newer and more efficient aircraft are coming into the market. They are more efficient and require less maintenance. Do you think this could lead to fewer replaced parts and less business for MROs?
Manufacturers always claim this but aircraft always do get older an even new aircraft need replacement parts.
However, APOCs focus is on mid-life to older aircraft, those reaching their 10-12 year checks. We ensure we are at the forefront of this market with the right parts to meet customer demand. Our policy is to tear down the newest aircraft assets that we can, so our parts are latest technology. They are not new parts, but almost new. Newer aircraft do not mean fewer replacements of parts. This is especially the case for life limited parts.
Q – As the aviation industry gears up Post COVID-19, what would you like to tell our readers?
A – Don’t be afraid of changing your business model during these strange times.
Don’t keep focusing on the parts of the business that used to work in the past, but focus on the parts that are working right now. For us, that means focusing on our leasing of engines and LDGs. This has really started to flourish during COVID, because customers tend to sit on their cash more during these times.
When the market recovers you can always return the focus to the services and products that worked in the past. But for now, you just have to ride it out.
Also, don’t be afraid to act anti-cyclical if you have the means to do so. We have secured major funding so we could do just that. Now prices of assets are at an all-time low and we have made some advantageous purchases, in preparation for the market recovery.
