CRS Jet Spares: managing commodities at home and away

posted on 13th June 2018

Armando Leighton, President, CRS Jet Spares has grown the business from his garage to the international market through supplying the right parts at the right time and with the right attitude to customer service. Jo Murray speaks to him

Armando Leighton, President of CRS Jetspares.

Founding a parts supply business is complex – especially when the world’s business aviation fleets are so diverse, so scattered and aircraft values fluctuate with macro-economic conditions. It is easy to imagine that such a business would fall victim to numerous external pressures as the aviation industry weaves its way through its cycles. Leighton clearly takes all these pressures in his stride. He has grown his business from a domestic garage operation to the international business it is today. “I established the business in 1982,” he says. “I specialised in one aircraft type: the Rockwell Sabreliner.” Knowledge of the military market, a role in an MRO business focussing on parts procurement and experience inside a charter company delivered to Leighton all the insights he needed in the market he now serves.

What he discovered from working inside a charter operation was that parts procurement was simple but expensive – there was no opportunity to provide savings. This is what prompted Leighton to strike out on his own, build his inventory and then eventually – in the first instance – offer it to the FAA which flew several Sabreliners in the 1980s. “As a small company I was able to generate a lot of sales as a low bidder on contract offerings,” he explains.

And so CRS Jet Spares was born, initially in a very small way but through taking baby steps, inventory, personnel and knowledge were built up to form the rotables supply business it is today.  In fact, his first employee was his mother, Mirta Chang, who still works to this day at CRS at age 75.

The model is simple: to supply overhauled airworthy spare parts, take back unserviceable components, have them serviced by a third-party, and then deliver the overhauled components back into CRS stock if appropriate. A fee is charged for the exchange of the unserviceable component with the reconditioned or new part. “The FAA/JAA approved repair stations  must be very good partners in being able to deliver a quality repair/overhaul on a timely basis while providing the right savings that can be passed on to the customers,” he says. Leighton summarises the business model like this: “We’re managing commodities in a particular fashion: having the right parts at the right time, and making the appropriate investments into particular aircraft platforms.”

Although Leighton started with the Rockwell Sabreliner in 1982, he saw the need to diversify into other aircraft types. “By year two I got into the Cessna Citation. I purchased an aircraft and disassembled it. Then I purchased a Lockheed Jetstar and evolved the business into Learjets and Falcons. We perpetually reinvest into critical parts covering all ATA chapters and make the inventory more diverse,” he says. “I felt that if I wanted to gain a competitive edge it would be better to be able to service several aircraft types.” By year 10, CRS Jet Spares was already working with 10-15 aircraft platforms and, today, the company services almost 30 – when all the aircraft family variants are included. “Today we are looking at later models of Gulfstream, Dassault, Hawker Raytheon and Bombardier – Learjets, the Challenger line, and the Global Express,” points out Leighton.

But it is not just aircraft types that CRS Jet Spares is delving deeper into; it is also diversifying its geographic markets. “As we expanded our aircraft platforms, we continue to build a global footprint through representations and partnerships beyond the US market that we have been servicing since those early years,” says Leighton. Most of the $60 million inventory is maintained in the Ft Lauderdale, Florida, headquarters; however, much has been shifted to other stocking locations such as the UK, France, Pacific Rim, and there is an eye on India in the near future.  Today, there is inventory held in California and Washington State with seasoned CRS representatives based in Texas, New York, California and Minnesota, with the western and eastern locations bleeding into Canada on both coastlines.

But the growth does not stop there. “We have always tried to be forerunners and anticipate trends. Traditionally we have been a domestic company with some international sales, but it was very little – less that 5% in the 1990s. That has grown to over 20% for us now,” says Leighton. “Wherever there’s wealth there’s jets. We have been following the trends and we have been looking at Brazil which has the second largest population of jets in the world after the US. Their wealth and technology has ramped up immensely in the last 20 years.”

CRS Jet Spares is very close to establishing a presence in Brazil, with the benefit of around 20 years’ experience trading with clients in the country. “With the economic set-back, we have seen many quality jets leave the US and go to other thriving countries where they have the cash and the wherewithal to be able to purchase these jets at prices 40-50% less than previously traded,” says Leighton. “Wherever they go, we follow them.” This includes Australia, Dubai, Europe, Russia, India and China.

“When it comes to the logistics for supplying parts now that these aircraft are established in their respective countries, we now see that they have a requirement for spares,” says Leighton. Of course spares distribution within the US is extremely easy – there is no border or customs to tackle. When it comes to exporting internationally, that is a different story.

Logistics is a whole new ballgame when it comes to export. “You need to plan properly in addition to making additional investment in aircraft parts for the platform you want to support,” he says. So is partnership the way forward on the logistics front? “We feel it’s good to partner. Many companies have established bricks and mortar in the past and historically have not done that well. We feel that partnerships are key.” For CRS Jet Spares, having an international presence has not just meant export; it has also meant locating inventory in overseas markets. Leighton says that there is no major need to procure additional inventory specifically for international locations – it is simply a question of relocating from their diverse inventory and a properly managing.

International markets aside, CRS Jet Spares is also evolving – as the market shifts – in terms of its client base. Traditionally corporate flight departments have formed the bulk of its client portfolio, but with the shrinking and closure of flight departments as the fractional share found favour, so CRS Jet Spares adjusted with the landscape of the industry. And then there was consolidation through charter company management of individually owned aircraft. This resulted in charter companies with larger fleets although fewer of these aircraft were actually owned. Consolidation in the charter market was good news for CRS Jet Spares – it meant having more of a captured audience when making sales calls and knocking on hangar doors. Of course the economic slump has brought a further layer of change to the business aviation market and therefore the spare parts business –prompting a certain level of internationalisation.

When asked whether the downturn has had positive effects in terms of being offered attractively priced spares and even whole aircraft for salvage, Leighton responds: “It has. Many operations went out of business and sold off aircraft and their residual inventories. We have been able to acquire a lot of inventory at favourable pricing that was not there four years ago.” The quid pro quo is that as aircraft values slumped, financiers put pressure on owners to pursue the salvage route in order to realise value from the assets. “The concern is that when you have so many aircraft parted out, it drives the market price for the parts down. That’s great for the owner/operator but we have to look at the profitability of those parts in order to maintain the high standards of the programmes we offer our customers.  Competition on legacy aircraft dictates whether we continue to compete or exit certain aircraft platforms.

This is a complex balancing act built on knowledge, familiarity and doing the numbers. There is nothing haphazard about the parts business although the bar has been raised with AS9120 Quality Standards in recent years. Future-proofing means growing the business into newer aircraft types – and that is exactly what Leighton is doing today as the business he founded nearly 30 years ago grows increasingly complex and voluminous.