Electronic Intermediaries

Many of the websites initially researched turned out to be little more than online advertisements for mom-and-pop type operations, which while listing available parts, prices and phone numbers, really offered nothing in the way of actual e-commerce.
 

That said, the industry is well aware of its own fragmentation and that it must fully embrace e-commerce technology in order to compete globally and create badly needed efficiencies in its very complex supply chains.Once effective e-commerce strategies are developed and established the new market transparency will allow companies in the industry to consolidate their supply base, negotiate bigger discounts and increase overall efficiencies in a tremendously competitive market.
 

A few of the companies that have begun to emerge as e-commerce intermediaries in the surplus aircraft parts industry are:
 

Although Spec2000 is not yet a full player in the e-commerce revolution, it must be included in our discussion because for the past 40 years its database service has been considered the industry standard when it comes to matching buyers and sellers in the surplus aircraft parts industry.
 

Originally known as ATA SPEC 200, this aviation marketplace consists of four databases: Central Procurement Database (CPDB), Central Repair Database (CRDB), Airline Inventory Redistribution System (AIRS), and the Tools, Test & Ground Equipment Database.Until recently, it has been accessed by many of the industry’s customers, manufacturers and suppliers through the use of electronic message or magnetic media.
 

In order to take full advantage of the efficiencies associated with e-commerce, suppliers and airlines from across the globe came together to develop SPEC 2000, which will take advantage of the latest electronic and telecommunications formats to provide users with a ready and reliable market.Although developed as a global joint venture, SPEC 2000 is managed under the auspices of the Air Transport Association of America (ATA).
 

Because it is the current industry standard SPEC 2000 has already achieved a great deal of critical mass among buyers and sellers in the industry.Since it already enjoys a great deal of use among suppliers and airlines, SPEC 2000 should not have any problems with liquidity once it implements full e-commerce capabilities.Its participants already report significant annual savings due to SPEC 2000’s 6 million record listing of available parts and services, as well as through revenues generated through sales of their own products on the system.
 

As was alluded to earlier, SPEC 2000 does not currently support the direct purchase and sale of goods and services, although it plans to implement these features as soon as possible.One reason for the slow e-commerce conversion is that although many of the suppliers would prefer to do business online through portals such as SPEC 2000, many of the airlines have been slow to change their procurement practices.In fact, even with the ease associated with the Internet and its real-time data capabilities, most of the major airlines still request monthly shipments of magnetic tapes and cartridges, which are loaded into their procurement systems.
 

Once fully operational, SPEC 2000 will undoubtedly take advantage of its strong ties to airlines and suppliers and leverage that into an extremely successful e-commerce hub.
 

PartsBase.com was established in April 1996 and is headquartered in Houston, Texas.This privately held aviation marketplace intermediary was created with one goal: streamlining the business processes of the Aviation Industry, using the Internet.

The company has used its market expertise to aggressively build an online presence that has made it one of the preeminent business-to-business vertical hubs in the marketplace for surplus aircraft parts.

In an effort to broaden the depths of its offerings, PartsBase.com’s business model includes both catalog and auction services to its members, and is involved in every aspect of the aviation industry – everything from surplus parts and aircraft sales to employment opportunities and industry news.

Partsbase.com firmly believes in the benefits of first-mover advantage and is doing its best to rapidly obtain global brand awareness and cost efficiencies that will allow it to move ahead of its competitors in the industry.In order to accomplish this, Partsbase.com is using its depth in the marketplace and belief in cutting edge technologies to provide its members with what it believes is the best vertical hub in the aviation marketplace.

TradeAir.com has been in existence since 1999 and is headquartered in Minnetonka, Minnesota.The company claims that its initial transaction on February 9, 1999 in which BF Goodrich purchased $200,000 worth of aircraft parts is the first time in history that commercial aircraft parts were specified, sourced and negotiated using an Internet marketmaker.
 

The e-commerce site, which is privately held, is one of a handful of vertical hubs attempting to cash in on the multi-billion dollar aircraft parts industry.Furthermore, the company believes that it has a keen insight into both e-commerce and the aircraft parts industry because its principal founders all come from either aerospace or Internet backgrounds.
 

In order to provide its customers with an added sense of security, TradeAir.com has partnered with BF Goodrich Aerospace, which inventories and prices all parts offered on the site.In addition, TradeAir.com doesn’t charge its users any fees, rather, all sellers are required to a nominal transaction fee on their sales.
 

As with the other sites, TradeAir.com is trying to build efficiencies by streamlining the purchase process in the extremely fragmented aircraft parts market by bringing buyer and sellers together through its real-time web-based marketplace.
 

TradeAir.com’s portal allows its users to conduct business through either the open market or with a select group of TradeAir.com approved trading partners.The site also allows users to get a feel for current market conditions through its “Trade Tracker ™ market monitor, which displays real-time prices of currently trading parts.
 

Using TradeAir.com is easy, prospective buyers simply enter a parts number and the price they are willing to pay into the system and a match is sought.If one is not found, buyers are given the opportunity to expand their price range until a part is located within their budget.
 

In addition, TradeAir.com has plans to expand its vertical niche by adding new features and efficiencies that it hopes will allow it to become a true online aviation community.
 

As if to underscore the burgeoning e-commerce opportunities available in the aircraft parts industry, United Technologies, Honeywell, and i2.com announced on February 14, 2000, that they are embarking on a joint venture called Myaircraft.com.As with the other intermediaries, Myaircraft.com hopes to develop a comprehensive e-commerce site that brings together participants in the aerospace industry.
 

According to press releases, the joint venture will utilize i2.com’s TradeMatrix software platform to create an Internet marketplace that will enable airlines, original equipment manufacturers (OEMs) and their suppliers to dramatically improve business performance in the industry by infusing market transparency into aircraft parts procurement.The site, which will be operational by the 2^nd quarter of 2000, will be based on a bid-auction business model.
 

 

	SPEC 2000	PartsBase.com	TradeAir.com	Myaircraft.com *
Hub Type	Vertical	Vertical	Vertical	Vertical
Auction	No	Yes	No	Yes
Barter	No	No	No	No
Catalog	Yes	Yes	Yes	Yes
Exchange	No	No	No	Yes

* Since Myaircraft.com is not yet operational the answers provided in this table

are based on information from press releases announcing the joint venture.

Due to the fact that these companies are privately held, and or early on in their operations, it is difficult to gauge whether or not they are profitable.Since Myaircraft.com will be a joint venture between three publicly held entities this may be the one to watch to determine how the industry will fare over the long run.
 

All four of these organizations are trying to build a sense of community by marketing their product or hub to a preexisting community – the airline industry.
 

If successful, these hubs will foster an even greater sense of community by bringing buyers and sellers together like never before due to the global reach of the Internet.
 

Benefits and marketing

Finally, purchasers would have the security of knowing they are buying through a network of certified parts vendors with known reputations.
 

What does it offer sellers? Parts vendors would be able to market and sell their parts 24 hours a day, seven days a week anywhere in the world.They would have immediate access to information regarding the current needs of purchasers.Vendors would still be able to maintain one-on-one contact relationships with buyers in order to negotiate larger discounts for preferred customers.
 

Sellers would also benefit from increased and improved customer service due to the efficiencies enjoyed by process automation.Vendors will also achieve economies of scale from being able to market on a global level.Additionally, vendors would derive satisfaction knowing that they will be paid since purchasers will have established accounts and lines of credit.
 

 

Buyer Benefits	Seller Benefits
· instant access to millions of parts/prices	· provides access to global customer base
· discover new sources for parts/repairs	· establishes an Internet presence
· no special software needed	· central source for prices/availability
· accessible 24/7	· eliminates need for hard copy catalogs
· no need for multiple catalogs	· creates efficiencies & economies of scale

Technologies