How does the second-hand GSE market fare post-Covid? According to one new company, opportunities abound as airlines grapple with the need to boost passenger numbers, balance the books and keep up with market developments
Adapt GSE is a fledgling company based in Northern Ireland which entered the second-hand ground support equipment (GSE) market during the industry’s most challenging period in recent history: the coronavirus pandemic.
“Our business only really started to get traction in 2021 on the tailwinds of Covid,” explain Adapt GSE’s co-directors Martin O’Hanlon (left) and David Russell (right). “Everybody said we were mad starting an aviation business when the industry was pretty much on its knees. But it was a good time for us because it allowed us time to build a reputation more widely in the global market,” O’Hanlon adds.
Market focus
Nevertheless, the company is “still in its infancy”, according to Russell. He says that since the launch of Adapt during the uncertainty of the pandemic, the business has developed a broad global footprint, but is focused today on what it identifies as the three biggest markets of opportunity for second-hand sales: Europe, Africa and the Middle East.
Evaluating the post-pandemic demand for second-hand equipment, O’Hanlon says: “At the moment, in terms of products, there is a broad church and in the second-hand market, there are different sectors within it. You have the commercial sector, cargo, military, maintenance and fire and rescue – so there are many [new] aspects of the industry that are probably only starting to come into the second-hand market.”
Meeting the need: Long-term forecasts for demand
Demand is not so much about the immediate opportunities for small companies like Adapt, though, O’Hanlon hints. It’s about the bigger picture. He tells Airside: “If you look at Airbus’s annual report which states that, by 2042, the number of aircraft are going to double and you look at the lifecycle of GSE, that’s a full replacement of today’s existing GSE and doubling it again.”
These projections for industry-wide growth mean that OEMs (original equipment manufacturers) will have to step up their output. According to Adapt, this presents an opportunity for major growth where second-hand suppliers can work with the operators to meet the demand for GSE.
Russell emphasises that “as long as the OEMs and second-hand providers can work hand in hand and continue to build relationships, as we are, to deliver the quality to maintain the integrity of the machines”, manufacturers and suppliers can meet the potential demand together.
“Whatever the existing global GSE market is today, in the next 20 years, operators are going to have to double their output. The current OEMs on the market can’t support that growth, so it’s going to have to be supplemented by really good quality second-hand equipment. That’s our belief,” O’Hanlon adds.
Post-Covid demand for second-hand GSE is up
The dire straits that aviation endured through the pandemic are well known today. A positive outcome for second-hand suppliers, O’Hanlon notes, is that GSE operators have turned to refurbished equipment as a way to keep costs down.
“We’ve been pleasantly surprised by the demand in terms of the number of enquiries, the type of enquiries and being able to get access to equipment that we can refurbish and resell. The part coming out of Covid that everyone forgets about is that the airlines went through an absolute horror show in terms of profitability,” he explains.
“Passenger numbers are only now bouncing back, and airlines are only [beginning to] refill their wallets with cash again,” O’Hanlon goes on. “They drained all their resources just to survive through the pandemic. [However], there’s a lag because the industry’s just not awash with cash – so it has to find solutions.
“Though you’ve got a growing number of passengers, the OEMs are struggling with supply chain issues and volume output being able to meet market demand. You have the consumers, the airlines, trying to rebuild their balance sheets post-Covid, and we fit in.”
Stamping out the ‘stigma’
Adapt’s unique selling point is providing value-for-money, high-quality refurbishments, the company says. As a result, customers are coming back. Where one might imagine a GSE operator would buy second-hand equipment as a one-off purchase, they are increasingly seeing renewed kit as an operationally and cost-effective alternative to buying new from the OEM.
But it “hasn’t been easy” to build a reputation for offering this solution to operators, Russell emphasises. “The stigma of the second-hand industry has always been that ‘it’s a poor-quality refurbishment’ or people have promised the world, and they’ve painted the machines to make the cosmetics look nice but haven’t gone into the guts of the machines” to give them the second life Adapt GSE promises.
However: “Because we’re new to what we’re doing, people have come and bought one or two pieces of equipment, and after that they have become returning customers and bought several pieces of equipment off the back of the refurbishments that we’re doing,” Russell adds.
Business is booming for Adapt, which is why the company is expanding, bringing in new staff and increasing the size of its workshop to cater to demand.
Sustainable second-hand GSE
Adapt may have identified the opportunities for second-hand sales in the wake of the pandemic. But one other factor has significantly shifted demand in the GSE market: sustainability and airside electrification. How can second-hand suppliers cater to this demand?
One might imagine that sustainable GSE makes up a very small proportion of second-hand sales, given that the electrification drive, like Adapt, is still very much in its infancy. Therefore, would there be much second-hand electric equipment? And, wouldn’t it be most likely that operators purchase it direct from the manufacturer?
According to O’Hanlon: “There’s no doubt that there’s a huge push, and rightly so, on environmental [considerations]. There needs to be a reduction in carbon footprint. But the biggest challenge we have come across is that airports’ infrastructure does not entirely support a fully electric fleet.”
Indeed, the lack of supporting infrastructure for electric GSE remains a topic of continual coverage for Airside.
O’Hanlon continues: “You have a demand, or an expectation, that you can fully electrify your fleet. The reality is that you can’t. But there is an absolute requirement to reduce [the industry’s] CO2 emissions.
“What we’ve been focusing on, in terms of where we’re trying to develop, is looking at the various solutions. You have the battery solution: we work with some battery manufacturers to see what you can do in terms of conversions and we have a couple of projects in the pipeline where we can convert an existing diesel fleet into an electric fleet.”
But: “We don’t believe there’s a magic wand that’s going to fix the emissions on the airfield. We believe we have to come up with clever solutions to reduce operators’ carbon footprints. And that will be a combination of all the different tools you have to try and reduce it,” O’Hanlon says.
Future plans
For a new business, Adapt GSE’s global footprint is impressive. Its customers span from Europe and Africa to the Middle East and Southeast Asia – and the company hints at future expansion into South America.
North America, however, is not on the cards for now – not only because it is perhaps one of the most mature and established markets for aviation, but also, according to O’Hanlon, because doing business there is “different to doing business in the rest of the world”. Particularly in the second-hand arena, Russell adds, suppliers are already established and the airline market is dominated by only four carriers.
“This side of the pond and beyond” is where Adapt’s efforts are concentrated today and looking to the future. But “never say never”, Russell proclaims.
