Aircraft Parts Fraud: counterfeit and unapproved parts in the aviation supply chain and circumvention of sanctions

Aviation fraud has been in the spotlight in the last year with the criminal investigation into aircraft parts supplier AOG Technics in progress, following a search and arrest in December 2023. In an industry where safety and confidence are paramount, it is essential that any instances of fraud and gaps in regulation are identified quicky and rogue operators taken out of the supply chain and dealt with firmly.

In addition to AOG Technics, the aviation industry has also been grappling with attempts at circumvention of sanctions, with the supply of aircraft parts through third-countries, which has enabled Russia to continue operating military and civil aircraft.

This article explores these problems and considers attempts to address these issues.

Why have aircraft parts traditionally been an area ripe for fraud?

The maintenance of aircraft, and the certification of parts for use on them, is heavily regulated.  There is very good reason for this, because aircraft parts are subject to enormous stress and hostile environments, and any failure of any aircraft part can have disastrous consequences.

The use of counterfeit aircraft parts has been a serious, though thankfully relatively rare, issue for decades. Use of non-approved or counterfeit parts have been attributed as factors in a number of aviation accidents, such as the Convair 580 crash in 1989 where counterfeit bolts were used to affix the aircraft’s tail section and, more recently, the fatal Sukhoi crash in Moscow in July 2024[1]. Unlike fake watches or designer clothing, counterfeit aircraft parts can have fatal consequences. The US Federal Aviation Administration estimates that 166 accidents or serious mishaps between May 1973 and April 1993 were due to uncertified parts.

The AOG Technics case revealed a gap in regulation, as distributors were not covered by controls imposed on other parts of the market. The wrongly certified parts found their way into the supply chain and were installed on aircraft, which created risk in the operation of those aircraft.

Fraudsters rely on the shortage of available parts in the market to prey on airlines and maintenance, repair and overhaul (MRO) providers that are desperate to return aircraft to operations as quickly as possible. Cash-strapped airlines can also be tempted by low-cost solutions. For the fraudsters, the high value of aircraft parts make it an attractive area for criminal activity.

In the current aviation market, there are pressures on the supply of parts in the secondary parts market. These pressures are largely caused by an excess of demand driven by a lack of feedstock due to the extension in operational life of mature aircraft. When mature aircraft are used for extended operations and not torn down, this both increases demand for mature aircraft parts and restricts supply.

AOG Technics scandal

AOG Technics had supplied parts to airlines in Britain and abroad  since 2015. A small broker, with no mandatory certification or special licence, essentially devised a scheme to acquire old parts and pass them off as either new or reconditioned by forging key documents.

Safety issues linked to AOG’s parts relate to the CFM56 engine, which is made by CFM International. CFM said it had found 145 engines in the global fleet[2] that were fitted with parts linked with AOG. More than half of these had been removed from service.

The scandal came to light in June 2023 when technicians at a Portuguese MRO provider flagged some CFM parts purchased from UK Broker AOG Technics. The parts were shown as new on the paperwork that came with them (including the EASA Form 1 indicating the parts’ history) but technicians raised suspicion upon inspection. On checking with CFM, the paperwork was found to have been forged.

On 4 August 2023, the UK Civil Aviation Authority (CAA) and European Union Aviation Safety Agency (EASA) issued safety notices to alert owners, operators, maintenance organisations, and distributors of suspected unapproved parts distributed by AOG Technics. On 21 September 2023, the United States’ Federal Aviation Administration issued a similar notice about parts distributed by the company.

On 6 December 2023, the SFO conducted a search operation at a site in Greater London and made one arrest in connection with the investigation. The investigation continues and no further information is available at the current time.

The paperwork was sufficiently convincing to get the parts installed onto some aircraft. Fortunately, no life limited parts – those that are most critical – were flagged in the probe. Also, reassuring to the industry was that in this case the parts themselves did not appear to be fake, rather they were older than indicated.

The lessons from AOG Technics are stark. Verifying the airworthiness of a part comes down to both records and a technical inspection. Cross-referencing purchase orders with delivery receipts is a recommended practice to verify the accuracy of part numbers and ensure the integrity of component history records. Conducting supplier audits is another integral aspect of quality assurance, ensuring that suppliers adhere to the quality requirements specified in purchase orders.

Russia and attempts to circumvent sanctions to supply parts for Western-built aircraft flying in Russia

In another fraud-related matter, Russian aircraft manufacturers have continued to import aircraft parts produced by European and U.S. manufacturers despite Western sanctions. After the invasion of Ukraine, sanctions were imposed on Russia aimed at preventing the lease, use and maintenance of Western-built aircraft by Russian airlines. However, a number of aircraft were retained within Russia and continued to be operated by certain Russian airlines. Those aircraft require parts to maintain them, and sanctions were intended to stop the flow of those parts in order to prevent further use of the aircraft.

Russia has, in part, been resilient to Western export controls despite policymakers’ belief that technology sanctions would prevent the use of commercial aircraft and significantly degrade Russia’s military capability. Russia was nevertheless able to procure computer chips and components from consumer products, using third country trading hubs to bypass sanctions, and has been able to effectively exploit gaps in the regulatory system designed to keep counterfeit or unapproved parts out of the legitimate stock of parts.

How and why are the gaps in regulation exploited? While many key components intended for installation on aircraft must be accompanied by an Authorised Release Form, this requirement does not apply to certain consumable parts, which only require a Certificate of Conformity (CoC) and these CoCs are more susceptible to manipulation.[3] Responsibility ultimately lies with the end user to verify the provenance of the parts and their accompanying documentation.

Russian airlines are estimated to have purchased replacement parts worth at least US$1.2 billion between May 2022 and June 2023. These parts were sourced through middlemen in countries which have not endorsed or adopted Western sanctions on Russia.

As with the AOG Technics issue, the struggles to control the supply of parts notwithstanding the imposition of comprehensive sanctions on Russia demonstrate that there is less control over the global supply of aircraft parts than might have been imagined.

This does not necessarily demonstrate any particular failings in the global parts trade as there always needs to be a balance between regulation and freedom to trade. However, it does mean that traders and consumers of aircraft parts need to be vigilant in understanding their contractual counterparties and prepared to ask the difficult questions before concluding their trades. 

All parts and their documentation should be subject to close scrutiny before they are installed on any aircraft. Communications between end users should be encouraged to share information and concerns.