TransDigm Group

Mechanics of the moat. TransDigm’s products are heavily engineered, certified components embedded on nearly every major platform; once spec’d into the type certificate, airlines and depots overwhelmingly buy the same part for decades due to airworthiness, paperwork, and reliability concerns.

Management estimates about 90% of sales are from proprietary products and about 55% of sales from the aftermarket, where certification and documentation requirements, not just unit price, drive purchasing decisions. Product life cycles can exceed 50 years when you include the aftermarket tail. Component scoring and weightings.

Switching costs and certifications 40% weight: 95/100, given FAA/EASA approvals and platform qualification. Intangible assets and proprietary IP 30%: 90/100, reinforced by design authority and data rights. Efficient scale 20%: 85/100, as many niches are too small to attract scaled entrants.

Cost advantage 10%: 70/100, not classic low‑cost but advantaged through mix, engineering, and small‑lot manufacturing expertise. Network effects 0%: 10/100, not material. Weighted average ≈ 89/100. Erosion risks to monitor.

Parts Manufacturer Approval competitors like HEICO can pressure select lines, especially high‑volume consumables, and OEMs occasionally attempt second‑sourcing. Management reports limited aggregate impact so far, but we track PMA penetration and OEM destocking attempts.

Persistent DoD pricing scrutiny can also catalyze changes in contracting that partially blunt pricing. Overall moat durability remains high given thousands of SKUs, diversified platforms, regulatory barriers, and the scale of the installed base.