Accusations of price gouging
In 2019, the Department of Defense audited TransDigm's pricing practices for government contracts.[21][22] It concluded that the Pentagon was purchasing parts from TransDigm at very high profit margins, such as a 9,400% markup on a metal pin.[21][22] According to the authors of Lessons from the Titans, this is because older aerospace components are not expensive to produce individually, but require keeping expensive dated manufacturing lines active for small-batch production.[8] After a congressional hearing criticizing TransDigm's pricing practices, the company agreed to refund the Pentagon $16 million.[23]
TransDigm's revenues grew by 15-fold from TransDigm's IPO in 2006 to 2020.[8] However, business declined in 2020 due to the COVID-19 pandemic's impact on the aerospace industry.[24]
In 2022, founder Nick Howley was again called to testify before Congress on accusations of price gouging.[25] A Department of Defense review alleged that the company charged $119 million for parts that should have cost $28 million, with an earlier 2021 report alleging that TransDigm made an excess profit of $20.8 million on 105 spare parts on 150 contracts.[26][27]
The company's practices and position have also reached the commercial aviation industry, ranging from employees to executives within the aviation industry. A former employee of AvtechTyee, a firm later acquired by TransDigm, commented on how airlines are stuck with TransDigm's parts with a refusal to utilize the company equating to an airline's plane not flying. Concurring on the situation was Abdol Moabery, CEO of the aircraft maintenance company GA Telesis, TransDigm's pricing practices have made it costlier for airlines to repair their planes, with aircraft manufacturers like Boeing and Airbus often caught in the middle when TransDigm acquires companies that Boeing contracted with to make its parts. TransDigm counterargues, though, that its pricing practices are justified when considering its efforts to ensure that planes always fly safely, and that the high prices are necessary to continue providing quality service.[28][25]
