MRO

ISSUE ONE 2011www. av i at i o nne ws - o nl i ne . c o m MRO GLOBAL www.teamsai.com TeamSAI provi des consul ti ng and techni cal ser vi ces to avi ati on i ndustr y cl i ent s i ncl udi ng ai rl i nes, MRO’s, corporate/ fracti onal operators, OEM’s, ai rpor t authori ti es, and i nvestment banks around the worl d wi th a focus on strategy, operati ons i mprovement, cost reducti on, safet y, cer ti fi cati on, and suppl y chai n. 4 THE MRO MARKET IN 2011 A review of the past 12 months in the MRO market and a look at what’s ahead for 2012 16 Who combines the data? Amalgamating two or more data systems is a costly and time consuming affair Swiss Aviation Software has the solution 22 More MRO for your money MRO Global looks into the maintenance providers market. 32 Smoke and mirrors The PMA parts market has enormous potential for growth if it can fight back against the OEMs. 44 Solving lessor issues Ideas about how to handle third-party maintenance contracts 47 More than an afterthought Inventory management planning from Inform 50 Pulled apart Kellstrom shares how it intends to retain its share of the fragmenting parts market. 54 MRO Americas 62 MRO Americas Directory 66 A320-family maintenance MRO Global surveys the best maintenance providers for A320-family aircraft 78 MRO Europe 90 MRO Europe Directory 94 High-tech, low maintenance Boeing designed the 737NG with a reduced scheduled maintenance in mind 98 MRO Middle East 105 MRO Africa 108 MRO Middle East/Africa Directory 110 A340 maintenance MRO Global examines the history of the A340 117 MRO Asia-Pacific 121 MRO Asia-Pacific Directory 2 Airline Economics: MRO Global 2011 www.airlineeconomics.co CONTENTS MRO GLOBAL 2011 EDITORIAL TEAM Victoria Tozer-Pennington [email protected] Philip Tozer-Pennington [email protected] Kaleyesus Bekele [email protected] SUBSCRIPTIONS Annual subscription: £250 / €250 / $300 Subscription enquiries to: [email protected] ADVERTISING SALES John Pennington [email protected] Philip Tozer [email protected] PRODUCTION AND ONLINE Dino D’Amore [email protected] Kathy Alys, subeditor DIGITAL ISSUE Digital version production by Symbian Print Intelligence PUBLISHER Aviation News Ltd Suite 16745, Lower Ground Floor, 145-157 St John Street, London, EC1V 4PW Registered in England & Wales Company number: 7351543 Copyright 2011 Aviation News Ltd Airline economics (Print) ISSN 2045-7154 Airline economics (Online) ISSN 2045-7162 Printed in England through Ben Chater Printing All rights reserved. No part of this publication may be reproduced by any means whatsoever without express permission of the Publisher. Although great care has been taken in the compilation of Airline Economics, Aviation News Ltd does not take any responsibility for the views expressed herein. KEEPING YOU IN THE AIR Engine Leasing Asset Management All Manufacturer Types Long, Medium & Short Term Leases : 0peratlng Leases : ^sset Management : Sales & Leasebaoks ^ll Manufaoturer Types : 0peratlng Leases ^sset Management : Sales & Leasebaoks ^ll Manufaoturer Types : Lcng, Medlum & Shcrt Term Leases : 0peratlng Leases : ^sset Management : Lnglne Tradlng : ^ll Manufaoturer Types : Sales & Leasebaoks : ^sset gement : Lcng, Medlum & Shcrt Term Leases : 0peratlng Leases ^sset Management : ^ll Manufaoturer Types : Sales & Leasebaoks ng Leases : Lnglne Tradlng : Lcng, Medlum & Shcrt Term Leases ^ll Manufaoturer Types : 0peratlng Leases : ^sset Management ses : Lcng, Medlum & Shcrt Term Leases : 0peratlng Leases Manufaoturer Types : Sales & Leasebaoks : Lnglne Tradlng , Medlum & Shcrt Term Leases : 0peratlng Leases : Sales Leasebaoks : Lnglne Tradlng : ^sset Management : Lcng edlum & Shcrt Term Leases : Lnglne Tradlng : 0peratlng Leases : ^ll Manufaoturer Types : ^sset Management m & Shcrt Term Leases : ^sset Management : Sales easebaoks : ^ll Manufaoturer Types : Lcng, Medlum and Shcrt Term Leases : 0peratlng Leases : ^sset gement : Sales & Leasebaoks : ^ll Manufaoturer nagement : Lcng, Medlum & Shcrt Term Leases es : 0peratl ng Leases : ^sset Management al es & Leasebaoks : ^ll Manufaoturer Types ng, Medlum & Shcrt Term Leases : 0peratlng : ^sset Management : Sales Leasebaoks Leases : ^ll Manufaoturer Types : Lcng edlum Shcrt Term Leases : 0peratlng Leases ^sset Management : Lnglne ne Tradlng : ^ll Manufaoturer Types asebaoks : Lnglne Tradlng : ^sset agement : Medlum & Shcr t Term es : 0peratlng Leases : ^sset ement : ^ll Manufaoturer Types s & Leasebaoks : 0peratlng es : Lnglne Tradlng : Lcng dium & Short Term Leases : ^ll Manufaoturer Types t : ^sset Management Medium & Short Term Leases : 0peratlng Sales & Leasebaoks , Medlum & Shcrt 0peratlng Leases baoks : Lnglne nt : 0peratlng Term Leases anagement rer Types Leases ement ases erm www.elfc.com 4 4 Airline Economics: MRO Global 2011 www.airlineeconomics.co MRO GUIDE M aintenance repair and overhaul (MRO) is big business, worth some $46.9 billion and rep- resents 12-15% of an airline’s cost base. Although many airlines carry out their own line maintenance, 60% of the world’s carriers outsource heavy work in an efort to lower costs, for the 40% who keep line maintenance in-house huge investments in infrastructure, facilities and parts are required it is no wonder then that many airlines have been unable to make it work on a cost efective basis. Some 30% to 50% of MRO work is estimated to be completed by third par- ties. While some airlines are getting out of MRO, others believe they can find econo- mies of scale by bulking up the amount of work they do and keeping MRO in house. Airlines with their own in house MRO argue that it is an integral part of their overall business plan and that a third party provider would not be able to understand the complete operational environment. For third party MROs to expand, in many cases they must adapt to be more than just a maintenance and parts supply partner. They must become more involved in the day to day running of an airline so they know what is going on at any given time and recommend solutions. MROs also need to reduce costs: This can be done by suppliers working together to purchase parts, but more cooperation is needed than is currently taking place, at least in the European market. Some major MROs are cooperating on stafng at vari- ous locations so that they in efect establish a joint partnership. Some major firms have cut jobs at certain bases because they are using employees from a competitor to keep contracts running. In some cases an engineer will be servicing a number of air- MAINTENANCE REPAIR AND OVERHAUL www.airlineeconomics.co Airline Economics: MRO Global 201155 MRO GUIDE craft in a day under contracts with two or more separate MRO providers. The shar- ing of staf has resulted in a large number of engineers flooding the jobs market but it has subsequently drastically cut the cost base of many MRO firms and relieved some pricing pressures for MROs. During 2011 airlines increased capacity once again and MROs have forecast a much improved pic- ture for this year, however the latter months of 2011 are seeing dramatic cuts to sched- ules across the globe as airlines react to yet another sharp slowdown and plot a course for winter 2011/2012 that forecasts passen- ger numbers below that of 2009. Another problem for the sector has always been over regulation. Audits are hurting the industry and, with the FAA trying its best to intro- duce new draconian measures, it can only get worse before it gets better. However it should be noted that the eforts of the Air Transport Association to highlight and deal with the problems may yet bear fruit. The MRO sector is reactionary, fitting services with client needs or perceived needs. The problem is how do you per- ceive the needs of a client, or potential client when the client has no clue what- soever as to what tomorrow may bring? At the close of 2011 and into early 2012, the only thing that is certain is that liquidity, especially within the European sphere, is drying up, banks are laying of staf, busi- ness are having problems raising capital and politicians seem willing to continue kicking the can down what is left of the road to fiscal collapse. Although unemployment within most geographical zones is holding flat or even reducing, this silver lining does not mean that business travel is secure – it is not. Unemployment within the all-impor- tant financial services sector is increasing rapidly throughout just about every region other than South East Asia and Australasia, although even the latter has signs of weak- ness. So as financial services executives either cease to fly or take a one-way trip to Hong Kong or Mumbai, over capacity on major routes is at this time a real and pres- ent danger. It can also therefore be assumed that re-fit orders for aircraft to have re- vamped or extended premium seating, as seen in 2010, is now a thing of the past at least for the next fifteen months and maybe more depending on the possibility and nature of any sovereign defaults within the Eurozone during the same period. Previ- ously an MRO was judged on the service it provided and its client/orderbook, going forward they are now also being judged on the strength of their finances and financial backing. Any company at this point wishing to refinance will have to look to investment which may also lead to MRO market con- solidation, something that would indeed be welcome at this time. What to watch out for in 2012 The acquisition of TIMCO by SR Technics was, and maybe still is, on the cards. This would be a good move for SRT but every- one is a little bit afraid of what is happening in Zurich at the moment. Nobody really understands what direction the Mubadala group wishes to go. Heavy maintenance out of Switzerland with a cost base in Swiss francs (CHF) has been crippling for the MRO. Only timely and decisive Swiss gov- ernment intervention saved the day, but the pressure is still on. It would be a challenge for Mubadala to look for new business opportunities in the near future with SR Technics under pressure. That said oppor- tunities are bound to present themselves. SR Technics is not alone but simply an example, even the mighty Lufthansa Tech- nic is feeling the pressure of late. Everyone is very cautious. The smaller MROs have their market niche and they have a stable customer base, but for the big MROs the current market and 2012 outlook is a chal- lenge at best. The MRO industry outlook currently shows that in 2011, global MRO spend will be up 10.8% over 2010, to $46.9 bil- lion. Global growth is expected to maintain a 3.9% CAGR through 2021 seeing the current $46.9billion industry grow to one worth some $69 billion, within these figures the engine repair market is the seg- ment with the highest growth rate, in part this is due to new aircraft requiring less maintenance as per design specifications. It remains to be seen if this will be the case. "Prav|ous|y an Nßû Was |udgad on Iha sarv|ca |I prov|dad and |Is c||anI/ordar boo|, go|ng IorWard Ihay ara noW a|so ba|ng |udgad on Iha sIrangIh oI Iha|r I|nancas and I|nanc|a| bac||ng." 2011 2016 2021 Engines Compenent Line HMV&Mod $56.4 $69.0 $46.9 CAGR 3.8% CAGR 4.1% $8.7 $21.6 $8.6 $8.0 $9.9 $27.1 $10.1 $9.3 $12.4 $32.6 $12.5 $11.5 2011 ûLû8AL Nßû FûßE0A8T TûTAL VALüE $8 QUICK VIEW FACTS: MRO in 2011 Global MRO spend will be up 10.8% in 2011, to $46.9B. The drivers of the year-over-year change are important to understand. º Fleet change alone drives a 3.2% increase, due to fleet renewal º Utilization increase drives market up a small amount (utilization up 1.5% for the year driv- ing 0.4% for market) º Component increases outpace declines to airframe and line for a small net increase of 1.0% º Engine MRO drives a significant 6.4% increase º And last, labor rates have eased down ever so slightly. MRO in 2011 Fleet 2010 19,675 + Deliveries + 1,076 - Retirements - 396 - Stored - 152 Fleet 2011 20,203 Source: TeamSAI Consulting Source: TeamSAI Consulting Source: TeamSAI Consulting 6 Airline Economics: MRO Global 2011 www.airlineeconomics.co MRO GUIDE 1,000,000 2005 2006 2007 500,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 2008 2009 2010 2011 $15.0 $10.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 $5.0 $0.0 0 ASM (M) Total MRO ($B) 0APA0ITY NAhAûENEhT`8 INPA0T ûh ThE Nßû NAßkET Ih 2010, A8 AIßLIhE8 NAhAûEû 0APA0ITY 0AßEFüLLY 8Y ßEûü0Ihû A8N8 8Y 1%, Nßû 8PEhû 8üFFEßEû A 7.6% ûE0LIhE The global business cycle has a strong influence on MRO activity as it does with most areas of aviation and the last few months of this year could change the 2011 outlook sharply. 2010 marked a notable leveling of capacity. ASMs declined 1% in 2010 (mostly long-haul trafc). But the 1% decline in capacity has taken a dramatic toll on the associated MRO business with 2010’s MRO market down 7.5%. With airlines now able to adjust very quickly to global events and econom- ic changes, it is time that MROs acted in the same manner. For the remainder of 2011 and into 2012, a pattern mirroring that of 2009 will emerge with the world fleet continuing to grow but with aircraft being parked; newer, less maintenance intensive aircraft will show their influ- ence, with the contribution of the older vintages in decline as retirements acceler- ate. Meanwhile, younger vintage aircraft have significantly lower unit costs and in just under two years there has been a sig- nificant shift in the share of the younger vintage fleets which in turn has resulted in the average MRO cost per aircraft per year falling by some US$300,000. 2010 should have been a tipping point as fleet size and utilization increased to meet demand, but the economic health of the globe of late has lead to a return to fleet contraction whilst at the same time MRO costs per aircraft continue to fall rapidly. It is a worrying time indeed for the MROs. So is the MRO sector ripe for in- vestment or is it a bit of a minefield? Overcapacity and OEMs are marching into the aftermarket very heavily and there is the ongoing war between the PMA, DER and OEM strategies. SR Technics managed to pull in some very heavy weight investors to help them in the form of Mubadala Development Company. Airline Economics asked Chris Doan, CEO of Team SAI, what his experience was in trying to secure in- vestment into the maintenance market. “The playing field is somewhat inter- esting,” he says. “It is cautious but pri- vate equity seems to have a fair amount of interest in the sector. They recognise the potential of consolidation, the frag- mentation that exists. That is the key. It is not vying to make it grow because there are a lot of minefields that have to be navigated today but to bring appro- priate businesses together into a bigger platform that has a very purposeful end. It is an interesting play. We are starting to see a little bit of that play out.” Investors do worry that the long-term future for the MRO industry will require mergers but this is also one of the attractions. Investors are looking at the plans around the world to lower fleet ages, lower retirement ages and of course they have taken note of the amount of new aircraft on order and the lower maintenance requirements of the same and they are worried for MRO and aftermarket suppliers. At the same time many have clamoured to invest in new aircraft through funds such as Doric Air Nimrod 1 and 2. Aircraft maintenance will always be required; the question is whether there will be very serious overcapacity in the market in the short-to-medium-term making the investment a prolonged afair? One large private equity investor of note told Airline Economics under condition of anonymity that an MRO can only be a serious prospect in the long term if it is global with strategic hubs that can service just about anything in the air and has serious exposure to South East Asia. And even then the get-in point has to be a good one as the continued investment would need to be dramatic to secure market share. In this market- place, the appetite for this sort of invest- ment intervention is weak, but as MRO providers move into leasing and other new areas, barriers start to remove themselves. Even so Chris Doan; when asked about the interest from private equity (PE) firms, stated: “I would say there has been a serious acceleration in the past 12 months. In fact in the first quar- ter of 2011, in terms of transactions, equalled the entire 2009 – four times the transaction volume.” Unfortunately this very encouraging trend has been stifled by the Eurozone crisis and the global economic melee currently play- ing out on the world stage. When asked if he thought PE firms were looking at the maintenance market because they were hoping for buyouts, Doan replied: “Probably not in the short term. Most "Tha g|oba| bus|nass cyc|a has a sIrong |nI|uanca on Nßû acI|v|Iy as |I doas W|Ih mosI araas oI av|aI|on and Iha |asI IaW monIhs oI Ih|s yaar cou|d changa Iha 2011 ouI|oo| sharp|y." Source: TeamSAI Consulting MRO GUIDE AMOS A STORY OF SUCCESS – “WE ASSESS AMOS AS A TOP LINE PRODUCT WHICH IS ENDEARED AND ACCEPTED AS A FINE TOOL BY OUR USERS,” STATES AIR ASIA READ MORE ABOUT THE WORLD-CLASS M&E SOFTWARE SYSTEM AT SWISS-AS.COM PE firms are going to be buying into a business for three to five years before a turnover, but you do have a number of MROs that are owned by PE today that would be interested in that play. There are a couple of PE firms that own some of the big MRO firms that would typi- cally be interested, after they have had the company for four or five years…” Some of those PE firms that invested in MRO before the crash are now in difculty and wanting to get out of the market but they are now, due to falling values, more or less stranded. Doan says: “Timing into the market is very critical and those that came in five, six or seven years ago with the intention of having a three to five year turnaround got hit pretty dramatically in the world economic downturn. Then the question becomes where are we in the business cycle – at the bottom and starting to grow and how stable is it? Of course the stability question is an interesting one today because we do see airlines and therefore the MRO business being quite a bit more sensitive to events in the world. Even with the earthquake in Japan, there was a huge downturn in airline business and it is going to have an impact in due course on the MRO business. So there is that factor of sen- sitivity that we have never seen before. I think that there is more likelihood of world events causing quick adjustments on airlines to maintain their own profit- ability.” The future for third party MRO market share lies in geography. The Middle East, the conduit for travel between the APAC region and Europe is seen as the perfect location and Turkey seems to hold many aces for the future of third party MRO. Turkish Technic’s new HABOM facility is built with this thought in mind, however it could all come to grief if Turkey were ever to join the European Union (EU) and be subjected to Emissions Trading Scheme (ETS) charges. As it is, and with the EU preoccupied with the survival of current members, it is likely that Turkey will benefit hugely from being at the centre of global trading routes. The facility is so very large and the MRO growth rate in the Gulf region so prolific that one wonders if Turk- ish Technic will be able to fill it at any given time. This facility is enough to cause regional overcapacity in the short term, provided that Turkish Technic is prepared to hire the colossal numbers of engineers that will be required to man the entire facility. Global fleet growth projections show wide variations and give some cause for concern. While North America and West- ern Europe have the largest fleets and MRO markets, the growth areas lie in emerging regions such as Eastern Europe, India and China. While these emerging regions are growing fast, their overall size represents just a fraction of the total market. Nevertheless, the fleet forecast clearly indicates a shift to the east, which is expected to drive a level of parity when combining the Americas, Europe (Western & Eastern) and Asia, including China & India: As a result, the APAC, European and the Americas MRO markets are esti- mated to reach parity within 10 years, due to the population and fleet growth in the APAC region. Over the next ten years, the Asian MRO market will come into parity with Europe and the Ameri- cas. Today the Americas commands 35% of the market; Europe is about 25- 6% and Asia is below that; this will level out, which is a staggering statistic. The growth has definitely shifted East and from an investment standpoint that is where the excitement is going to be over 8 Airline Economics: MRO Global 2011 www.airlineeconomics.co MRO GUIDE $0.0 $10.0 $15.0 $20.0 $25.0 Americas Europe Asia Middle East Africa $5.0 2021 2011 Americas Europe Asia $17.0 $13.7 $11.6 $3.1 $1.5 36% 29% 25% 7% 3% 2.4% 4.7% 6.8% 5.3% 3.5% Market ($B) Market Share (2011) CAGR (2011-21) 29% 30% 30% 7% 3% Market Share (2011) Africa Middle East NOTE: Americas = North America and Latin America & the Caribbean Europe = Western and Eastern Europe Asia = Asia Pacifc, China and India ûßûwTh LEVEL8 ûIFFEß 8Y ßEûIûh wITh ThE hIûhE8T ûßûwTh PßûJE0TEû Ih ThE A8IA/PA- 0IFI0 ßEûIûh. ThI8 ßEALITY wILL ßE8üLT Ih ThE NAJûß wûßLû ßEûIûh8 ßEA0hIhû PAßITY wIThIh 10 YEAß8. MRO SPEND ($M) PER AIRCRAFT Vintage Jan-08 Jan-09 Dec-10 1970’s $2.9 $2.5 $2.2 1980’s $3.0 $3.0 $2.8 1990’s $2.0 $2.1 $1.9 2000’s $0.8 $0.8 $1.1 Grand Total $2.4 $2.4 $2.1 $0.3 $0.5 $0.6 2006 2007 2008 2009 2010 $0.4 Line HMV Average MRO Cost per Aircraft 2011 M i l l i o n s AVEßAûE hNV Ahû LIhE NAIhTEhAh0E 0û8T8 hAVE ûßûPPEû 8IûhIFI0AhTLY ‡ 777 UPWARDS OF 50% LESS THAN 767 ‡ HMV FREQUENCIES MOVING FROM 4-6 TO 8-12 YEARS ‡ A350 AND 787 PROMISING FURTHER IMPROVEMENT the next ten years. The airline MRO industry has been in a state of rapid transition for many years as airlines, seeking cost and ser- vice improvements, have shifted from in-house to outsourced maintenance as the dominant model. The emergence of MRO competitors in low-labour-cost regions has also radically changed the competitive dynamics of the industry, forcing traditional MRO competitors to adapt to ofer more sophisticated services in order to remain relevant. This pace of change then sped-up dra- matically over the past five years as the OEMs entered the market in what could be described as a forceful manner. This OEM intervention lead to increasingly sophisticated support services being ofered, bundled ‘full-service’ oferings, global footprints and relentless ef- ciency improvements. MROs are now also unlocking unrealized value through mergers, acquisitions, alliances and the sale of non-strategic assets. Mean- while, turmoil in the broader aviation industry is creating significant pressure as airlines seek to cut costs, and ac- celerated retirement of old-generation fleets is reducing forecast demand. The rapid growth and evolution of the MRO industry is ofering smarter and more responsive competitors seeking significant opportunities for growth and profitability. Preliminary estimates for the 2011 global MRO forecast indicate a return to positive, albeit small, growth (2.1%) with growth expected to increase slowly at 3.4% CAGR through 2015 and 4.4% CAGR through 2020. That said, 2011 has seen a sharp falling away of busi- ness over the past six weeks to October 20 and the preliminary growth figure could well fall. But total global MRO is just starting a new growth cycle with large numbers of narrow and wide body Source: TeamSAI Consulting Source: TeamSAI Consulting S o u r c e : T e a m S A I C o n s u l t i n g MRO GUIDE AMOS A STORY OF SUCCESS – “IMPACTING OUR BUSINESS POSITIVELY IN TERMS OF PROCESS OPTIMISATION AND INCREASE OF LABOUR PRODUCTIVITY,” SAYS AUSTRIAN AIRLINES READ MORE ABOUT THE WORLD-CLASS M&E SOFTWARE SYSTEM AT SWISS-AS.COM 2007 2008 2009 Africa 2010 2011 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 Middle East APAC North America Europe Central/South America N u m b e r o f A i r c r a f t Year wûßLû FLEET 8IZE 8Y ßEûIûh - Ih Ahû ûüT ûF ThE FIhAh0IAL 0ßI8I8 Source: TeamSAI Consulting 10 Airline Economics: MRO Global 2011 www.airlineeconomics.co MRO GUIDE Narrowbody 60% Widebody 23% Regional Jets 17% 2010 19,675 2021 28,591 2.7% CAGR 3.5% CAGR 2011 20,203 Narrowbody 60% Widebody 23% Regional Jets 17% Narrowbody 57% Widebody 24% Regional Jets 19% Lûhû TEßN FLEET ûßûwTh ßENAIh8 8ûLIû Latin America & Caribbean Asia Pacifc Africa Eastern Europe North America 2011-2021 Regional CAGRs Western Europe Middle East China India 3.2% 3.5% 4.4% 4.9% 5.7% 8.4% 9.1% 9.6% 1.0% 8üT VAßIE8 0ûh8IûEßA8LY ßEûIûh 8Y ßEûIûh 2001 Historic MRO Market and Fleet Size $42.2 2002 2003 2004 2005 2006 2007 2008 2009 2010 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 0 5,000 10,000 15,000 20,000 25,000 $37.8 $36.1 $37.0 $38.3 $38.8 $41.0 $45.1 $45.7 $42.3 1 6 ,0 3 0 1 7 ,2 0 6 1 7 ,9 0 3 1 7 ,6 2 7 1 8 ,8 1 6 1 9 ,3 3 0 1 9 ,6 7 5 M R O M a r k e t ( $ U S B ) F l e e t S i z e MRO Market Fleet aircraft requiring heavy maintenance checks in the months and years to come. So taking overcapacity in the market to one side, there should be a steady growth in the number of aircraft being maintained during this decade. MROs find themselves having to re-design the way they do business, from how they handle and agree a contract with a client to how they maintain aircraft, en- gines and parts and flow them through on a shop visit – All in the name of cutting turnaround times while also cutting cost to the operator at the same time. This is something that to an out- side investor would seem worrying as market pressures are so extensive in the aerospace aftermarket that MROs are being forced to enhance their services while also reduce the cost to the client on what seems to be an ongoing basis. The MROs are in efect doing more for less with less and thus many have been cutting their cost base and redesigning their facilities to cut turnaround times. Most long-term forecasts, be they OEM, MRO or consultant forecasts, are all relying on one thing: Population growth and the growing middle class. It is these factors which drive long term aviation forecasts across the board with MRO and the aftermarket being no exception. Fleet growth forecast at 3.5% CAGR (compound annual growth rate) to 28,591 in 10 years with ASM growth set to increase at 5.3% CAGR over the same period with aircraft utilization rates going into October 2011 remaining high. As of August 2011, fleet growth was on pace for the year with the global fleet standing at 20,617, up 2.0% for the year thus far from a 2011-21 CAGR forecast of 3.0% in Jan 2011, this in part is due to the continued expansion of the North American fleet. Source: TeamSAI Consulting Source: TeamSAI Consulting To discuss any of your maintenance and engineering needs, please contact:- email: [email protected] web: www.monarchaircraftengineering.com or call us on: +44 (0)1582 398644 the height of excellence since 1967 Heavy, Light & Line Maintenance Monarch Design Services - Part 21j Engineering Services - Part M Technical Training - Part 147 Technical & Safety Consultancy Component Repair Spares Trading For over forty years Monarch Aircraft Engineering has gone about its business providing first class service to major airlines around the world. Today, we continue to provide valued solutions to the aviation industry. 12 Airline Economics: MRO Global 2011 www.airlineeconomics.co MRO GUIDE these services THE BENEFITS · Provides total cost advantage · Ofers more flexibility to operators · Shift risks and costs away from airline · Gives independent MROs opportu- nity to form credible network with extensive capabilities · Regulation could temper outsourc- ing growth somewhat, but large players will adapt The most successful MROs will be those able to ofer a full array of services across all aircraft types ofering total maintenance through a long term partnership. This is the key for MROs independent from OEMs. The real benefit of opting for an independent third-party or in-house provider is data share. If an MRO is able to service a mixed fleet at any time in any zone with one service provider, that will be a significant benefit as the provider will share data at all times over all types that will also embrace the latest cost saving technologies be they PMA, DER or whatever is needed. This provides a cost aftermarket remaining independent of the OEMs and this will lead to lack of data and choice for the operators on a scale not imaginable just ten years ago. Once the OEMs control the data then there is no going back. This is why there has been a scramble for maintenance providers to be a part of the OEM pro- grams, which has served to accelerate the whole process. Airlines are going to ask in ten years’ time just how this has happened, just as the lessors are today asking many questions about their future handling of aircraft and maintenance reserves on the same. The key for the future will be the control of price escalation, but without viable alternatives to the OEM programs, the airlines will not be in a position to do a great deal other than pay. TECHNICAL SUPPORT SERVICES · Includes all “back ofce” functions such as engineering, planning and supply chain · Early stages of the emergence of Tech Services outsourcing · Lately, larger carriers are recogniz- ing the leverage of outsourcing The bottom line for the MRO sector The operator will continue to: · manage core operations (flying) · outsource maintenance as it choos- es, basing outsourcing decision on key guidelines MROs therefore must: · identify new market needs and value added services that support airline requirements · reinvent the business model to position itself to meet needs · develop business processes to opti- mize service Key decisions guidelines for choosing maintenance services/outsourcing  Labour  Material  Terntime  Performance  Quality The mainstay for MROs remains the global narrowbody fleet, this will continue to expand for the foreseeable future providing increasing amounts of business over the long term: Or at least that is the overriding message from the MROs. The truth of the matter is that MRO business will not increase over the next five to ten years on anything other than the current expanding narrowbody fleet. Aircraft age ranges and the efect on the maintenance market over the next five to 10 years, in the US especially where there are many MD and 757 air- craft, is going to be monumental. Once they are removed from the market and the new aircraft come online the MRO will lose business. The phenomenon of new aircraft taking less maintenance re- quirement leads to a very black market for the Americas especially over the next ten years with very low growth. What can be said for global MRO as a whole is that new airframes in produc- tion will require less maintenance while the new engines, which will cost more to maintain, are on the whole being captured by the OEMs by design with the same scenario applying to compo- nents also. Thus it is hard to see the 0% 20% 30% 40% 50% HMV (Check) Engines Components Line Tech Support 10% 70% 80% 90% 100% 60% Note: Outsourced MRO includes work outsourced to independent MROs or to OEMs but not work done by operator-afliated MROs ûLû8AL ûüT8ûüß0Ihû Source: TeamSAI Consulting www.airlineeconomics.co Airline Economics: MRO Global 2011 13 MRO GUIDE efcient service that an operator will be at pains to refuse. This is the blunt truth of MRO moving into 2012 and it is a truth that for many will require either expansion, acquisition or invest- ment. There is no middle ground and although an MRO may inform you that they are secure in their sphere of influ- ence, if they do not meet the aforemen- tioned criteria, then they are operating on borrowed time as globalisation of the aviation aftermarket speeds. An MRO provider must be global particularly with carbon taxes arriving in many corners of the globe and fuel prices con- tinuing to rise on a long term basis. An operator cannot aford to fly an aircraft across the globe for maintenance checks in the future, this is the silver lining for the independent MROs. The operators and OEMs alike will in the end need them. As Chris Doan states: “It is more about firms setting up partnerships within existing MROs in the growth regions. You are not seeing opportunity for a LHT or SRT to go in and set up, but there is an interest in joining forces in joint venture with MRO shops in the Middle East, including India and China. That is the way it is heading as it really brings experience in with local inter- est and creates a very robust business model for the MRO. Four basic strategies for MRO growth LABOUR · Capitalize on outsourcing needs of airlines · Develop expertise in core activ- ity areas and outsource non-core activity · With upward wage pressures, focus on efciency and productivity · Actively develop new talent as a Comparison of popular Narrowbody and Widebody aircraft order books Manufacturer Aircraft type Model Aircraft in service Backlog No. of airline operators No. of aircraft on operating lease (approx) Production years (to date) Boeing 737NG -700 1138 501 78 380 14 -800 2037 1445 130 957 14 777 300ER 247 198 23 114 8 Airbus A320 A319-100 1217 254 103 520 16 A320-200 2302 1756 210 1193 23 A321-200 528 214 64 214 15 A330 -200 377 256 65 191 13 Relationship Based Inventory Tolerant Asset Utilization Not a Focus Little Accountability Limited Competitive Threat Metal & Mechanical Western Focused Performance Based Inventory Tolerant Turn-Around Time Prioritized Accountability for Results Global Competition Composites & Electronic Eastern Focused ThE FüTüßE ûüTLûûk hûw ThE PßIûßITIE8 AßE 0hAhûIhû Fûß AIßLIhE8 - ThE FüTüßE ûüTLûûk 8ü8IhE88 EXPE0TATIûh8 AßE 0hAhûIhû ßAPIûLY hedge against a labor shortage VALUE CREATION · Implement cost reductions and new efciencies · Adopt supply chain innovations · Focus on reliability & dependability · Embrace new, smart aircraft sys- tems · Manage and showcase eforts with appropriate metrics DIVERSIFICATION · Expand market oferings · Expand geographical reach · Pursue full-service capabilities · Create strategic OEM alignments · Balance portfolio with counter- cyclical businesses MERGER AND ACQUISITION · Identify value-oriented innovations that contribute to airline customer’s cost focus · Focus on the supply chain & distri- bution channels for components & material · Leverage JVs and alliances Source: TeamSAI Consulting 14 Airline Economics: MRO Guide 2011 www.airlineeconomics.co MRO GUIDE using so many systems. They are now adding 787s to their fleet with all the loadable software components and with all of the headaches that new genera- tion aircraft can have. The two airlines which merged, would need to merge the acquiring airline’s data into the other airline’s older systems or vice versa even before they can even think about an integrated approach for future cost sav- ings. In fact it is reasonable to assume that such a large airline would not be in a position to move forward with an integrated fleet management approach for at least a decade. That said, Luf- thansa too operates diferent systems and is actually running with SAP/ point solution, but it has everything under control and information flows between MRO shops freely. But this is a system that requires a huge amount of investment both in time and resources with many people stafng the same. Lufthansa is an example to American Airlines but if AA in the future wants to be able to manage its mixed fleet more efciently, then it will have to invest very heavily in bespoke systems that can create an in-house crossover of data all running on one platform. This cost over the medium-to-long term will erase all gains made through reduced aircraft/ engine prices at point of sale. Our heartfelt thanks goes to Team SAI for the provision of data and intel- ligence used within this feature and throughout this publication. delivered with the aircraft type, which for mixed fleet airlines, however, loses all the benefits of having an integrated system. It would be much easier if the OEMs concentrated on building hi-tech aircraft and provided hi-tech structured information, and would not be engaged in entering the market of providing IT systems.” The American Airlines order of September 2011, which consisted of huge numbers of Boeing 737 Max and Airbus A320neo aircraft, begs the ques- tions what the future will be like for the airline when it comes to maintaining and tracking the needs of these aircraft when comparable data between the two fleet types will not be easy to come by. If the two systems don’t look exactly the same, maintaining these fleets will be a challenge. When Airline Economics looked into the fleet management systems of a large US airline, which subsequently merged, it became clear that there might be a need to become increasingly nervous about their future maintenance abilities. The US is one of the largest potential markets for fleet manage- ment systems but many still use Maxi Merlin’s outdated legacy systems. One side of the airline was using one legacy system and the other side was using a diferent system; the shop floor was using another system, and for compo- nent control they were using Oracle and so on. Just imagine the implications of At this point, the question needs to be asked: What will happen to operators who are currently ordering mixed fleets of aircraft virtually free of charge on the back of signing aftermarket contracts? For now, it seems that unless there is a change of policy at the OEMs, the operator will not be able to compare aircraft data at all and will not have the in-house skills to deal with aftermarket problems in a cost efective manner. Thus the operators have in efect helped speed the process of the OEMs control- ling their fleets. One business on the frontline with a headache on the subject of OEM incur- sion is Swiss Aviation Software. When asked about the efect on his business of OEM additional services, Ronald Schaeufele, CEO of Swiss Aviation Software, which owns industry leading IT product AMOS, stated: “The OEMs produce aircraft and that is their core business. Apart from that, they provide additional services, such as systems for point solutions. The problem for us as a software vendor is that some of these solutions are open to connectivity while others are not. I have just come back from a customer that was asking me if Amos could connect to a particular sys- tem from Airbus, but Amos cannot and it is obvious that this is not an Amos- unique problem. The Boeing toolbox is open to grab information from and can be linked with Amos to some extent. If you are a customer with the right market power, you can go to Boeing and ask for all the manuals out of the toolbox and load it into Amos. For smaller customers with mixed fleets the financial implications might be too tough to choose this way.” He adds: “When Airbus delivers a new aircraft, the documents delivered with the aircraft – including the component list of the aircraft – are completely dif- ferent from those Boeing delivers. The two manufacturers don’t seem to com- municate on this issue; they don’t seem to be preoccupied with the data format of information they provide. They pro- duce hi-tech aircraft and do not focus too much on data format standards. Sometimes they provide IT systems bundled with a new aircraft. Airlines with 787s on order, for example, might profit from an IT management system Knowledge KPMG is a leading provider of cross-border advisory services to the international aviation finance and leasing sector. www.kpmg.ie/aviation © 2011 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. To find out more about how we can help you, please contact Tom Woods on +353 1 410 2589 or [email protected] 16 Airline Economics: MRO Global 2011 www.airlineeconomics.co DATA SYSTEMS M any airlines and main- tenance companies within the aviation sector know all too well from past mergers and acquisitions and/or internal revamps that data migration is a huge task and one that cannot be undertaken lightly. The task of data migration can be high in both cost and labour hours, and can provide mixed results in the first instance until staf train- ing and troubleshooting processes start to take hold. One company that has been able to get around this is Swiss Aviation Soft- ware (Swiss-AS) which uses an innovative and advanced migration tool that eases the data transfer from the legacy systems to their system. Swiss-AS has gained substantial knowledge over a number of years in per- fecting the best possible data migration procedure and the firm uses that same knowledge to assist customers in mak- ing the right decisions when it comes to planning a data-transfer project. Many mainstream Enterprise Resource Plan- ning (ERP) system providers have not entered the aviation maintenance and engineering sector primarily because the system optimises all the processes in an engineering environment, which means it has to be highly bespoke due to the complex nature of the business. It is also not a high volume market, which is prob- ably why ERP system providers have not successfully expanded into it. This leaves the market open for targeted operators such as Swiss Aviation Software, Trax and Lufthansa Systems. Each of these companies has a reputation for products that are based upon best practice built up over a number of years and with cli- ents on a case-by-case basis. Swiss-AS chief executive Ronald Schäufele says the business of providing data management products is one that goes well beyond the initial agreement, installation and training processes. “We are open for any additional fine tuning and reshaping of functionality and have a real relationship with our customers – it is not just a black box, it’s a community, we speak to each other,” he says. “We optimise and adapt to new tech- nologies to help move the customer’s business forward. This often results in reducing manpower because we can prove that use of our system will be of benefit for new customers. They see the value that the integration of the systems brings, such as the ability to have infor- mation at your fingertips – for example when users see with one right click what logistics is doing and thereby prevent that something in the planning is going wrong. There are also minor functional- ities where customers can send messages within the company – much like an inte- grated email system – where you can look at one document to see all queries every- body has raised over a set period. It brings the departments closer to each other.” The decision driver for system inte- gration for an airline, operator and/ or maintenance company is never the same. Some companies will concentrate on necessity while others will be look- ing to increase margins. When asked the question of how a system provider is able to measure the benefit to a customer Amalgamating two or more data systems is a costly and time consuming affair – even though a company may save time and effort in the long run. So how have Swiss Aviation Software got round this thorny problem? Who combines the data? www.airlineeconomics.co Airline Economics: MRO Global 2011 17 DATA SYSTEMS 18 Airline Economics: MRO Global 2011 www.airlineeconomics.co DATA SYSTEMS in time and money only, Schäufele is unable to give an accurate response in terms of figures. “It is very difcult to quantify the benefit,” he says. “We have benchmarking figures from various business cases of customers who have been reviewing what they have achieved due to implementing a new system, but we are in such a dynamic environment that it is not always possible to compare what firms can save after two or three years with what they initially formulated in their business case. Because the envi- ronment will have changed so much over the years. But of course our customers are doing more business with less cost.” Schäufele added that it is very hard to quantify the benefits in a general way because a customer’s increase of efciency heavily depends on the its productivity prior to the software implementation project. The final comment reflects the reality of the situation for maintenance and engineering firms – it is a matter of doing more business at less cost. UNDER PRESSURE The maintenance sector is under terri- ble pressure today to lower turnaround times, reduce costs and at the same time provide an enhanced level of all-round service to the customer. This against a backdrop of airlines parking aircraft again as passenger numbers fall and increased competition from Original Equipment Manufacturer (OEM) after- market services. OEM’s incursion in the aftermarket has been highly successful in the extreme with most agreements coming at the point of sale for an air- frame or engine. For data management firms, OEM agreements are providing a headache because of the lack of data share that the OEMs will allow. Under a usual data management and integration agree- ment, customers are provided with a wide spectrum of generic interfaces which promote an easy integration of the system into the customers’ existing system environments. However, this is not always possible with some OEM aftermarket agreements. When asked if the OEM incursion has had an efect on his business, Schäufele said: “Yes, I have a headache. The OEMs produce aircraft and that is their core business. Apart from that, they provide www.airlineeconomics.co Airline Economics: MRO Global 2011 19 additional services, such as systems for point solutions. The problem for us as a software vendor is that some of these solutions are open to connectivity while others are not. I have just come back from a customer that was asking me if Amos could connect to a particular system from Airbus, but Amos cannot and it is obvious that this is not an Amos-unique problem. The Boeing toolbox is open to grab infor- mation from and can be linked with Amos to some extent. If you are a customer with the right market power, you can go to Boeing and ask for all the manuals out of the toolbox and load it into Amos. For smaller customers with mixed fleets the financial implications might be too tough to choose this way.” He adds: “When Airbus delivers a new aircraft, the documents delivered with the aircraft – including the component list of the aircraft – are completely dif- ferent from those Boeing delivers. The two manufacturers don’t seem to com- municate on this issue; they don’t seem to care about the data format of informa- tion they provide. They produce hi-tech aircraft and do not focus too much on data format standards. Sometimes they provide IT systems bundled with a new aircraft. Airlines with 787s on order, for example, might profit from an IT management system delivered with the aircraft type, which for mixed fleet air- lines, however, loses all the benefits of having an integrated system. It would be much easier if the OEMs concentrated on building hi-tech aircraft and pro- vided hi-tech structured information, and would not be engaged in entering the market of providing IT systems.” The problem of OEM data share will be compounded where an airline orders a mixed fleet with aftermarket agreements attached; the competition between the Airbus Neo and the Boeing Max – for air- lines such as American Airlines that have ordered a large mix of Boeing and Airbus aircraft – may have trouble in five or six- years when they need to have comparable data between the two fleet types. “If the two systems to maintain these fleets don’t look exactly the same, it presents a prob- lem,” says Schäufele. Another factor suppressing the growth of the data management sector currently is the lack of cash at many airlines across the globe which prevents the implementation of modern, cost-saving systems, which in turn afects the long-term bottom line. This factor is however a very serious mat- ter when one considers airline mergers and acquisitions and the lack of cash that carriers have to complete a merger. CONFUSON IN THE RANKS “The US is one of our biggest poten- tial markets but they still use outdated legacy systems,” says Schäufele. “I was speaking to the technical staf from a big airline, where one side of the airline was using one legacy system and the other side was using a diferent solu- tion; the shop floors were using a third system, and for component control they were using an ERP system and so on. Just imagine the implications of using so many systems. Imagine they are now adding 787s to their fleet with all the loadable software components and with all of the headaches that a new generation aircraft will produce. This will be a real challenge for them. Let’s further develop this worst case scenario: The airline then needs to merge with another airline with a similar scattered system landscape and the acquiring airline’s data needs to be transferred into the other airline’s older systems or vice versa. It is difcult to believe in an integrated approach in such an environment.” In the past data management com- panies have concentrated on their own regional sphere of influence; Swiss-AS has had particular focus on Europe, while Trax concentrated on the Ameri- cas, with the two fiercely competing in the Middle East and the Asia Pacific regions. However, Swiss-AS is moving in on the American market in a big way. Airline Economics asked Schäufele what has changed: “In the past, we mainly focused on Europe, some parts of Africa and the Middle East and previously we were not really prepared to go beyond in markets like Asia or Asia-Pacific or in the US. If you want to expand your business into the US, you need to have a separate legal entity over there and you need to have people working there that speak and think like they do. “So we spread our wings to the US in September/October last year [2010] and have immediately generated a number of leads. We have signed a deal with South- ern Air and we hope to sign in a couple of weeks with a second one and a third is in the pipeline. We want to have this project finished in such a way that we can send a prospective customer to Southern Air to see what we have achieved there. We want to make sure that Southern Air is happy with the system and exploits the full potential of Amos and can therefore be used as a good reference site.” Getting into the US market is no easy task however, which is why Swiss-AS has taken the decision to launch a joint ven- ture with Lufthansa Systems Americas. Swiss-AS is now represented in Miami, Florida, as a business unit within Luf- thansa Systems Americas. Schäufele says: “Swiss-AS found in Lufthansa Systems Americas the ideal partner for its strategic expansion plans to market Amos in the Americas. While being the market leader in Europe and having a substantial market share in other parts of the world, Swiss-AS now intends to intensify its presence in the US market. The potential of the US mar- ket is well-known to the MRO software industry. Many airlines in the US cur- rently use outdated MRO software and will sooner or later screen the market for best-of-breed, fully integrated MRO software solutions. “Miami seems an excellent choice to Swiss-AS since the city is the link between South and North America and at the same time a gateway destina- tion to the rest of the world. Swiss-AS was looking for a partner and found in Lufthansa Systems Americas the ideal set-up for its strategic expansion plans. The American subsidiary of Lufthansa Systems has been based in the US for more than 15 years and has long-stand- ing relationships and experience with DATA SYSTEMS "Tha poIanI|a| oI Iha ü8 mar|aI |s Wa||-|noWn Io Iha Nßû soIIWara |ndusIry. Nany a|r||nas |n Iha ü8 curranI|y usa ouIdaIad Nßû soIIWara and W||| soonar or |aIar scraan Iha mar|aI Ior basI-oI-braad, Iu||y |nIagraIad Nßû soIIWara so|uI|ons." 20 Airline Economics: MRO Global 2011 www.airlineeconomics.co DATA SYSTEMS airlines in North and South America. Amos has been positioned within Luf- thansa Systems Americas as a business unit that will be fully dedicated to Amos- related activities. This approach enabled the US Amos team to start its business right away while profiting from the infrastructure, sales distribution chan- nels and good reputation of Lufthansa Systems Americas. Lufthansa Systems Americas has many years of experience in implementing software solutions in the aviation business. By co-operating with Swiss-AS, the aviation IT pro- vider complemented its portfolio for the American market. The Amos business unit will focus not only on sales but also on project management and consulting.” THE BIG SQUEEZE The business in the pipeline for Swiss-AS is impressive and is telling. In such uncer- tain times, airlines and MROs alike are desperate to reduce costs and gain what business is out there. “We have signed a considerable number of contracts this year,” says Schäufele. “We went through a period where we were pushing ahead with 30 potential customers. Nine have signed so far, that is to say we are closing the deals now, which we have worked on for months, sometimes even years.” But this is only one side of the coin, the other is the needs of customers to drill even more out of existing contracts with Swiss-AS. “At the same time we have large-scale developments in process. Times have changed and we always have to invest in keeping the system state-of- the-art. We continuously screen trends in the industry and add/enhance the functional scope. We are now optimising and reorganising the planning of main- tenance events in Amos. Over years we have been adding functions to the main- tenance planning module, while adding complexity and diversity. Now we go one step back and consolidate the existing business functions prior to adding new ones. The same logic rules shall be applied to all functions of the maintenance plan- ning module,” says Schäufele. He adds: “Another big step forward will be the introduction of a rule engine in Amos, which is a graphical way to define complex behaviours of programmes in the system, such as the hierarchy of con- tractual terms in the program Contract Management. Thanks to this new feature, clients will be able to do visual program- ming in Amos via drag and drop. They will have a tool at hand that allows them to visualise contractual rules. Swiss-AS is in the process of introducing this rule engine in all areas where the system deals with very complex behaviours.” IN THE PIPELINE “We have a huge amount of develop- ment in the pipeline for pure MROs. One of these developments is devoted to the subject ‘material flow tracking’. Currently material is properly tracked when it is inside the customer’s store or installed/ removed from an aircraft. The move- ments between store and aircraft are not really monitored. In future you can define per part number tracking points, which indicate in the system where the part number is moving through your organi- sation. The client will have the possibility to define an unlimited number of flows per component that they want to control. We are developing this workflow together with our latest customer. You see, Swiss- AS is definitely pushing Amos into the MRO arena – being a high-yield market. Also for MROs have we introduced the possibility that third-party maintenance providers can work with mixed author- ity/certification set-ups while the system will always produce the right type of cer- tificate dependent on the ownership of the component/aircraft. This need arose because we have environments in our community where MRO providers work for diferent companies under diferent certification rules. “Many more projects could be men- tioned here. I just want to refer to one other project in this context. Currently we have an approval rule system in place for orders. In future, all Amos users can define at whatever place in the system which kind of approval workflow they want to imple- ment. Since approval workflows are so diferent between countries and cultures, we have agreed that the approval workflow system needs to be completely generic and that it must be adjustable to the customers’ needs. All of this will be released between now and the end of next year.” UP FOR THE FIGHT As companies such as Swiss-AS concen- trate more on pure MRO and compete more heavily against one another, they involve themselves more heavily in a market under great pressures. It would be folly for the aviation data manage- ment system providers such as Trax and Swiss-AS to devalue what is currently a highly investable arena that looks set for strong and rapid growth. Schäufele sums up his thoughts in a manner that would impress any investor. “We have grown over the past couple of years with a growth rate of 20–25%, but we do not want to become the biggest. Swiss-AS just wants to keep the optimum balance between acquiring new custom- ers versus maintaining what we have already achieved. At the same time, we are committed to continuously investing in the product in terms of technology and functionality. We think it can turn sour if we start selling more aggressively and sell at too high a premium. This is not good for the customers and it is also not good for the supplier. The only disadvantage is our connection to the Swiss franc. Our cost base is mainly in francs. Fortunately, most of our income is still in Swiss francs. Since the very beginning we were very cautious not to have the currency risk on our shoulders and customers were more than happy to have Swiss franc contracts because they expected this currency to be more stable with lower inflation rate risk. Many airlines were really pushing to sign franc contracts. Currently we have more than 100 customers and we still sign Swiss franc contracts. The ones we sign in US dollars at the moment don’t have a real big negative impact on us, as we try to have the cost basis of those contracts in US dollars. We would like to charge everyone in Swiss francs, but we had to recognise that some customers want to sign US dollar or euro contracts only.” "wa hava groWn ovar Iha pasI coup|a oI yaars W|Ih a groWIh raIa oI 20-26%, buI Wa do noI WanI Io bacoma Iha b|ggasI. 8W|ss-A8 |usI WanIs Io |aap Iha opI|mum ba|anca baIWaan acqu|r|ng naW cusIomars varsus ma|nIa|n|ng WhaI Wa hava a|raady ach|avad" www.airlineeconomics.co Airline Economics: MRO Global 2011 21 DATA SYSTEMS For over 20 years Swiss Aviation Soft- ware (Swiss-AS) has been providing a range of bespoke management sup- port services to the aviation sector. In order to be able to give customers the most benefit from the implementa- tion of Amos, Swiss-AS ofers a full package of services covering the whole range of services and thereby guaran- tee a successful and reliable product performance. Ranging from initial requirement studies to system instal- lation, from user training to consulting and continuous support. Amos Opera- tion Services (AOS), a service ofered by Swiss-AS, covers a predefined set of tasks related to the administration of the application Amos and the underly- ing database. Swiss-AS provides strong leader- ship throughout the project to ensure the implementation stays on time and on budget, while fulfilling the custom- ers’ expectations. Swiss-AS helps its customers to get the most out of their Amos investment by providing reliable consultancy services not only during the implementation project, but also for the complete life cycle of Amos, including management consulting, process analysis and system audits. This process includes a comprehen- sive support package through an Amos Online Support tool and Amos Online Documentation. Over the past years, Swiss-AS has gained a high reputation around the world, which is the biggest diference from five or 10 years ago; there are fewer names left in the market today acting on a global level. Growth is being driven by reputation and word of mouth. Combining 20 years of innova- tion and excellence in the area of IT/ MRO, Swiss-AS has become a fixture in the MRO software market and the i ndustr y-l eadi ng maintenance man- agement system in Europe and beyond. Since the late 1980s the mainte- nance and engineering system Amos has been setting the standards in a highly specialised market segment and has attracted more than 100 cus- tomers from all over the world. Its solid customer base ranges from pure operators of all sizes, major low-cost, regional and flag carriers to large airline groups and MRO providers. Ryanair has been a customer since 1997/98. Lauda-air being one opera- tor of the Austrian Airlines group joined the AMOS community in 1994 while the entire Austrian Airlines group came on board in 2002. Alitalia is a big customer, with 130 aircraft. Swiss is also becoming one of the biggest customers because it is migrating its data into Amos for its entire fleet. Amos lists GOL in Brazil, and AirAsia in Kuala Lumpur, and it has just signed with South African Airways. Swiss-AS helps customers to successfully manage the complex requirements of a modern aircraft fleet whether in the context of air- lines, MRO providers, pure operators or flight schools. In its fully integrated software package Amos delivers all the required tools to meet the demanding requirements in the fields of mainte- nance, engineering and logistics. Today, more than 100 customers in four continents run Amos applications – and as customers actively participate in the further development of soft- ware, the scope of functions in Amos is increased with every new customer. Needless to say, Amos completely ful- fils the airworthiness standards of EASA and FAA and is continuously updated accordingly. "0omb|n|ng 20 yaars oI |nnovaI|on and axca||anca |n Iha araa oI IT/Nßû, 8W|ss-A8 has bacoma a I|xIura |n Iha Nßû soIIWara mar|aI and Iha |ndusIry-|aad|ng ma|nIananca managamanI sysIam |n Europa and bayond." Swiss Aviation Software and its Amos product ENGINES 22 Airline Economics: MRO Global 2011 www.airlineeconomics.co E ngine original equipment manufacturers (OEMs) and maintenance repair and overhaul firms (MROs) are together responsible for the performance of an asset, which is a prerequisite to airline reliability, aircraft availability and fuel burn – the bulk of an airline’s cost base. It also represents the largest share of maintenance spend. It has often been said that the only real low-cost shop visit is the one you don’t have. But air- lines are getting smarter at stretching time on-wing by investing in a variety of tech- niques and activities to enhance engine life. These include regular engine washes to ensure the working parts inside the engine are as clean and contamination- free as possible, as well as asking pilots not to use full throttle unless strictly necessary due to load, airfield altitude or atmo- spheric conditions. According to engine manufacturer CFM International (CFMI) all these techniques can increase time on- wing by 10% to 20%. Growth rates in Asia (especially China and India) will be high over this decade. The active jet engine fleet in Asia-Pacific (including China and India) will grow from under 10,000 at the start of this decade to some 16,000 in 2020 – that’s an additional 6,000 engines to support and maintain. This is said to be larger than the absolute engine fleet growth in North America and Europe combined during the same period. Engine MRO suppli- ers and others in the related supply chain who have not already developed cor- porate, capacity, customer support and logistics strategies for the Asia region now risk losing out on global market share by some margin. Asia-Pacific accounts for almost 50% of the absolute growth in engine MRO spend and the region will be a larger engine MRO market than North More MRO for your money MRO Global looks into the maintenance providers market and outlines some of the options available certain engine types. ENGINES www.airlineeconomics.co Airline Economics: MRO Global 2011 23 availability from OEMs. So it is expected adoption of PMA will recover and increase, especially in the airframe components and interior parts of the aircraft. ENGINE OEMS LEAD THE AFTERMARKET In the mid-1990s, engine OEMs embarked on a strategy to capture the total maintenance value as part of their product lifecycle. The OEM approach was simple: · ConlroI maleriaI µrices, which are a significant portion of maintenance costs. · ConlroI inleIIecluaI µroµerly. The proposition they made to the air- lines was logical: · Provide µrediclabIe cosls (µower-by- the-hour deals). · Remove assel ownershiµ cosl of sµare parts. · Oßer exµerlise lhal oµeralors cannol easily maintain on their own. · Provide singIe source for aII mainle- nance needs. · Sµread lhe inveslmenl in exolic looI- ing over a larger base. · Manage lhe comµIexily. The effect on third-party/airline MROs: · Comµonenl and airframe OEMs have adopted similar models · Comµonenl and airframe OEMs have developed less maintenance-intensive equipment, which they control closely · Labour arbilrage aµµIies µressure lo third-party/airline MROs The result: If you aren’t an OEM MRO, you need a strategy to align yourself to deliver maximum value and stable costs to the customer over the long term. On newer engine models, engine OEMs have a competitive advantage over other third-party suppliers. OEMs are able to sell long-term MRO support deals at the point of aircraft purchase and they control access to technical data, documentation and many parts. They can also be more flexible on material µricing wilhin lheir MRO oßers, shouId they choose to do so. As evidence of the market strength of OEMs, one just has to observe the market penetration of lhe RoIIs-Royce TolaICare oßer on ils MRO. Between 2007 and 2009 airlines parked many old maintenance-intensive aircraft, such as the 737 Classic and MD aircraft, and reduced overall aircraft use to better match capacity with demand. In 2010 aircraft were moved back into service at pace, but now in the latter half of 2011 schedules are being cut once more and the general global market slowdown will once again see less aircraft in the air for the next six to 12 months. Red ink is again flowing across the balance sheets of airlines across the globe and so cost reductions are at the vanguard of thinking, and airlines have sought many ways to reduce their engine MRO spend. Examples include: a reduc- tion in work scope for shop visits; where possible, more repairs and less replace- ment of expensive parts; deferment of the replacement of expensive life-limited parts and use of short-stub engines; greater leverage of spare or surplus engines in lieu of an overhaul; and, of course, seeking renegotiation of MRO contracts. All these changes in behaviour have meant engine overhaul suppliers, depending on their engine and customer portfolio, have seen revenues decline on average by 10–15%. Ironically, the recession has seen the use of PMAparts decline by 17% since the 2007 peak. There are many reasons for lhis, incIuding: airIine use of bußer slock rather than buying inventory; more repairs rather than replacement of parts; parking and cannibalisation of the mature aircraft fleets where PMA had a higher penetra- tion of material content; reduced airline resources available to the PMA approval process; and, last but not least, OEM defensive measures. This latter point can be illustrated by GE/CFMI’s agreements with potential adopters/users of PMA, the independent suppliers such as Aveos and ST Aerospace. This has successfully given GE/CFMI greater influence over the parts/ material supply chain. Despite this, PMA remains a strategic tool for airlines to use in the face of increasing prices or poor parts America and Europe by 2020. This is driven not just by the fleet growth, but also by the age demographics of the fleet already in operation. · Engine cosl µer hour conlinues lo climb with each passing year. · IIeel ralionaIisalion (2uu8-2u1u) helped to curtail average total spend per engine. · However, lolaI oµeraling cosls are coming down when considering the improvement in fuel consumption on newer engine types. The recent recession and global slowdown during 2u11 has aßecled sµend on engine "0hangas |n a|r||na bahav|our hava maanI ang|na ovarhau| supp||ars, dapand|ng on Iha|r ang|na and cusIomar porIIo||o, hava saan ravanuas dac||na on avaraga by 10-16%." 24 Airline Economics: MRO Global 2011 www.airlineeconomics.co ments due immediately, some of the majors offer PbH wilh µaymenl µer event (PPE). Under a PPE agreement the customer pays the rate per engine hour flown only when the shop visit is being performed. This model allows the operator to conserve cash until the visit is due and could be favourable in times of limited cashflow, and this is an option many operators have taken up in the current climate. Additional services provided by those such as MTU include spare engine support, dedicated spare engine services, e.pool, engine condition monitoring, engineering support such as fleet management, line replaceable unil (LRU) suµµorl, on-sile suµµorl and customer training. Indeed, MTU’s Total Engine Care package can include several MRO services besides core engine MRO. A good MRO provider, no matter its background, will operate on a phi- losophy to repair engine parts wherever possible. Component repair capabilities should in this day and age range from standard manual repairs and OEM licensed repairs to the company’s inde- pendent bespoke repair solutions. Advice to operators who have yet to select an engine MRO provider: Rely on a strong engine MRO provider with significant experience, one that can best assess the optimum time for a cost- eßeclive shoµ visil and avoid incurring any risks. Gel oßers from various µroviders and compare cost carefully, so as not to fall for the expensive ‘quick fix’. In general, it might be worthwhile sending engines to a few providers on a time and material basis to get a feeling for which provider oßers lhe besl vaIue-for-money MRO and turnaround time. Especially for the newer engines, it might be better not to sign a long-term fly-by-hour contract now as component repair options continue to increase, and operators might find out later they have been overpaying. Generally speaking, operators should pay careful attention to contractual inclusions/exclusions to avoid cost sur- prises down the road. Arrange for shop-visit staggering and/ or spare engine solutions a long time ahead or select an MRO provider that oßers lo lake of sµare engine suµµorl. all the wash efuent while eliminat- ing overspray and dripping. As well as addressing environmental, health and worker safety concerns, the arrange- ment means engines can be washed in many more locations within airports or maintenance facilities. At the Paris Air Show 2011, flydubai, the world’s fastest-growing start-up air- line, signed a contract with GE Aviation for the maintenance, repair and overhaul of 109 engines over the next decade. The OnPoint solution agreement represents an investment of $2 million per CFM5- 6-7B engine, which power flydubai’s fIeel of Boeing ,3,-8uuNG aircrafl. Some engines will have more than one shop visit, putting the total value of the contract at more than $300 million. Ghaith Al Ghaith, chief executive of Fly- dubai, stated at the time: “Flydubai is constantly looking for the best services and partners to ensure our fleet remains in the best condition to safeguard our operational obligations and safety of our passengers and crew. We have one of the newest fleets in the industry and signing this agreement will ensure our engines continue to perform at peak levels.” This agreement is just one recent example of prolific OEM incursion into the engine aftermarket. Their success can be attributed to agreements made at the time of selling an engine and pricing benefits at that time that erase much of the aftermarket cost or the initial pur- chase cost, whichever way you look at it. Many independent MROs benefit from a strong customer focus, reflected in their flexible solutions such as power- by-lhe-hour (PbH) deaIs for smaIIer fleets and customised work-scoping. As weII as lradilionaI PbH conlracls, under which the customer pays a monthly flat rate per engine hour flown, with pay- own engine models, especially the Trent family, and the aftermarket agreements made by GE]CIMI for lhe Leaµ X of Iale. As the OEMs take greater control of the aftermarket, airlines need to remem- ber to develop strategies that enhance competition and/or help protect/reduce costs, especially on the larger, newer engines where OEMs tend to have a stronger market position. The ability of the engine OEMs to raise/escalate their prices even in the middle of the current recession remains an open and regular complaint of many airlines. This concern will grow as we move towards 2020. Since 1995, OEMs have increased their share of the market by 30 percent- age points, primarily by taking work from in-house supply, the proportion of which has dropped by 31 percentage points. Interestingly, the combined share held by airline third parties and independents remains almost unchanged at 33–34%. As a result of this change in purchas- ing behaviour by airlines, the ‘available’ or outsourced market has grown at just over 10% per annum over this period, to more than $12 billion in 2011. This out- sourcing trend will probably continue, albeit not at such a fast rate. There are three reasons for this. First, as airlines receive new aircraft, the associated new engines are becoming increasingly reli- able and the cost to establish overhaul capability is getting higher. This makea the business case for in-house capability difcult to justify. Second, airlines today are focusing more on their core business of flying passengers, and engine main- tenance to most airlines is non-core. Third, a viable supply base exists for many engine types, so airlines can and should leverage this opportunity. GE Aviation’s OnPoint long-term maintenance and material solutions include overhaul, on-wing support, new and used serviceable parts, component repair, technology upgrades, engine leasing, and integrated systems with support and diagnostics. The OnPoint portfolio includes the ClearCore engine wash and effluent-collection system. Engine washing is an established technique for helping reduce fuel con- sumption and carbon footprint. GE has stated that ClearCore is distinguished by its efuent-collection system, with a positive connection to capture almost "AI Iha Par|s A|r 8hoW 2011, I|yduba|, Iha Wor|d`s IasIasI- groW|ng sIarI-up a|r||na, s|gnad a conIracI W|Ih ûE Av|aI|on Ior Iha ma|nIananca, rapa|r and ovarhau| oI 109 ang|nas ovar Iha naxI dacada." ENGINES www.airlineeconomics.co Airline Economics: MRO Global 2011 25 ENGINES 26 Airline Economics: MRO Global 2011 www.airlineeconomics.co used to service the engine must be con- sistent with CFM requirements for that engine model. In addition, all mainte- nance must comply with CFM-issued engine manuals and other maintenance recommendations. The qualification data is obtained through a combination of fleet operational and maintenance records. Commercial jet engines typically are in service for more than 25 years and change ownership at least once in their opera- tional life. The engine’s configuration, material content, maintenance history and supportability impact overall value as it changes ownership. The TRUEngine designation also facilitates CFM’s ability to provide tech- nical support. CFM’s engine support is built upon technical expertise for genu- ine CFM56 parts and configurations, as well as data gained from the vast opera- tional history of the global CFM56 engine population. The original manufacturers argue that by changing one or more parts manufacturer approval (PMA) parts in the engine for cheaper versions – at least when initially purchased – might result in reli- ability issues, not to mention the possibility the asset might realise considerably less financial return when it is eventually sold. They are also concerned that the modifi- cation of engines they design and build, beyond the type-certified configuration, reduces their ability to provide technical support. These concerns resulted in the FAA’s Aircraft Certification Service issu- ing a Special Airworthiness Information BuIIelin in Augusl 2uu8 aIerling own- ers, operators, and certificated repair and maintenance providers of the responsi- bilities of type and production certificate holders, supplemental type certificate holders and the PMA holders to support the continued operational safety of their product or part design. When CFM was designing the -7B engine, now used exclusively on 737NGs, future maintenance was one of the major contributing factors considered by the engineers. Use of the latest digital product definition tools at all stages of the engine’s design helped to reduce definition cycle time and the first -7B engines came to pro- duction faster than had been done in the OEM parts repair solutions, designated engineering representative repairs devel- oped by the company and approved and certified by the airworthiness authorities, and a strong customer focus. MTU is the largest independent provider of commer- cial engine MRO services both overall and for the CFM56 product range, and more specifically the CFM56-7. In recent years its market share on the CFM56-7 has fluctuated around 10%, depending on customer demand. The company added the CFM56 to its MRO portfolio in 1999 and has accumulated extensive experi- ence, particularly on the CFM56-3 and -7, and has several CFM56-7 customers with mature fleets under exclusive agree- ments. Overhauls of the -7 are carried out at MTU Maintenance Zhuhai in China as weII as al MTU Mainlenance Hannover, and the company has sufcient capacity to absorb short-term demand for engine MRO as well as increased demand for CFM56-7 in the years to come. Both facil- ilies are fuIIy equiµµed and Hannover has a flow-line for inducting engines, mean- ing any engine type can be inducted at any time, no matter which type. And new additional test cells have become opera- tional over the past few years. CFM’s TRUEngine programme, Iaunched in mid-2uu8, has been weII received by customers worldwide. CFM launched the programme to help the industry more accurately appraise used CFM56 engines and to enhance the resale value of the same. To date, more than 5,000 CFM56 engines in service with more than 40 operators around the globe have been granted TRUEngine status. CFM says it developed the TRUEngine programme in response to industry demand for better ways to determine the value of engines as they are redistributed in aircraft fleets. The programme allows companies to more easily evaluate used CFM56 engines by serial number, based on data not widely accessible. The TRU- Engine designation is available to all CFM56 engines meeting the criteria, and several fleets of engines are being evalu- ated. To qualify for TRUEngine status, the engine configuration, engine over- haul practices, spare parts and repairs CFM International’s parent companies GE and Snecma used digital product tools, specifically Catia, to develop the CFM5- 6-7B engine, making it the first engine to be developed using a full digital mock-up at all engine and installation levels. Targets included maintenance costs lower than those for the CFM56-3, which powers the 737 Classics, along with higher thrust and improved efciency. The result of optimising accessibility and removal and installation envelopes is a claimed reduc- lion of uµ lo 8u% in LRU removaI and replacement times, and an online engine replacement time of less than four hours. The CFM56’s massive global popular- ity has fostered a correspondingly large number of maintenance facilities and a highly competitive market. There are 21 providers serving the market with as many as 34 MRO shops, and at the same time there is a limited number of large airlines and a plethora of small- to medium-sized operators with no dedicated engine MRO provider. There is also only a handful of providers with significant experience on the CFM56-7, and only such providers can guarantee no surprises in terms of slot availability, turnaround time, qual- ity and final cost. Further, there are not as many CFM56-7 spare engines available as there were in the past for other engine types, and it is critical operators without their own spares find an adequate source for spares during their shop visits, either directly with the MRO shop or from an engine lease company. This has been an area of intense competition lately. Support for the CFM56 is a major contributor to revenues at GE Aviation Services. Moreover, the company points out, only 40% of the combined GE and CFM installed fleet have had their first shop visit, and the revenue generated from servicing them through their 30+year operating life can approach seven times the revenue from the original engine sale. Service activity on CFM56-7B engines is growing at an annual rate of about 15%, so it is not surprising that all quarters are fighting hard for this business. Of the independent engine service providers perhaps the best known is MTU Maintenance. Its expertise covers non- CFM56-7B engine support ENGINES www.airlineeconomics.co Airline Economics: MRO Global 2011 27 is a more widely available product gener- ally running over a longer term of three+ years. There is an agreed delivery and redelivery condition and the lease term is fixed. The airline pays for the engine regardless of whether it is installed and typically takes maintenance responsibil- ity during the lease term. Operating leases are an eßeclive soIulion where exµecled utilisation is high over a given period and where an airline is not in a position to buy its own spares. Engine sales and exchange as anolher service can oßer ils cuslomers a wide range of CFM56 assets for sale at any given lime. SES, among olhers, oßers an engine exchange programme whereby an asset owner/operator may elect to swap out its unserviceable or older generation CFM56 engines with similar asset types that have greater on-wing life remaining with packages to suit specific customer requirements. Guaranteed availability is another service: this service is unique to SES and more commonly known as ‘GAF’. It is an insurance type product devised to protect airlines against the risk of an aircraft on ground. Engines are made available for lease within 24 hours of request. performance. In addition, it is improving engine cooling techniques and reducing parts count to achieve lower maintenance costs. In 2010, the engine completed an extensive ground test programme, which included a gruelling 150-hour block test and an almost 60-hour flight test pro- gramme on GE Aviation’s modified flying testbed. When an airline needs a replacement engine fast CFM-subsidiary SES and the engine lessors come into the frame. SES is the world’s largest CFM56 engine lessor. With a portfolio of more than 250 CFM56 engines and with ofces and pool locations Iocaled in 13 dißerenl counlries worId- wide - SES is positioned to deliver flexible and cosl eßeclive CIMõ6 sµare engine solutions to CFM56 operators around the globe. As the CFM56 in-service fleet con- tinues to grow, SES continues to adapt the size and mix of its engine pool to ensure that its customers have access to a com- prehensive range of CFM56 spare engine soIulions. Il currenlIy oßers a number of CFM56 engine lease options including: Short-term lease where customers pay for the number of days they need and rede- liver when finished. Operating lease: This industry before. Its high-tech Catia-aided design resulted in improved accessibility as well as optimised removal and installa- tion envelopes – with remarkable results. The reµIacemenl limes for LRUs have been reduced by uµ lo 8u% (comµared with the CFM56-3 engine) while an entire engine replacement can now be achieved within four hours. CFM56 Tech Insertion, which is the production configuration for CFM56-7B and CFM56-5B engines, had a highly successful entry into service in 2007 on both the 737NG and A320 fami- lies. Over the engine’s lifecycle, CFM56 Tech Insertion could provide operators with up to 1% better specific fuel con- sumption, which translates to better fuel burn, and with longer time on-wing through an equivalent 15–20°C additional exhaust gas temperature (EGT) margin. It also gives 5–15% lower maintenance costs (depending on the thrust rating) through enhanced durability. The engine meets the International Civil Aviation Organisation (ICAO) Committee of Aviation Environ- mental Protection’s standards (CAEP 6) lhal look eßecl in 2uu8. These beneñls are achieved through improvements to the high-pressure compressor, the com- bustor, and the high- and low-pressure turbines. In addition to the compressor kit, CIM aIso oßers a fuII Tech Inserlion core upgrade, as well as high- and low-pres- sure turbine hardware, for the more than 7,250 CFM56-5B and CFM56-7B engines that were delivered before the production shift in 2007. In April 2009, Boeing and CFM together launched the new CFM56- 7BE engine enhancement programme, which will provide up to 4% lower main- tenance costs, depending on the thrust rating. This lower cost is achieved through a combination of longer time on-wing, improved durability, and a lower overall parts count in the high- and low-pressure turbines. CFM used advanced computer codes and three-dimensional design tech- niques to improve airfoils in the high- and low-pressure turbines to improve engine "IIs h|gh-Iach 0aI|a-a|dad das|gn rasu|Iad |n |mprovad accass|b|||Iy as Wa|| as opI|m|sad ramova| and |nsIa||aI|on anva|opas - W|Ih ramar|ab|a rasu|Is" ENGINES 28 Airline Economics: MRO Global 2011 www.airlineeconomics.co Asset management delivers: · accessory lransµorlalion lo vendor repair station from line station and/or overhaul base; · relurn lransµorlalion of reµaired or new unit; · lransµorlalion of engine belween air- line main base and engine overhaul facility for scheduled and unsched- uled shop visits; · µrovision of sµare engines lo cover air- lines requirement: in case of aircraft on ground (AOG) due to engine reli- ability; and for standard spare engine provision; and · µrovision of µarls and recommenda- tion of stock levels. The line-support service provides special- ist, non-routine engine line maintenance flown. Against an agreed cost per flying hour, TolaICare oßers lhe oµµorlunily lo remove uncertainties from engine man- agement and provides greater financial confidence from managing predictable cosls. The µrogramme oßers a suile of engine-support services including: pro- active in-service engine management, overhaul shop maintenance, and the collection and management of engine data. Tailored to the customer’s individ- ual needs, asset management optimises inventory requirements. Rolls-Royce can provide and manage all required engine support equipment, including spare engines, engine accessories, line maintenance parts and tooling, remov- ing the supply chain management burden from the airline. Rolls Royce remains at the vanguard of original equipment manufacturer aftermarket programmes. It has been prolific in its aftermarket agreements to such an extent that it almost completely controls the aftermarket for its engines. This programme has been highly suc- cessful for airlines but at the same time has been a burden for lessors. TotalCare is a flexible approach to achieving an engine support service that has the correct fit and scope of services to meet the operator’s specific needs. It provides a single-source solution for the lifetime of the engine, from the time the engine is delivered to the customer until it goes out of service. TotalCare is a total support programme aligned to each cus- tomer’s operation and paid against hours The Rolls-Royce Total Care package is at the vanguard of OEMs’ march into the aftermarket. Rolls Royce TotalCare ENGINES www.airlineeconomics.co Airline Economics: MRO Global 2011 29 limited parts requiring repair/replace- ment when the initial life prediction is not met within the agreed term. The planned shop visit service pro- vides all restorative/refurbishment (planned) shop visits throughout the TotalCare term, enabling minimum operational disruption and maximum time on-wing. More specifically, this ser- vice includes: · engine overhauI µIanning, workscoµ- ing and overhaul work; · aII engine slriµ Iabour; · moduIe rework Iabour; · rebuiId and lesl Iabour; · reµIacemenl maleriaI; and · incorµoralion of aII aIerl and rec- ommended service bulletins and airworthiness directives throughout the term. Services oßered aIso incIude unµIanned oß-wing mainlenance, which incIudes engine overhaul scheduling, work- scoping and overhaul work in the case of unscheduled engine-caused events. Also included are the non-insurable costs associated with shop visits caused by non- negligent foreign object damage (FOD). Accessory repair and overhaul service is about the repair of specific accesso- ries both in the shop and on-wing, and management of the repair loop. Replen- ishment material is supplied in the case of no available repair. Engine heaIlh moniloring (EHM) helps to optimise operating costs and µrevenl service disruµlion. High-quaIily predictive support can highlight a main- tenance requirement before a potential event and can assist with maintenance shop load planning and spares scheduling. Optimised System & Solutions (OSyS) is lhe µrovider of lhe RoIIs-Royce EHM service, providing trend monitoring of on-wing engine µerformance. EHM is a state-of-the-art predictive health ser- vice designed to minimise operational disruptions and simplify data reporting practices translating data into valuable information, including: advance failure prediction to avoid the cost of opera- tional disruption and engine repair; idenliñcalion of eßeclive Iine mainle- nance to increase time on-wing; and engine margin forecasting to maximise on-wing life. This is over and above the data handling and interpretation of ser- vice to help save time. operations centre, the unexpected is cen- trally managed, providing a fast response with optimised solutions. At present, this fully operational service is available al Hong Kong and Healhrow. In Hong Kong, RoIIs-Royce has joined forces wilh ils exisling joinl venlure µarlner Haeco lo suµµorl lhis inilialive and al Healhrow the service is provided by an established Rolls-Royce line maintenance support faciIily based al Hallon Cross. RoIIs- Royce is looking to enhance its on-wing care global locations and will soon have Frankfurt, Singapore, Dallas and Newark fully operational. Maintenance is controlled through jointly derived engine management plans and component management plans. A TotalCare agreement also covers any life activities, including: 24/7 coverage by on-wing care airport service including service bulletin/airworthiness directive incorporation resulting in reduced engine turnaround time. Qualified and equipped maintenance engineers available at key airports for operators to use in the field (that is, fly-away teams to support in the event of an AOG situation). Access to line maintenance facilities (hospital shops) at key airports. Co-ordinated through the "ßo||s ßoyca has baan pro||I|c |n |Is aIIarmar|aI agraamanIs Io such an axIanI IhaI |I a|mosI comp|aIa|y conIro|s Iha aIIarmar|aI Ior |Is ang|nas" ENGINES 30 Airline Economics: MRO Global 2011 www.airlineeconomics.co lb rated GP7200 engine is identified as GP7270 or the GP7270E (‘E’ stands for extended) and the 76,500 lb rated GP7200 is identified as GP7277. The GP7277 was aimed at the freighter ver- sion of lhe A38u, which was canceIIed. Another thrust rating to be added soon lo lhe A38u oµlion calaIogue, lo aIIow a slightly higher MTOW of the passen- ger version of lhe A38u, is lhe GP,2,2, with 72,000 lb thrust. All versions have lhe same hardware and lhe dißerence in lhrusl is achieved lhrough a dißerenl thrust rating plug. The GP7270 and the GP7270E have exactly the same thrust rating of 70,000 lb, but the GP7270E has a higher flat rating temperature at lake-oß µower (ISA + 22.2 °C for lhe GP7277E versus ISA + 15°C for the GP7270), which means the aircraft has increased thrust available in hot day conditions and the GP7270E provides lhe lake-oß µerformance caµabiIily of the GP7277. On the aircraft side, the 100 engines. Emirates continues to be the biggest GP7200 operator, followed by Air Irance and Korean Air, which have smaller fleets. As with any growing fleet, flight hours and flight cycles are accru- ing rapidly – in June this year the fleet of GP7200 engines passed 500,000 flight hours and 70,000 flight cycles. It can be estimated that the milestone of 1 million flight hours will be reached in the second half of 2012. The average flight duration for the GP7200 engines is about seven flight hours. The average flight duration of the GP7200 engines is shorter than for the Rolls Royce Trent 900 engines, which are aIso µowering a µarl of lhe A38u ßeel. This is the result of Emirates using a number of ils A38us on ßighls lhal are nol so Iong. The ‘high-time’ engines have about 1,500 flight cycles and about 12,000 flight hours. THRUST RATINGS There are three thrust versions for the GP7200 engines available. The 70,000 I n 1996, Pratt & Whitney and Gen- eral Electric ofcially announced their joint venture, Engine Alli- ance, to produce and sell large engines for Boeing’s proposed ,4,-õuuX]6uuX. This µrogramme was cancelled, but Engine Alliance was then selected to design and develop an engine lo µower Airbus`s µroµosed A3XX, which Ialer became lhe A38u. The design of lhe engine is built around the designs of the core of the GE90 and the fan and low- pressure system of the PW4000: GP7200. The first run of the GP7200 was in April 2004 and the first flight with a GP7200- µowered A38u was in Augusl 2uu6. Although the GP7200 is certified for up to 77,000 lb thrust, only the 70,000 lb thrust version is in use by lhe dißerenl airIines. FLEET With a growing fleet of presently about 2õ GP,2uu-µowered A38us in service, the number of installed GP7200s is about A promising start Maurick Groeneveld, director of aircraft management at Doric Asset Finance, takes a look at the Engine Alliance engine developed for the Airbus A380. ENGINES www.airlineeconomics.co Airline Economics: MRO Global 2011 31 oµeralion in Augusl 2uu8. The shoµ visils typically involved repairs and modifica- tions, and the extent of the work was light. Based on the number of GP7200-powered A38us in service and on order, lhe annuaI number of GP7200 shop visits is expected to increase significantly from about 10 a year now to about 100 a year towards the end of this decade. At the moment, all GP7200 engine shop visits are performed in GE Wales, which is the only MRO shop for lhe GP,2uu. However, Air Irance Industries is gearing up its extensive engine maintenance facilities to perform GP7200 shop visits. It expects to perform the first GP7200 shop visit during winter 2013/2014 and have full overhaul and repair capability for the GP7200 by winter 2u1õ]2u16, and il is oßering ils services lo Air France and other operators. Emirates Engineering is also gearing up its engine maintenance facilities from changing modules on the GP7200s as of today and it plans to perform GP7200 shop visits from late 2014. Another MRO shop prepar- ing for GP7200 shop visits is Abu Dhabi Aircraft Technologies, which plans to be able to handle GP7200s by 2013. All the MROs are part of the Engine Alliance MRO network. SMOOTH ENTRY Although the experience with the GP7200 is limited, the GP7200 engines have shown a smooth entry into service wilh lhe dißerenl oµeralors so far. Like any other engine, it features some issues, but Engine Alliance either has a solution in place or is working on it. The perfor- mance demonstrated by the GP7200 engine also suggests this engine will live up to its promise. for around 3,000 engine cycles (for first-run engines). The engine’s first refurbishment is likely to feature light maintenance of all modules, except for the combustor and the high-pressure turbine, which will undergo heavy maintenance. Thereafter, a second run of about 2,000 to 2,500 engine cycles is likely to follow. The engine’s second refurbishment would be more exten- sive than the first and also feature heavy mainlenance of lhe HPC, lhe lurbine centre frame, the low-pressure turbine and the turbine exit case. Like lhe GEµu, lhe GP,2uu can be sµIil in the propulsor and the fan module to ease transportation for shop visits. Obviously, from an engine management perspective, this requires additional tracking of the fan modules and propulsors. LIFE-LIMITED PARTS MANAGEMENT The life-limited parts in the GP7200 engines have a target life of 15,000 cycles. However, al µresenl, a Iarge µorlion of lhe life-limited parts has certified life limits weII beIow 1õ,uuu cycIes. The HPC 2-õ spool has the lowest life limit (4,200 cycles) and other life-limited parts have limits at various levels in between. This Iife Iimil of lhe HPC 2-õ sµooI means lhe engine’s first refurbishment is not caus- ing a premature first refurbishment of the engine. Simultaneously, Engine Alliance is working on extending the life limits of those parts that have a lower limit. SUPPORT Up to now, the number of GP7200 shop visits has been limited and only 20 shop visits have occurred since the GP7200 engines commenced their commercial GP7270E requires the thrust enhance- ment kit modification to be embodied. OPERATIONAL EXPERIENCE Based on information available to Doric, the GP7200’s performance retention (up to now) looks very satisfactory and the exhaust gas temperature (EGT) deterio- ration is presently not a contributor to engine removals. As the EGT margin of new GP7200 engines is significant and the deterioration not very high, it can be expected that removals for EGT margin – if being a removal reason – will only start to occur around 2,500 to 3,000 ßighl cycIes for ñrsl-run engines. How- ever, due to the lower EGT margins of the GP7270E engines compared with the ‘standard’ GP7270 engines, the GP7270E engines will reach their removals for EGT margin slightly earlier. TECHNICAL ISSUES There have not been any Airworthiness Directives issued against the GP7200 engines. It is somewhat difcult, due to the youth of the GP7200 engines, to make general remarks and draw conclusions, but in managing the GP7200 engines, Doric has come across the following more significant issues: · High oiI consumµlion: lhere have been some premature engine remov- als due to excessive oil consumption. The root cause seems to be linked with premature and increased wear of the #5 carbon seal, which results in a loss of oil through the seal. A product improvement plan is in place. · High-µressure comµressor (HPC) 2-õ spool upgrade: engines with a par- licuIar µarl number for lhe HPC 2-õ sµooI have been aßecled by µremalure removals as, due to higher-than- normal seal rub (as a result of the manufacturing process), the life limit of these parts was reduced to 2,100 cycles. As a result, Engine Alliance initiated a replacement programme for HPC 2-õ sµooIs wilh a new design part that has a life limit of 4,200 cycles. This replacement and upgrade programme has been completed on lhe aßecled engines. SHOP VISITS It seems possible the GP7200 engines would be able to remain on-wing GP7200 ENGINE CHARACTERISTICS Fan Single stage with 24 swept wide-chord hollow titanium blades Low-pressure compressor Five stages High-pressure compressor Nine stages Combustor Annular combustion chamber High-pressure turbine Two stages (cooled) Low-pressure turbine Six stages (uncooled) Fan diameter (inches) 116.7 Length (inches) 187.1 Dry weight (lb) 14,800 32 Airline Economics: MRO Global 2011 www.airlineeconomics.com SMOKE AND MIRRORS A s owners and operators of commercial aircraft struggle to stay com- petitive in today’s global economic environment, using cheaper, yet safe, aircraft parts, and contracting out main- tenance to both domestic and overseas providers, can make all the difference. But there are consequences to such a strategy: significantly the doubt that has been cast on the integrity of parts and services no provider by the original equipment manufacturer (OEM). Those consequences include higher insurance costs, lost warranties, liability concerns, lower aircraft resale values, and an erosion of public confidence. The parts market is split into three main sections: OEM, FAA Parts Manu- facturer Approval (PMA) parts and approved repairs, or DER. [DER stands for parts that are approved by a US Federal Aviation Administration (FAA) Designated Engineering Representa- tive but for the purpose of this article “DER” repairs also relates to Euro- pean Aviation Safety Agency (EASA) approved repairs. Owners and operators of commercial aircraft need PMA developed parts and DER repairs accepted globally as read- ily as OEM parts and repairs. Similarly DER repair and alteration approval holders and PMA holders need to have their parts, repairs, and alterations to be accepted globally because they are marketing their products and services to a global customer base. However, there is fierce competition between the OEMs (including their "Thara |s I|arca compaI|I|on baIWaan Iha ûENs (|nc|ud|ng Iha|r ravanua/r|s|-shar|ng supp||ars) and Iha |ndapandanI aIIarmar|aI parIs prov|dars oI rapa|rs" Smoke & Mirrors A bitter feud, a possible future legal battle, misleading quotes and credit barriers – the PMA debate has it all. The PMA market has a small slice of the overall parts market but enormous potential for growth yet doors are closing. Ph|||p Totar-Pann|ngIon explores the current state of the PMA market and the threats to its survival. www.airlineeconomics.com Airline Economics: MRO Global 2011 33 SMOKE AND MIRRORS guidelines are particularly relevant for dominant firms or firms with market power. When Airline Economics looked at the guidelines it was clear that the OEMs are sailing very close to the wind and, as they expand so too they increase the risk of catching the eye of the regula- tors. On current form it is only a matter of time. PMA parts offer savings of up to 40% against parts from OEMs. The market for PMA showed a 7% growth rate in 2010 and is expected to top that in 2011 as airlines scramble to cut costs. The PMA market has continued to grow even though the aircraft lessors, that don’t accept non-OEM parts for the most part on their aircraft, account for over 40% of all commercial aircraft in operation, which is set to increase above 50% at any time. Given such dom- inance, one would expect the market for PMA to be shrinking but it has not. That said, although PMA penetration in the Americas is prolific, in Europe, with the exception of Lufthansa and British Air- ways, the market is more restrained. The OEMs have been fighting to curb the growth of the PMA market, however. And have been backed in their campaign by the various national Export Credit Agencies (ECAs) that support the OEMs in their respective countries. Just a few years ago the OEMs con- trolled 15% of the aftermarket but they now control around 45%. If current trends continue, the OEM s will control more than 60% by the end of this decade and around 75% of the engine specific aftermarket, mirroring the automobile market in many ways. This represents both the success of the OEMs growth strategies in a tough market but also an erosion of choice for the airlines and aircraft and engine lessors in the longer term. Once that choice has gone, for some areas of the aircraft and engine For example, a major OEM that owns over 25 repair stations worldwide is repairing and fabricating parts and applying for supplemental type certifi- cates (STCs) and PMAs. GE for example owns an estimated 20 repair stations worldwide and also owns a major air- craft leasing company (GECAS). Some engine OEMs also lease engines on a power-by-the-hour basis. Consequently, the OEMs are increasingly gaining full control over what parts, repairs and alterations go into either aircraft they own, or for which they offer warranties and maintenance services. It has been reported that OEMs are cutting back or eliminating customer product support if the owner/opera- tor incorporates non-OEM developed repairs, alterations or replacement parts in their aircraft. OEMs have also acquired independent companies that held PMAs or had developed their own repairs and alterations. Once an OEM acquires an aftermarket company, the repairs and parts which they had pre- viously complained about suddenly became acceptable. As a consequence of all of these factors, the OEMs and the leasing companies and repair stations they own, are putting pressure on owners/ operators not to use non-OEM parts or unapproved repairs through plac- ing restrictions on customer support services, warranties, the use of Instruc- tions for Continued Airworthiness, etc. The OEMs have formed a loop around the aftermarket and are cornering the same at alarming speed. When Airline Economics spoke to the Directorate General for Compe- tition at the European Commission, concern was expressed over the poten- tial stifling of competition. However, because the OEMs are not proven to be acting in collaboration, the issue is not at this time seen as a problem. Never- theless, owners and operators do have the power to force an investigation in the state of the aviaition aftermarket. The Directorate General for Com- petition, after some consideration, did point to new vertical restraints rules and guidelines that were adopted and published in Spring 2010 that cover all kinds of supply, purchase or distribu- tion agreements in all sectors. The revenue/risk-sharing suppliers) and the independent aftermarket parts providers of repairs, alterations and fabricated replacement parts and other maintenance services. Also many owners and operators that provide maintenance services, or have entered into partnerships with non-Type certifi- cate/production certificate holders to develop repairs and fabricate replace- ment parts, are further crowding the market. As the major OEMs diversify into maintenance, aftermarket parts supply, and leasing, they are also vying for a share of the very market that they are criticizing, while at the same time lobbying for policy changes in their favour. "Tha ûENs hava baan I|ghI|ng Io curb Iha groWIh oI Iha PNA mar|aI, hoWavar. And hava baan bac|ad |n Iha|r campa|gn by Iha var|ous naI|ona| ExporI 0rad|I Aganc|as" 34 Airline Economics: MRO Global 2011 www.airlineeconomics.com SMOKE AND MIRRORS cheap copy of their original parts. They say their OEM made parts are superior because they have gone through a rig- orous R&D and testing processes. This has led to the generally-held percep- tion that PMA or DER parts devalue the value of an aircraft or engine. But the real clincher for putting airlines off the use of non-OEM parts is the repu- tational risk impact should one of their aircraft or engines to fail and cause fatalities, and that failure were traced back to non-OEM parts. “The reason many airlines don’t use PMA or DER parts is not because they are seen as inherently unsafe or unreliable, but for the concern over reputational risk,” says Sharp. “One well-known airline CEO said to me: “If one of my airplanes crashed and people died and the cause of the accident was traced back to PMA or DER, can you imagine what sport the tabloids would have? ‘Airline X uses dodgy parts’ - peo- ple would stop flying with us tomorrow. And for that reason I will not accept PMA/DER.” Fear of any potential reputational damage has never stopped British Airways, who is under the spotlight of the most vicious domestic press on the planet, from using PMA parts. BA, as well as Lufthansa, United and ANA, to name but a few, use PMA parts and approved repairs on the aircraft they own, which has directly improved their bottom line with no adverse affects whatsoever. In fact some senior airline board members spoken to by Airline Economics have expressed dismay that more airlines, especially within the EU and Asia-Pacific regions, are not making more use of PMA and approved repairs. British Airways has been using PMA parts as standard since 2006 when a total of 28 new PMA parts were approved. In 2007, when BA entered into a deal with HEICO after watching Luf- thansa take the lead, a spokesperson for the airline stated: “We will no longer be the cash machine for OEMs… These are not bogus parts but approved by the very same regulatory authorities that approve OEM aircraft parts. BA reviews all applicable PMA parts and approves each one on a case-by-case basis. Once installed, the parts are monitored for any defect trends and we note failure slow to see the benefits of aftermarket sales, until the 1980s there was little competition for their aircraft/engines and parts so they had no need to get involved with maintenance or did not need to lock in customers at the point of sale. Today, however, there are many aircraft and engine manufacturers in the market and as purchase prices fall through increased competition on one side, PMA parts manufacturers have entered the market on the other forc- ing the OEMs to react to the erosion of their now essential aftermarket rev- enue stream. In 2011 an aircraft or engine manu- facturer cannot make a return on an aircraft program without aftermar- ket sales/agreements; in fact in some recent cases all of the profit is tied-up in the aftermarket. The problem for the OEMs was that they did not have the expertise to maintain aircraft. Dur- ing the 1990s and the last decade the OEMs moved to change this by copy- ing the automobile market template of approved repair shops. The benefit for the maintenance shop was guaranteed business, while the OEMs benefited from up-selling these extra services at the point of sale as standard. What the OEMs did not expect was the infiltration of the PMA market into essential areas of the aircraft/engine. The OEMs believed that there was always a line that would not be crossed and also believed they could get away with 5% per annum price increases. However, the monopoly was broken by engineering companies in the 1980s that answered the need for airlines to save money, leading to rapid PMA infil- tration into most areas of an aircraft and/or engine. All of this is good competition. But if PMA parts are as good as, if not better, than the original OEM part thanks to reverse engineering, while also being much cheaper: why has the PMA sector not achieved total market dominance over the past three decades? The answer lies in a clever smoke and mirrors campaign waged by the OEMs in the way PMA and repaired parts are perceived by the market. The engine OEMs have, from the beginning of the PMA threat to aftermarket sales, been talking up the fact that a PMA part is a market, it will be gone forever. Now is the time to sit up and take notice of how the OEMs are extending their market share and examine the impact this will have on the aftermar- ket landscape. It is the very success of PMA parts manufacturers and approved repaired parts (DER) that has led to the OEMs adopting such aggressive strategies to protect and increase their share of the aftermarket. “It is because of the growth of PMA and DER that the OEMs have adopted strategies to try to exclude PMA and DER,” says Jon Sharp, president and chief executive of engine lessor ELFC. “The OEMs spend a huge amount of money on developing new engines, which they then sell at a loss and only make money from spare parts sales over the years. The intervention of PMA and DER impacts their aftermarket profit opportunities so they are developing ways to curtail this including develop- ing strategies to attract MRO business to their own workshops. They have been spectacularly successful at doing so. In 1999 around 15% of the engine MRO market went to the OEMs, by 2009 that had grown to 45%. For some of the new engines types, 100% of the fleets are on OEM care packages. That situation presents a lot of problems for those of us in the leasing business.” There is an argument, often used by financiers, that the aviation aftermarket is running at least a decade behind the automobile market, therefore it is often used as a means to predict the future of the aviation aftermarket. This is not the whole story however. It is not that air- craft and engine manufacturers were "A|| oI Ih|s |s good compaI|I|on. 8uI |I PNA parIs ara as good as, |I noI baIIar, Ihan Iha or|g|na| ûEN parI Ihan|s Io ravarsa ang|naar|ng, Wh||a a|so ba|ng much chaapar: Why has Iha PNA sacIor noI ach|avad IoIa| mar|aI dom|nanca" 36 Airline Economics: MRO Global 2011 www.airlineeconomics.com SMOKE AND MIRRORS agreement and every lessor I have ever heard of excludes PMA and DER in their leases. That does not mean to say that on return of an aircraft or engine, there will be no PMA or DER parts in there, indeed it is often the case, the airline will simply ask the lessor to be excused. In the case of an aircraft, if the PMA or DER parts concerns things like seats or cabin interiors, it probably doesn’t mat- ter because those are likely going to get ripped out and reconfigured for the next airline lessee. Does having certain non-critical components exterior to the engine, certainly within the gas path, [being fitted with PMA or DER parts] really matter? Probably not. However, and herein lies the rub, it is not the les- sor who originally says they are not having PMA or DER, it is their custom- ers, which in turn causes the lessor to say they cannot accept PMA or DER.” He adds: “We have between 50 and 60 remarketing events a year and if 50% of those potential customers won’t accept PMA or DER that reduces my market by 50%, which I cannot accept.” The reaction of the OEMs to the use of PMA/DER parts has been to shockingly abuse their dominant market position. It has been widely reported that OEMs tell operators they are on their own when they call in with a problem on an engine that has any PMA/approved repairs parts. This action has been open and widely publicised so it is a wonder that no one has been in court over this issue to date. The view from the OEMs is that if a failed part was a PMA part, then they shouldn’t be held responsible. When an OEM part fails they will take responsibility for those parts and would investigate but if a PMA part has been fitted anywhere they shouldn’t have to spend time and resource dealing with the issue. In one particular engine failure that is being investigated by the National Transport Safety Board (NTSB), the OEM concerned is claiming that it shouldn’t be held responsible and that the authorities should be speaking to the PMA manufacturer. The OEM takes it even further to say that even if it was an OEM part that failed, if there were any PMA parts in the engine, because those PMA parts are not tested within a whole engine, it could have had a mate- does PMAs for replacing GE parts and GE returns the favour. The fundamen- tal argument is that if dually authorised and approved, a PMA part is considered to be equally as airworthy as the OEM part. They are supposed to be.” Moreover of all the airworthiness directives (ADs) issued since the early 1990s, out of 290 directives, only three have included PMA parts, parts that at the time so closely matched the OEM original that they carried over the same problems that caused the ADs. “Back in the days when I was con- fronted with the argument that a PMA part or an independently developed repair that was not the OEMs was an inferior part, I have to say that in fact it is equally as authorised,” says Aldo Prario. “As a matter of fact there is a his- tory of parts that have been AD’d that are OEM parts and I don’t know of any PMA parts that have been deemed to be independently identified as a non-air worthy part.” Alas the “what if ” argument remains a primary reason for airlines refusing to use PMA parts. Ultimately though, airlines blame lessors for holding them back from using PMA more freely. ELFC’s Sharp says: “Every lease modes of PMA parts to check that they are similar, if not the same, as their OEM equivalent”. It should be noted, however, that BA only uses non-critical PMA parts. Even so, the UK flag carrier still achieved between 30-40% savings over OEM list prices after focusing on high-cost items. United and ANA use PMA parts to their fullest extent and achieve significant bottom line benefits without downside. The argument that OEM parts are somehow better has long since been defunct and the majority of the market realises that many PMA parts, although cheaper, benefit from improvements on the original OEM design through reverse engineering. This argument was helped along eventually by the OEMs themselves. “The parts that are approved under PMA are considered by the FAA to be equally as airworthy as those that are made by the OEM,” says Aldo Prario, an FAA registered DER representa- tive. “There has strong objection by the OEM for obvious reason to consider PMA parts to be inferior. But since then, driven by economic considerations I am sure, both Pratt & Whitney and GE make one another’s PMA parts. P&W www.airlineeconomics.com Airline Economics: MRO Global 2011 37 SMOKE AND MIRRORS repairing any collateral damage not covered in most cases, but the MRO agency wants the airline to indemnify it against claims from third parties. “This is something else in the indus- try which is plain wrong and I think it has to be changed,” says Sharp. “Until such time that changes are made to that contractual language and the stance to pay a sum of money to the MRO shop to repair their engines. It states that if one of the parts it repaired fails, it will he liability language in MRO contracts is also a big obstacle for the acceptability of PMA and DER parts. In a standard MRO contract, it states that if one of the parts fails, the MRO agencywill replace it, and that’s it. Not only is the cost of rial affect on the OEM parts and cause a failure. If an airline has any PMA parts in the critical areas of the engine, they are on their own in the view of OEMs. The liability language in MRO con- tracts is also a big obstacle for the expansion of the use of PMA and DER parts. In a standard MRO contract, in the liability section, the airline agrees The FAA on liability concerns and the OEM argument The type certificate holders and the production certificate holders [classified here together as the OEMs for ease] and owners/operators are concerned about the liability that a failure of an aftermarket part may affect their credibility and incur substantial costs. The OEMs are claiming that with non-TC/ PC holder approved parts (PMAs) and repairs (DERs) in the product that their ability to fulfil their Continued Operational Safety (COS) responsibility is compromised. OEMs continue to call the product, “their product” and cite the fact the data plate required by 14 CFR 45, Identification and Registration Marking, identifies them as the manufacturer when in fact there are replacement parts in the product that were produced by other entities. That has been the situation for decades but now OEMs are contesting that long standing reality. The OEMs forget that the product is not “their product.” It belongs to the owner/operator who is ultimately responsible for the airworthiness of the aircraft. The OEM is only responsible for the parts they design and manufacture just as any aftermarket maintenance or replacement part provider is responsible only for the work they perform (including repairs) and the design and fabrication of parts they provide. The fact that there are aftermarket parts, repairs and owner produced parts in an aircraft only means, as has always been the case, that any accident/incident investigations must be a cooperative effort of all the affected design, production, operations, and maintenance provider stakeholders. Another aspect to this argument is that the OEMs want parts that are fabricated during maintenance and parts with extensive repairs and alterations to not be marked [or re-marked] with the original OEM part numbers. They also noted that the traceability of PMA parts is often questionable because aftermarket companies do not have tracking systems that are as comprehensive as theirs. The FAA concluded this is likely to be true in most cases. There is no regulatory basis that requires marking of any parts other than parts subject to an Airworthiness Limitation (14 CFR 45.14), PMA parts (14 CFR 45.15) and TSO parts or articles (14 CFR 21 Subpart O). Also, there is no requirement for manufacturers and fabricators of parts to track them or to have a tracking system. The owner/operator is responsible for their aircraft configuration management, conformity, airworthiness, and records management to ensure that airworthiness limitations are adhered to, ADs are accomplished, maintenance records are kept per the CFR, and the aircraft configuration conforms to its approved design. The fact that the OEMs support the owners/operators in fulfilling some of those responsibilities is often misrepresented as the OEM being responsible. The FAA says that they are aware of and are sensitive to the OEM’s liability concerns. In today’s highly litigious world, anyone associated with an aircraft involved in an accident/incident regardless of their culpability could be forced to share in a legal settlement. As a result some OEMs have recommended that the product data plate listing them as the manufacturer should be removed from aircraft and engines that include a substantial number of non-TC/PC holder repairs, alterations and replacement parts because they claim that the product no longer conforms to their type certificate design. The FAA disagrees with that proposal for both practical and regulatory reasons. There is a subtle point to remember that the OEM owns the original type “design” but not the “product” once it is produced and leaves their quality control system. Once in service, aircraft configurations very quickly diverge from the pure OEM/Type Certificate holder’s type design configuration due to maintenance and alterations that are performed. Thus it is currently the case that if an engine fails and the failure is traced to a single part, then it is that part which is to blame and therefore the burden of responsibility will fall upon that particular manufacturer. It is in the process in getting to the point of knowing which part is to blame that is currently a grey area and might just end in court action at some point if a resolution is not found. It is also noteworthy to point out that in most investigations, the owner/operator, who is ultimately responsible for ensuring the aircraft’s airworthiness, is rarely involved except for major accidents. In the past owners/operators and the FAA have expected the OEMs to investigate service events and accidents. In today’s environment when owners/operators are using a higher percentage of repairs, alterations and replacement parts that were not developed by the OEM, the owners/operators need to become more active in leading investigations and engaging the responsible PMA companies (non-TC/PC holders) / repair shops when aftermarket repairs and parts are involved. It could be argued that the OEMs are in some cases being deliberately belligerent and are scaring operators away from PMA parts through non cooperation in the event of a problem. This is of course a very poor show on the part of some OEMs. At this point it should be mentioned that some OEMs such as Boeing have been actively partnering with PMA companies to deliver safe and effective replacement parts to market. Boeing issues technical assistance letters and enters into license agreements with PMA companies to support acquisition of PMAs. Under the licensing agreements Boeing is at an arms-length relationship in which Boeing licenses approved data, but the PMA holder remains responsible for their own manufacturing quality, and Boeing will not provide production oversight to a licensee except to the extent that the licensee is also a supplier subject to Boeing’s normal supplier oversight protocols. Boeing has issued many licensing agreements, although an ongoing internal debate has temporarily halted the issue of new license agreements. 38 Airline Economics: MRO Global 2011 www.airlineeconomics.com SMOKE AND MIRRORS ing with lessors and negotiating lease contracts, that we are fairly comfort- able with PMA parts being fitted to the aircraft so long as they are not engine parts. A DER modification can be something relatively minor such as the installation of a soap dispenser in a toilet cubicle. They are not all engine related or critical parts, they can be very minor. Those do not mean the air- craft cannot be transferred to another operator. The simple rule there is that is it could affect the airworthiness then it is a critical part.” But appraisers can see both sides to the argument. “I can see why the mar- ket developed because there is a lack of response from the OEMs in terms of pricing parts – engine parts in particu- lar were always increased by 5-6% per annum,” says Seymour. “The expensive parts within the engine that had fairly minor discrepancies, airlines wanted to repair them and get a DER sign off. If an OEM was to say to an airline it did not want it to use PMA parts, the airline will ask them to reduce their prices. There is a bit of that going on, some airlines theoretical view and assume there are no PMA parts or DER repairs on the aircraft or the engines. However, that is not a very practical stance to take because it is more likely that many air- craft have PMA parts and DER parts in them. When it comes down to the specific inspection of an aircraft and the redeliver of it to a lessor… the rea- son we have to make assumptions is because people just want a quick and dirty valuation and they don’t want to pay much for it. When we are providing our aircraft values book and our lease rate digest, we have to make a whole load of assumptions. It is only when we are asked to do a more detailed valua- tion and inspection of the aircraft; the chances are that the aircraft will have those parts on it. If a lessor comes to us with an aircraft that has been used by United for the past 20 years and they want to operate it in Europe, is it going to be ok. The chances are the aircraft would have DER approved repairs on it so might not be allowed to be used in Europe. “We take the view when we are deal- regarding exclusion of liability, and indemnity, then airlines are not going to accept PMA or DER. And the insurance companies behind them aren’t either. There has to be a change to make these parts more acceptable and I think that change needs to be in the liability lan- guage.” It has been widely put out into the market that insurance on parts and engines that are fitted in is compro- mised by the use of PMA parts. Airline Economics has not been able to find any evidence of this at the time of going to press. But the FAA approval process for PMA equipment and approved DER repairs requires rigorous development, reporting and test processes. PMA equipment and DER repairs developed by authorized manufacturers are FAA- certified and perform equal to or better than original equipment. Installed PMA parts and repairs are fully insured to cover operator equipment. IMPACT ON VALUES Another reason for airlines and lessors to dislike PMA and DER is because of the widely held perception that their presence will devalue the aircraft or engine. Stephen Hannahs, CEO and group managing director of Aviation Capital Group, says: “We don’t like PMA parts and we don’t like DER parts because they tend to have an effect on the valua- tion of the asset. We try to do everything we can to prevent PMA or DER parts from going into our airplane. I think though unfortunately they are a thing of the future. I think more and more that will get traction as time goes on but at this juncture we prefer not to have them in our aircraft for valuation reasons.” However the appraisers have a dif- ferent view. Phil Seynour, president and chief operating officer of IBA Group, says: “As appraisers we like to think that in the perfect world everything in an air- craft is approved by the manufacturer. PMA parts and DER repairs are not approved by the manufacturer even though they have been approved by the regulatory authority. But a key issue for us given the movement of aircraft around the world and the market and supply and demand, we take a very "wa don`I |||a PNA parIs and Wa don`I |||a ûEß parIs bacausa Ihay Iand Io hava an aIIacI on Iha va|uaI|on oI Iha assaI. wa Iry Io do avaryIh|ng Wa can Io pravanI PNA or ûEß parIs Irom go|ng |nIo our a|rp|ana." www.airlineeconomics.com Airline Economics: MRO Global 2011 39 SMOKE AND MIRRORS needs to come close to breaking even. Some have gone on record stating that the Airbus programs are more expensive compared to other options in the market today, but we have learned that Airbus is surprisingly flexible and does indeed tailor contracts to a point to save airlines money over five year periods. At Boeing the GoldCare program has been growing rapidly, extending to most aircraft types in service. The clincher for Boeing came when they extended the program to cover the 737 Next Gen- eration product line. The company is currently in advanced discussions with multiple customers regarding the tai- loring of GoldCare solutions for their 737 fleets. GoldCare is available to 787 Dreamliner operators and Boeing is expanding the service in response to airline customer demand. “We’ve designed GoldCare to bring value to our Next-Generation 737 customers by boosting airplane reliability, which will reduce cost and improve efficiency throughout the airplane’s lifecycle,” said Jay Maloney, vice president, fleet management for Boeing Commercial Airplanes. “The airline will be able to focus on what it does best – flying its air- planes and serving its passengers.” Under GoldCare, Boeing leads and integrates a global team to deliver maintenance engineering, planning and execution and material services with a predictable cost based on airplane flight hours. Simplified maintenance operations and logistics allow GoldCare customers to focus on their passengers while their airplanes are maintained to the highest standards of excellence by Boeing, supported by GoldCare part- ners. The publicity states that Boeing pro- vides GoldCare customers with 24/7 operations support using the latest port.” The ECA angle is now very important and should be noted by all in the PMA argument. ECAs have been literally propping-up the aviation finance sector now since the start of the credit crisis and this is likely to continue for the near future as banks continue recover and build reserves. This does not bode well for continued PMA proliferation as the bulk of aircraft coming into service will either be financed by and ECA backed loan or on an OEM aftermarket agree- ment to cut the original purchase cost in the first instance. OEM CARE PROGRAMS OEMs offer care programs to airlines at the point of sale alongside joint ven- ture agreements with the MRO market. OEMs have shown themselves to be adept at putting together repair net- works that work for an airline’s entire fleet. In the past OEMs have been thought of as having critical design knowledge and strong cash reserves but a distinct lack of on the ground spe- cialist engineers able to perform and adapt. This is here where the specialist MROs come in. The engine manufactur- ers have been controlling much of the aftermarket through JV agreements for quite some time but the speed at which the airframe manufacturers are rolling out networks is astonishing. Manufacturers of airframes are offering support for all non-engine parts and repairs, these deals are extremely ambitious. Airbus in particular has become a very active player. Its cost- per-hour support program has matured substantially over the past two years as new aircraft have been delivered. Sin- gapore Airlines, for example, has signed up to cover all support for its A380 and A330 aircraft. The recent spat of A330 orders has been a catalyst. As Airbus sought to save the A330 program and with it a great many A350 orders that were delayed, it decided to sell the A330 stop gap aircraft at rock bottom prices with the proviso that customers bought into aftermarket service programs. This strategy has proved both a success and highly popular to the extent that Airbus is now able to up-sell onto other aircraft as they are delivered, giving the A350 program the commercial boost it do get big discounts from the list price. But a lot of airline purchasing people are very sceptical – they just don’t like monopolies and even if the prices were reduced say they just want to have a choice. We can see both sides of the story; we just have to be very careful in the appraisals as we can’t say PMA parts are fine.” MORE PROBLEMS FOR PMA IN ITS CORE MARKET PMA proliferation in the USA is due to the fact that the fleet there is older. The aircraft have no need to be financed; they are owned and used by the airlines to fulfil a role right up to the end of the aircraft’s useful life. This usage and ownership cycle represents the core market for PMA parts but what happens when these old US fleets are renewed under OEM aftermarket agreements? The aircraft owner will still have the bal- ance of power but in the future this will not be the airline, it will be the financ- ers – either banks or ECAs – and the OEMs and it is this which should worry the PMA market and investors in the same. One non ECA example of where financing is all important to the use of PMAS was highlighted by a senior MRO figure recently when he stated to Airline Economics: “I have had many meetings with leasing companies and found just one that said ‘we don’t care, you can put in whatever you want’ and this is with the airline’s support,”. “Everyone else they said no. In one case this was because their aircraft were mostly owned by Special Purpose Com- panies (SPC) through various financing structures. Although the SPC was an Airbus company, the financing was done by Gecas – I think you know what the answer was after asking Gecas to put a PMA part into a GE engine.” Aircraft bought using ECA-guaran- tees are also often contain restrictions on the use of PMA parts. The ECAs are there to support OEM sales; therefore they cannot back any sale that involves an asset riddled with competing parts. A spokesperson from the UK Export Credits Guarantee Department says: “The European ECAs have a stated policy not to allow the use of PMA parts on aircraft which benefit from their sup- "8uI a |oI oI a|r||na purchas|ng paop|a ara vary scapI|ca| - Ihay |usI don`I |||a monopo||as and avan |I Iha pr|cas Wara raducad say Ihay |usI WanI Io hava a cho|ca." 40 Airline Economics: MRO Global 2011 www.airlineeconomics.com SMOKE AND MIRRORS engine and use that money for its repair or overhaul. “Most importantly, the lessor loses the security that it (and where applicable, its lender) desires from holding maintenance reserves which under a care package are paid to the OEM rather than the lessor. That means that some airline credits simply become unacceptable without reserves and so a lease cannot be concluded. Care packages therefore reduce com- petition and the airlines’ options.” Moreover, the fund OEMs collect in respect to certain engines may not be fully transferable at the end of a lease. Sharp explains: “So the OEM has all this money from airline A. When airline A returns the engine to us, which we then lease out to airline B, they will be in say a half-life condition. When we ask for the fund money for the hours and cycles burned off to be returned to us, the OEMs refuse. That is the first problem. Secondly even if the fund is transfer- able, it is often insufficient given that the deal was probably struck at the time of selection of the engine where the manufacturer may have granted a con- cessionary rate. For example they could have asked for $100 per flying hour to be paid into the fund even though the real cost of maintaining the engine is $150 P&W states that all four aftermar- ket segments are growing well. Fleet management can cover non-P&W engines, and the company has opened two CFM56 shops in the past 18 months alone. Overhauls of this engine doubled for P&W in 2010 and P&W hopes to post another doubling during 2011. Pratt also has invested in repair of CFM56 compo- nents to control the supply chain. P&W is of the mind that airlines will increas- ingly rely on third-party maintenance even for line maintenance. A side effect to this OEM incursion into the aftermarket has been the unbalancing of maintenance reserves for lessors on both existing contracts and potential new business. All leasing companies – engine and aircraft lessors – collect maintenance reserves in what is universally thought of as being the fairest system possible. All lessees dur- ing the course of an aircraft/engine’s life will pay the same per-hour costs levelling the maintenance costs across the life of the product so that no one les- see, or indeed the lessor, has to foot the bills while others enjoy maintenance free periods. In addition, and maybe more importantly, the reserves are held as security, so in the event of a default, the lessor can repossess the aircraft/ technology to turn airplane operating data into diagnostic information that enhances efficiency and maximizes aircraft availability. For lessors the programs are a bit of a game changer. A new operator, when receiving a leased aircraft covered by GoldCare, is assured that the aircraft’s maintenance adheres to the require- ments established by the manufacturer. This is turn means that maintenance reserves will slowly become a thing of the past if current take-up continues. But during the transitional period, les- sors will have a number of headaches to deal with not least when clients come to them wanting to add the air- craft or indeed engine onto their own care program. This echoes Jon Sharp’s concerns over the non-transferability of care package reserves and the fact that even though they may be transferable there is often a shortfall. Of the engine OEMs, it is perhaps Pratt & Whitney that has focused even more intently on the aftermarket than most. It has seven engine-overhaul shops and 15 component-repair shops and offers material solutions for its own and CFM56 engines as well as line ser- vice, including the much publicised and highly successful “Ecopower”. Strategic Airlines signed an exclusive five-year maintenance services and expanded engine management program agreements with Pratt & Whitney in 2010 www.airlineeconomics.com Airline Economics: MRO Global 2011 41 goes back to the OEM and said ‘ok you didn’t have the time to do it for me, we did on our own authority, now put it in your book. We have done all of the work for you but we would like you to put it in your manual so the world can use it’. There are things that happen in the mature aircraft world that are not very responsive to the operators needs but they are understood to be so, not because the OEM doesn’t care about a mature engine any more, just that their priorities are different.” For independent MRO shops, form- ing these kinds of partnership on the DER side is essential to their near-term survival. One senior engine MRO figure who declined to be named stated: “What is important for us is that we have the ability in our organisation to design a repair in partnership with the OEMs and get their approval. If you can do that and work with the OEM and develop a good relationship, then you can get the OEM to approve the repair unless it would be a major hit to their bottom line. Occasionally we tie in the customer. We often present a case to the OEM with all of the facts for a repair and that there SMOKE AND MIRRORS is no technical reason why we cannot do a repair. What is the OEM going to say? If they don’t say yes now, we say we are going to be back tomorrow with the operator, although we say it much more politely that that.” Dr Robert Furlan, VP part repair, engine maintenance at SR Technics in Zurich, agrees that partnership with OEMs for repairs is important. This is understandable given the com- pany is part owned by GE - but he also highlights the importance for them to remain independent from the OEMs and focus on keeping costs low for the customer. He says: “You can develop repairs on your own like DER and PMA. Then you make claims that your technical solution is equal or in many cases bet- ter than the OEM. You can the approach the OEM and present a business case for the repairs. It could be that if the OEM already has some pressure to come up with a repair in the area or if they realise that this repair is not fixing the problem, they will decide they need your idea and will include the repair in their manual. In some cases the OEM puts themselves as the source but you share the market.” However this approach doesn’t always work, says Furlan, as the repair councils of the OEMs make purely commercial decisions on whether it is worthwhile coming up with a repair or not. “That’s my experience,” he says. “A topic is raised and has a good idea, and the aftermarket could have a demand, but the OEM could say no that they are not going to come up with this specific repair because sales of their new part are down and they would rather make more money on that than devise a repair service. This is just the way the OEMs make money – selling new parts.” Although partnerships and joint ventures in the DER market provide a way for independent MRO shops to remain competitive, technology is being developed that will result in the OEMs controlling even more of the aftermar- ket. Furlan explains: “The old world was about getting licences and negotiation with the OEMs. In the future and the next generation of engines there will be major changes in the game. Engines will be sold from the Aldo Prario says: “If a GE is devel- oping a new engine programme and they have limited resources they are going to put those scarce resources on the new engine program; maintaining or supporting the needs and desires of an airline with a mature engine is less likely to be at the forefront. If I am developing a new engine, all of my tal- ent and most resources are portioned to the people doing the new product. Consequently, but not intentionally, the product support of a mature engine takes a back seat. I have seen circum- stances where airlines under their own 121 authority develop a repair because the OEM hasn’t reacted quickly enough for them. However the repair on the aircraft has been documented in hours and cycles, and the MRO shop then an hour, somebody will have to stump up the difference for the next overhaul. And that is not something we should be doing, or something the next airline should be doing.” As more and more airlines ask les- sors to include aircraft under their OEM aftermarket programs so there begins a problem for the lessors. They must either double-up the cost to the airline per hour and risk losing the business or work out some other way to move forward through agreement with the OEM, lessor and lessee. DER REPAIRS - THE FUTURE SOLUTION? Amid all of this OEM expansion, it is important to note the growth in DER repairs. The approved repair market is growing rapidly and the OEMs are fully aware of the significance that this could have. But in most cases today, MROs upon arriving at a solution or improve- ment for a repair will revert back to the OEM to arrange a joint venture on specific repair going forward. This is fast becoming the norm and for some independent MROs this is a core part of their business going forward. Daniel Adamski of HEICO says: “In today’s competitive market, owners and operators are continuously searching for ways to reduce costs while maintain- ing safety. There are a variety of means permitted under the CFRs for owners/ operators to maintain their aircraft and restore or replace parts and compo- nents. The proper implementation of DER repairs is one method permitted under the CFRs. DER repairs to parts of any extent, short of 100% fabrication, that restore them to an airworthy condi- tion, when the applicant has determined that repair is more economical than purchasing or fabricating a complete new part, are permitted, provided they are in strict compliance with all appli- cable regulatory and airworthiness requirements.” DER repairs make sound financial sense for aircraft operators and they often improve on flaws in the original parts. With most OEMs expending much of their time and resources in the development of brand new engines, they have limited ability to work on develop- ing repairs for more mature engines. "whaI |s |mporIanI Ior us |s IhaI Wa hava Iha ab|||Iy |n our organ|saI|on Io das|gn a rapa|r |n parInarsh|p W|Ih Iha ûENs and gaI Iha|r approva|." 42 Airline Economics: MRO Global 2011 www.airlineeconomics.com SMOKE AND MIRRORS with the OEMs through aftermarket supply agreements and other joint- venture contracts to such an extent that they themselves have become an integral part of the OEM web, even though they repeatedly maintain there are independent. Conversely it is this interaction with the independent MRO market that has protected the OEMs from anti-trust investigations but has attracted the attention of the European Commission and Capitol Hill regulatory commissions. A source at the European Commission confirmed to Airline Eco- nomics that they were “looking into the situation”. In the meantime however the concept of an independent MRO is being completely eroded and the decision power of the independent and airline/ operator with it. When MRO shops are woven into the OEM structure to such an extent that they are worried to upset them by commented on the record, then the term independent has largely become redundant. In conclusion, it is clear that as the MRO market consolidates, the very best option for the PMA firms is to be bought by an OEM or MRO, or buy up maintenance companies themselves. If they are not large enough to do this, then PMA market consolidation and refinancing will need to take place to facilitate the next phase of prolifera- tion. The PMAs have spent hundreds of thousands of dollars fighting their collective corner and appealing to the airlines and lessors to look again and again at the correct facts. This has got very little traction to date. Now as the OEMs increase their grip on the after- market, it is logical that the PMA firms should seek to secure their position at the front end in the maintenance shops through merger and or acquisition and then extend to offer PMA included aftermarket care through base and line maintenance and power by the hour agreements. By controlling a section of the front-end market, the PMAs will be able to guarantee continued parts and repair supply to the market no matter the aircraft age. It is the only way to secure a solid footing for PMA in the commercial aviation sector for the next decade and beyond. The only question remaining is when will the PMA firms stop talking and start acting? very first day with long-term mainte- nance contracts and there will be many innovations in the new equipment that the OEMs will keep proprietary.” The next generation of engines con- tain composite fan blades; composites require a great deal of knowledge and experience to repair and also require new and expensive machinery. Another example Wolfgang cites is bladed disc technology, which have to pass a spin- ning test to show it is safe. “This is difficult for a non-OEM,” he says. “I do not see the free market developing in the next generation of engines that there was in the more mature engines. The OEMs are taking care that the whole lifecycle of the product is in their hands, including the aftermarket.” He adds: “In the old world, I would have said we would have to get more and more technology to be a bigger player in that market, but in the new world with our ownership we are pretty well in the market and still we are introduc- ing technology we have to be attractive to the OEMs. The climate is very good between us and the OEMs and we have to be an attractive partner. Our technology is not to put the OEM under pressure; it is more to be an attractive partner. We want to deliver best performance so we will be a partner to the OEM but we will also challenge them. We will build up our technology to provide the best ser- vice for our customers…. The change in the industry in selling engines, requires a totally new strategy. We are preparing for composite repair, which requires a lot of new technology. The good thing is that we are not only an engine MRO, we have a lot of know-how on the aircraft side of composites and we have to build it up right away.” In a world where the OEM con- trols everything from conception right through to D-check is one where there is little room for competition. The aviation sector is quietly moving towards huge OEM control and this, coupled with MRO consolidation, will mean higher prices for airlines before the end of the decade. If the fact that higher prices and an increased monopoly of the OEMs is forthcoming, why has no one stepped up to the plate to argue against such a situation? The very same independent MROs are themselves intertwined www.airlineeconomics.com Airline Economics: MRO Global 2011 43 SMOKE AND MIRRORS PMA LIMITATIONS Organisation Allow PMA Limitations Ex-Im NO It goes against our stated policy to allow PMA on aircraft which beneft from our sup- port ECGD NO The European ECAs have a stated policy not to allow the use of PMA parts on aircraft which beneft from their support. Coface NO Hermes NO Lessor Allow PMA Limitations If on care program or PBH agreement does the lessee still have to pay towards maintenance reserves Jackson Square Aviation YES in non critical areas on a case by case basis ECA funding exclusions It depends on the airline.  Sometimes if we can do a three party agreement with the OEM we will forego MRs. ELFC NO Limits the ability to lease or sell Sometimes, yes but most often, 75% of the time no. Willis Lease NO Operator either has to pay reserves or agree along with maintenance provider to a tripartite agreement ILFC YES on a case by case basis ILFC’s approach to the issue of PMA parts is that we allow our customers to make the decisions as long as all certifcations and aviation authorities regulations are met. Aviation Capital Group NO We do everything we can to avoid PMA/DER but we accept that it is the future. AerCap No Comment Airline Economics is aware of several clients that have been allowed PMA in non critical areas FLY Leasing / BBAM NO We preclude the use of PMA at all times "Typically a lessee will not pay reserves to both the OEM care program and to the lessor for the same maintenance event. In the scenario where the lessee pays the reserves to the OEM, we have structures in our agreements with the parties that returns the lessor to the same position at lease expiry had the lessor received the reserve payments during the term." GECAS NO 44 Airline Economics: MRO Global 2011 www.airlineeconomics.co FINANCE T he main issue for a les- sor is that, when the lease expires, it holds no reserves to apply towards the next engine overhaul, presumably when the air- craft will be operated by a new lessee whose lease will require the lessor to pay the portion of the cost of the next over- haul attributable to engine use before the new lease began. There are a number of ways to address this issue. None of them satisfies all the parties all the time, and each raises its own issues. 1. LEASE RESERVE PAYMENTS One solution is to require the lessee to pay reserves under the lease without regard to the maintenance contract. Another is to require the lessee to pay lease reserves only to the extent they exceed the monthly payments under the maintenance con- tract. These solutions typically require the lessor to pay the lessee an amount equal to the paid-in reserves upon the success- ful completion of an overhaul under the maintenance contract, but enable the lessor to retain the reserves paid after the last overhaul and before lease expiry or termination. Lessees often resist these solutions as duplicate maintenance payments and as depriving them of the benefit of advantageous pricing under the maintenance contract. 2. LEAVE IT FOR RETURN In support of this solution, lessees argue the engines will be maintained and over- hauled under the maintenance contract in a manner consistent with the corre- sponding lease requirements and that any deficiency can be addressed upon return of the aircraft at lease termina- tion or earlier expiry under the return condition clauses of the lease. A finan- cial adjustment, for example, would compensate for an engine with greater- than-allowed accumulated hours or cycles or that otherwise does not com- ply with all return conditions. But lessors often encounter difficulty recovering return condition payments, especially in cases of airline bankruptcies. Top credit airlines that would not pay reserves any- way argue the maintenance contract is not even relevant to the lessor. The above two solutions do not involve much negotiation with the main- tenance provider. Discussed below are other solutions that seek more middle ground, but that do require the mainte- nance provider’s agreement. 3. REFUND The lessor’s key objective should be to avoid a forfeiture of the unexpended maintenance payments paid under the maintenance contract. To accomplish this, the maintenance provider and les- see can agree that if the maintenance contract is terminated with regards to the lessor’s engines for any reason, including expiration or termination of the lease, the maintenance provider will refund to the lessor all (or an agreed portion) of the unexpended payments it holds on the basis that the maintenance provider will have been paid for an over- haul it no longer has to perform. If the refund is less than the reserves that would have been paid under the lease, the lessee can pay the difference. The maintenance provider might resist this approach because it might Solving issues with third-party maintenance contracts John Karesh at Vedder Price sets out the issues arising from maintenance contracts where, instead of paying engine reserves to the lessor, the lessee pays a maintenance provider based on the hours or cycles of operation in exchange for engine overhauls. www.airlineeconomics.co Airline Economics: MRO Global 2011 45 FINANCE the maintenance contract to secure its performance under the lease, so if the lessee defaults under the lease, the lessor could seek to enforce the mainte- nance contract for its benefit. However, as a general rule, absent agreement from the maintenance provider, it would not have to perform for the benefit of the lessor if the maintenance contract con- tains a provision generally that it is not assignable, and in any event, the main- tenance provider’s obligation to perform an overhaul or refund payments would be limited to what is required under the maintenance contract. Moreover, the lessor could be stayed from enforcing its security interest if the lessee were to file a petition under Chapter 11 of the Bankruptcy Code. 8. WHOLE NEW AGREEMENT The best option. The best way to address the concerns of each party is a sepa- rate, three-party agreement among the maintenance provider, lessor and lessee providing that, following a lessee default under the maintenance contract or the lease, the lessor can elect to require the maintenance provider either to make a refund, or to overhaul the engine with costs shared, or to permit the lessor or next operator or purchaser of the engines to step into the lessee’s shoes under the maintenance contract. The three-party agreement should also provide that the maintenance provider will: (a) notify the lessor immediately upon a material breach by the lessee under the maintenance contract; (b) following such breach or a default under the lease, follow the direction of the lessor to the exclusion of the lessee in relation to the lessor’s engines; (c) give copies to the lessor of any notice it gives or receives under the maintenance contract; (d) not modify the maintenance contract including by means of a private letter ruling, DER repair or other exemption, exclusion or alternative means of compliance, without the lessor’s consent; and (e) not pledge, assign or encumber its rights (including its right to payment) under the mainte- nance contract. The lessor should agree to notify the maintenance provider upon the occur- rence of a lease event of default. The lease should include provisions that: (a) prohibit the lessee from (i) occur after further operation of the engine by a new lessee, the maintenance pro- vider might resist contributing to the cost of the next overhaul if differences in the use profile or maintenance practices of the new lessee could increase its obliga- tion. A financial adjustment could solve this problem. 5. CURE OF LESSEE DEFAULTS Curing lessee defaults under the mainte- nance contract to avoid termination might not adequately address the concerns of the lessor or the maintenance provider. A cure can be expensive and would only make sense if the maintenance provider has agreed to overhaul the engines for the lessor or a new lessee and otherwise to continue performing under the contract as long as the lessor makes the cure pay- ments notwithstanding any other default by the lessee under the maintenance contract. If the lessor elects not to cure, or if the maintenance provider refuses to accept a cure, the maintenance contract should require the maintenance provider to refund to the lessor all unexpended maintenance payments in its possession attributable to the lessor’s engines. 6. ASSIGNMENT A right to assign the maintenance con- tract to a new lessee is often contentious and might be of limited use to the lessor. Offering an assignment of the mainte- nance contract to a new lessee could, in certain circumstances, enhance the lessor’s efforts to re-market the aircraft. But the new lessee might not want the contract if it is too expensive or burden- some, or if it has its own maintenance programme. The maintenance provider might object to an assignment on the basis that the monthly maintenance fees and workscope were agreed with the exist- ing lessee based on factors, such as its use profile and assumed quantity of work, that do not apply to the new les- see. However, these factors should only affect pricing, not the agreement to assign. Some assignees might simply be unacceptable to the maintenance provider, such as a competitor. 7. SECURITY INTEREST The lessee could grant the lessor a secu- rity interest in the lessee’s rights under view maintenance payments as its prop- erty or as security for lessee obligations. It could claim that the maintenance payments form part of a pool to pay for overhauls on a fleet of engines, that it will be damaged by the premature termina- tion of the contract because it anticipated a certain workflow, or that it ‘over-built’ the engine at the last overhaul to reduce its projected cost under the contract. 4. OVERHAUL COST SHARE The maintenance provider might agree to contribute to the cost of the next overhaul the amount of unexpended maintenance payments attributable to the lessor’s engine held at the time of contract termination. The contribution may be limited to overhauls performed in its shop and/or within a limited period of time, or to the payment of a percentage of the cost of the next overhaul based on the ratio of the number of hours or cycles for which the maintenance provider is holding payment and the total number of hours or cycles accumulated by the next overhaul. Since the next overhaul will usually 46 Airline Economics: MRO Global 2011 www.airlineeconomics.co FINANCE under the lease), then upon withdrawal: (a) the maintenance provider should pay to the lessor all unexpended main- tenance reserves attributable to such engines; and (b) the lessee either should be required to (i) induct the engines into another acceptable maintenance programme or (ii) commence paying reserves under the lease and make any catch-up payment described above, and pay any termination fee due under the maintenance contract. Artisans’ liens: Such liens (some- times known as mechanics’ liens) are generally limited to the agreed price and reasonable value of the labour and parts furnished by the maintenance provider for the improvement of the particular engine. Sometimes, the maintenance provider will waive its artisan lien rights on the theory it has already been paid for the cost of the overhaul by the lessee’s periodic mainte- nance payments. But some maintenance contracts purport to give the maintenance provider a consensual lien on the lessor’s engine to secure all obligations under the maintenance contract, including for unre- lated engines. The lessor should seek a waiver of these liens. WHERE AND BY WHOM CAN THE OVERHAUL BE PERFORMED? The lessor should verify that the main- tenance provider remains liable for the work performed by its subcontractors or designees and that any subcontracted work is covered by the maintenance pro- vider’s indemnity and warranty. Warranty: All warranties of the main- tenance provider should be assignable to the lessor or new lessee. PMA parts: Any lease restriction on the use of PMA parts should be consis- tent with the maintenance contract. Replacement parts: The mainte- nance contract should provide that title to replacement parts will vest in the les- sor, subject to the lease and the lien of a lender, if any. CONCLUSION Third-party maintenance contracts are here to stay, and are growing in impor- tance. They can be of great benefit to the lessee, and in many instances to the les- sor as well. But they raise issues that the parties can effectively resolve if they co- operate reasonably in the process. (or supplemented) to cover the lessee’s obligations described in (a)–(d) above. OTHER LESSOR ISSUES A number of other clauses in mainte- nance contracts can also create issues for lessors: Confidentiality: The lessor needs to know the provisions of the maintenance contract to determine if any them (includ- ing those discussed below) affect the lease, and should be willing to maintain such confidentiality. Even pricing of the maintenance contract can be important for the lessor to determine if it risks being ‘under-reserved’ or if the amount of a refund becomes relevant. Conditions precedent: Most mainte- nance contracts will excuse performance by the maintenance provider or permit it to terminate the maintenance contract if the lessee fails to make payment or perform other obligations. This is par- ticularly troublesome if the maintenance contract contains a cross-default clause to other agreements with the mainte- nance provider or an affiliate. Workscope: The lessee might argue the workscope is not relevant to the les- sor’s interests because the lessee will remain obligated at its expense and risk to perform all maintenance and meet all return conditions required under the lease, and the lessor will have a claim for damages in case the lessee fails to do so. Replacement engines: The mainte- nance contract should permit the lessee to induct a replacement engine into the maintenance programme if a leased engine is replaced, for example, due to an event of loss. The lease should obligate the lessee to pay any required induc- tion charge. If the replacement engine is not inducted, the maintenance contract should require the maintenance provider to refund the amount of unexpended maintenance payments attributable to the replaced engine, and the lease should obligate the lessee to make any necessary ‘catch-up’ payment in case the refund is less than the reserves that would have been paid by the lessee under the lease in respect of the replaced engine absent the maintenance contract. Engine withdrawals: If the lessee has the right to withdraw the lessor’s engines from the maintenance programme (especially in contemplation of return assigning, pledging or encumbering its rights under the maintenance contract and (ii) modifying or waiving any provi- sion of the maintenance contract without the lessor’s consent; (b) make a lessee default under the maintenance contract a default under the lease; (c) require the lessee (i) to hold the lessor harmless if the refund or credit of maintenance pay- ments or contribution to the cost of the next overhaul from the maintenance pro- vider is less than the amount the lessor would have been holding had traditional maintenance reserves been paid under the lease, and (ii) to indemnify the les- sor for any loss resulting from a lessee default under the maintenance contract, including any cure payment made by the lessor; and (d) require the lessee to pay as additional rent (i) any amount by which traditional maintenance reserves payable under the lease exceed the maintenance payments payable under the maintenance contract or (ii) full, tradi- tional maintenance reserves at any time when the maintenance contract is not in effect together with a ‘catch-up’ payment if full maintenance reserves become required under the lease. The lease security deposit should be adequate John Karesh at Vedder Price represents lenders and lessors in a variety of domestic and cross- border aircraft finance transactions, including mortgage financing and operating leases, and investors and operators in domestic and cross- border purchases, sales and financing of aircraft. www.airlineeconomics.co Airline Economics: MRO Global 2011 47 AFTERMARKET demand volatility increases, the effect on the amount of inventory required can have a major impact on cashflow and bottom-line profit. The effects of the recent economic climate have disrupted the normal pat- terns of demand for a lot of industries, and throughout the whole supply chain. What will be the effect on the required parts to service the aftermarket? Do we know the knock-on effect of this yet, or do we have to wait for the natural time lag to affect the demand profile for spares? Companies that have greater visibil- ity of future demand and can anticipate the volatility will stand a better chance costs, negative effects on service levels, or significant firefighting. While a strong understanding of the efficiency of a standard supply chain operation is commendable, many have forgotten the aftermarket. Product life- times are lengthening, and companies are seeing changes in demand pat- terns. Now is the time for the aftermarket supply chain to be at an optimum, rather than being treated as an ‘also- ran’ division. DEMAND VOLATILITY One of the main characteristics of an aftermarket business is the large range of parts that have to be stocked. If T he economic climate and change in market require- ments has seen supply chain management move up the business agenda. This has led to many man- ufacturers improving process efficiency, smartening up performance metrics, and investing heavily in technology to increase the efficiency and cost-effec- tiveness of their supply chain. In recent years supply chain man- agement teams have begun to look at risk evaluation alongside their process optimisation strategy. This has helped to position organisations to better man- age risks such as failure to supply, higher In this climate it is vital that aviation aftermarket businesses optimise their aftermarket supply chain. Inform’s Cathy Humphreys explains how to boost the efficiency of this process with inventory management planning without making big changes to systems. More than an afterthought 48 Airline Economics: MRO Global 2011 www.airlineeconomics.co AFTERMARKET versions of spare part are available. Issues such as backward compatibility and obsolescence have to be managed carefully to ensure the right parts are available in the right strategic location for rapid delivery to the right customers. Offering superior customer service is more important than ever before as it encourages repeat business. Manu- facturers now need to review what parts they will need to keep in stock to ensure a smooth aftermarket service for products being kept for longer periods of time. Ultimately, this greater instability in the demand of new products, as people hold on to products for longer, affects the supply chain dramatically, as it becomes far more difficult to manage the all important aftermarket. EFFECTIVE PLANNING IS THE KEY Supply chain management is constantly evolving, and organisations should recognise the role that decision-support systems can play. These systems can assist not only in supporting best practice for strategic decision-making processes, but also in the operational, transaction- oriented decisions that typically get the focus from supporting technology. Businesses prepared for future changes in demand of spare parts will strengthen their market position. Predict- ing future requirements, and planning proactively, will create greater visibility and the opportunity to enable a more efficient (and profitable) supply chain. The business benefits will be evident if it can better manage the aftermarket supply chain and achieve optimal stock levels to satisfy service-level agree- ments. Benefits include a release of cash tied up from excessive stock, improved process efficiency and less emergency costs from firefighting, as well as the potential for increased rev- enue from happy customers. Aftermarket supply chain manage- ment is complex, but the rewards are big for getting it right. The key is not to use systems created for the main- stream business by trying to shoehorn them into a completely different envi- ronment. Instead, it is paramount to have the right tools for the job and to use sophisticated systems to manage the complexity, helping managers make the right decisions. product, and to efficiently source and stock these items. Although it is common practice for companies to use sophisticated soft- ware for the new-build market, many still use spreadsheets for the manage- ment of spare parts. With the pressures of high service-level requirements and high demand volatility, isn’t it the latter part of the business that needs the sup- port of sophisticated software and not the other way around? IMPROVED DEMAND ACCURACY Improving demand accuracy is the single most effective action that will cascade through all other supply chain metrics, improving revenue and profit, and reducing costs. If aftermarket parts are inherently difficult to forecast, then this is where businesses should look at getting help. Advanced planning and execution software, catering specifically to after- market products, can have a big impact on demand accuracy. By applying the appropriate algorithms (automatically) to the historical consumption of each and every item, as well as combining known demand such as scheduled maintenance or predicted failure rates, accuracy will increase. That said, some people argue that forecasting based on historical con- sumption is not right for their business. But it is a good place to start. It pro- vides a demand shape or pattern for the profile of an item, which can then be adjusted with known information about the future demand. It is also essential businesses under- stand potential changes in the product mix as well as overall volumes, so the right parts can be stocked. The cost of having the wrong parts could be a breaking point. A lack of product avail- ability will lose customers and increase the cost of expensive emergency ship- ments. Excess stock ties up capital, incurs unnecessary storage costs and affects cashflow. Many businesses are now aiming for 100% availability of spare parts, yet their portfolio is set to increase, espe- cially with the number of revision levels required to support a larger base of older products. The longer a product is supported in the aftermarket, the more of supplying customers in the most optimised way. By improving the performance of the spare parts division of a business, profit can be driven into the company through increased revenue in the aftermarket and reduced wasted cost. This can potentially increase revenue in the mainstream business through increased customer loyalty. The length of time a company spends doing busi- ness in the aftermarket is often far greater than the initial sale. This creates an opportune time to sell more – if the customer is happy. The key is continuous improvement. A few years ago it was fine to have a spare parts division whose focus was to identify those existing production parts that might be required in the aftermarket and to keep a few to one side for later. Then, when required, the appropriate part is sourced at a higher price. This is no longer the case, and the requirement now is to dynamically and accurately predict what parts might be required during the lifecycle of each Cathy Humphreys is UK country manager at Inform, which specialises in planning and decision-making software to improve busi- ness productivity. She has been at Inform for four years and was previously a director in the aftermarket services division of rolling stock manufacturer Bombardier Transportation. THE PARTS MARKET 50 Airline Economics: MRO Global 2011 www.airlineeconomics.co T he global movement in the aviation industry towards younger aircraft has had an efect on all maintenance repair and overhaul firms, and the parts market is no diferent. Although it is of course far more targeted, it remains at the very front line of cost pressures and demand. The parts market, from the point of view of an investor, looks proliferated at the moment, with many players compet- ing for the same slice of market share. This view is backed by Dennis Zalupski, chief executive ofcer of Kellstrom Indus- tries. “The competitive landscape of the aviation aftermarket has changed consid- erably over the past decade. Not only are there many more large competitors, there is also a proliferation of small companies that work out of other people’s invento- ries, using a computer and the internet to sell parts around the world,” he says. “Per- haps even more importantly, there has also been a deluge of investment dollars coming into the used airplane market that has resulted in financial investors and a few aviation companies taking large posi- tions in asset classes that are approaching their end of life. All of these factors have contributed to a flood of material into the aftermarket over the past few years.” The growing acceptance and availabil- ity of used parts is helping to drive down overhaul costs across the globe. Mainte- nance specialists have an entire spectrum Pulled apart The parts industry is fragmenting, as more and more players enter the market. And they’re all competing for the same slice of business. MRO Global talks to Kellstrom’s Dennis Zalupski about how his firm intends to retain its share THE PARTS MARKET www.airlineeconomics.co Airline Economics: MRO Global 2011 51 advantage we ofer them is we already have the infrastructure in place and the relationships with the airline custom- ers and MRO facilities around the world to efectively market their products for them – often better than they could do on their own. We also assume the inventory and credit risk for the OEM, something that has always been somewhat of a barrier to success for OEMs in the after- market. This type of relationship works especially well for us, with manufacturers such as Ametek Aerospace, which is an important partner of ours in the Com- mercial channel, and Honeywell, who we are very strong with on the military side of our business.” “Where we don’t have an aftermarket distribution relationship with an impor- tant OEM, we still make every efort to work with and support it when we can. For example, when we have surplus material receptive to the concept of used, recondi- tioned and PMA parts, due to concerns over asset values. However this view appears too be subsiding as new les- sors enter the market with a more open mind regarding their use. But on the other hand, the OEMs are gradually taking control of the market through increased aftermarket agreements at point of order, which in turn is leading to parts specialists having to join forces with the OEMs in much the same way as the MROs. “There is no question that the big OEMs, whether they are airframers, engine companies or systems providers, have woken up and are trying to protect their very profitable new parts stream into the aftermarket,” says Zalupski. “In some cases, we join forces with them by using our ongoing access to the global customer base to sell and distribute their new products into the aftermarket. The of options to choose from to suit their clients, from new original equipment manufacturers’ parts through to PMA, approved repairs and reconditioned used parts. The great number of options open to airlines has had an efect on the mar- ket Zalupski of Kellstrom Industries is on the front line in the parts market and he is seeing the movements in the global market first-hand. “On the commercial aviation side of the business, we are see- ing continued price pressure on both surplus airframe and engine parts. This is really a direct result of the number of older aircraft that have been removed from service and disassembled over the past few years. Generally, it has been the older Boeing and Airbus models along with the associated engine types. Pricing on newer generation equipment, if you can find it, continues to be quite strong.” The leasing sector is generally less 52 Airline Economics: MRO Global 2011 www.airlineeconomics.co THE PARTS MARKET that needs to be repaired or overhauled, we will make a concerted efort to send it to the OEM, assuming it is competitive in price and turn time. This in turn helps us sell the products to our customers, most of whom are as quality-conscious as we are,” says Zalupski. Parts demand, both from a quantity as well as platform type, changes on a daily basis. Longer-term trends in demand follow the fleets. Today, almost any part from the new-generation airframes and associated engine types, such as the newer versions of the A320 along with platforms such as the 737NG, 777 and A330, always have more demand than supply. As these fleets continue to grow and the OEMs continue to raise prices for new parts, that demand is set to become even greater. The industry has changed greatly over the past decade and as it contin- ues to evolve, so too will companies such as Kellstrom. The lifecycle of an aircraft is getting shorter, from 25–30 years to something more in the 20-year range. Based on the number of new air- craft Boeing, Airbus and the others are projecting to build over the next two decades, it seems there will be a race to see if the industry can grow fast enough on a global basis to absorb all of the new and used aircraft. If the global economic situation were to cause a Japan-style decade-long recession, then we could be faced with massive aircraft retirements, which will be parted out. The future focus of the industry will be on Asia in general, and China in par- ticular, which is clearly a growth market. A combination of routes is driving growth – long haul between continents, long haul within Asia and short haul within the regions and/or within China. “When you combine this with the young, vibrant and growing population, as well as lower wage scales, it is little wonder Asia and China have quickly become a force in the global MRO business. Back in the mid-2000s, we anticipated this would happen and opened our Asian regional ofce in Singapore,” says Zal- upski. “Today, in addition to the ofce in Singapore, we have an operation in Aus- tralia, as well as a network of exclusive agents who help us service the region. This is clearly our fastest growing region on the commercial side.” www.airlineeconomics.co Airline Economics: MRO Global 2011 53 THE PARTS MARKET Kellstrom Industries Kellstrom Commercial Aerospace is one of the largest and most reli- able suppliers of aircraft parts and is a full-service provider of logistics and material management solutions. Kell- strom has established itself as a global supplier of inventory solutions with specific focus on: · Large new-generalion invenlory · A slrong, cuslomer-focused management team · Slale-of-lhe-arl IT caµabiIilies and solutions COMMITMENT TO THE HIGHEST LEVEL OF QUALITY STANDARDS Kellstrom Commercial Aerospace has achieved success through the establish- ment of various value-added material management and distribution pro- grammes and has existing agreements in place with companies such as: · Norlhroµ Grumman · MarshaII Aerosµace · Qanlas Defence Services · Amelek Aerosµace & Defense · HoneyweII · Paciñc Scienliñc · Arrowhead Producls It currently ofers supply chain man- agement, inventory pool programmes, exchange programmes and surplus management. Dennis Zalupski of Kellstrom Industries was recently interviewed by MRO Global and was asked: What have the past 12 months been like for his company and has he had noticed a slowdown of late? He said: “The past 12 months have been strong from a business standpoint for Kellstrom. With its defence and commercial parts and logistics busi- nesses, along with its FAA145 repair business, Kellstrom finds itself pretty well diversified. All three segments have performed well. Kellstrom has seen some softening in Europe, espe- cially in the military MRO business, which it believes is a direct result of the pressures on EU budgets due to the deficit issues there. Fortunately, between Kellstrom’s order backlog of previously won business as well as a new contract recently won supporting the US Air Force, it has been able to continue to grow the business.” Currently, Kellstrom is able to fund all of its business needs through its existing credit lines and cash generation. The company doesn’ t anticipate needing additional fund- ing in the near future, but is confident that if it did, it could raise a reason- able amount of funds relative to its size and profitability. One area that any exporter needs to consider is currency fluctuations, but generally Kellstrom finds it has been helped by the weaker US dollar. “We are a US-headquartered company that does more than 50% of our busi- ness outside of the US, and the global aviation industry is still primarily dol- lar based,” says Zalupski. “Because of this, most of our costs are in US dollars and when we sell outside of the US, the weaker dollar allows us to ofer more competitive products and services to our customers. On the negative side, the weaker dollar has driven up our cost structure and salaries in the other markets where we have a pres- ence, primarily Europe, Singapore and Australia.” The focus at Kellstrom over the past few years has been to continuously improve performance in every facet of day-to-day business. Today’s Kellstrom is a company with a great infrastruc- ture, whether it is facilities, IT systems, quality systems or its most important asset – its people. “Our goal is to lever- age these strengths into every segment of the business we compete in, not nec- essarily to be the biggest, but to be as efcient a business as possible and to deliver high-quality products and ser- vices to our customers at the lowest possible cost,” says Zalupski. “At this time, we are looking for better ways to compete every day in a market that gets tougher all the time. At the same time, we keep looking for opportunities to take our strengths and use them to grow into associated businesses. For example, we are using a combination of Kellstrom’s heritage in providing surplus engine parts to the aviation market along with our exper- tise in new parts distribution to build a new business for ourselves focusing on ground-based power. While still small, we believe this business can grow into a very profitable niche for us soon.” Kellstom’s growth today is primarily focused on three areas. The first is the new OEM parts distribution into the global commercial and defence avia- tion aftermarkets. Another strong area of growth has been the defence parts and logistics business, which provides support to aviation MRO companies around the world, such as Northrop Grumman in the US, Marshall Aero- sµace in lhe UK and Qanlas Defence Services in Australia, all of whom ser- vice US military platforms such as the C130, P3, F16 and B707. Lastly, Kell- strom continues to see strong growth in the traditional commercial aviation surplus parts business, including the power segment. “We are very proud of a very large logistics support contract we recently won supporting Northrop Grumman and the operational fleet of the US Air Force AWACS airplanes. The contract, which is for five years, is currently tran- sitioning over to Kellstrom and will be 100% under our control by November 1,” says Zalupski. “We are fortunate to be in a great industry at an exciting time. Kellstrom might be a relatively small player in a huge global industry, but we like where we are positioned in the space we concentrate on and we are bullish on the future of the company.” You can contact Kellstom at: Kellstrom Industries 3701 Flamingo Road Miramar, FL 33027 Tel: (954) 538-2000 Fax: (954) 538-6626 AMERICAS 54 Airline Economics: MRO Global 2011 www.airlineeconomics.co M id-term growth in North America will be slow, with limited fleet growth expected for North Ameri- can operators. The narrowbody fleet is expected to grow in the next five years while the widebody and regional jet fleet contracts over the same period. Team SAI estimates a negative 0.3% com- pound annual growth rate from (CAGR) 2011 to 2016 overall followed by a posi- tive 1.4% CAGR from 2016–2021. The current environment means operators are unlikely to bring back most parked aircraft into service, greatly reducing the number of MD and 757 fleets flying. During 2010 and the first half of 2011 economic recovery gave airlines confi- dence to make longer term plans, which in turn led to the supply of hangar and engine slots tightening. During the sec- ond half of calendar 2011 the positive impact of capacity discipline has been more than ofset by economic woes, caus- ing a fresh slowing of passenger demand that might yet lead to additional parked aircraft in the near term during winter 2011/12. Aircraft age ranges and the efect on the North American maintenance market over the next five to 10 years will be pro- lific. In the US especially there are many MD and 757 aircraft still flying – once these are removed from the market and the new aircraft begin service the MROs will lose business. MRO Global asked Chris Doan, chair and chief executive of Team SAI, what he thinks is in store for the US market over the next five to 10 years. “We definitely see the phenomenon of new aircraft taking less maintenance requirement,” he says. “We see a very black market for the Americas for the next 10 years, with very low growth. And no growth in the fleet; maybe a small loss in the fleet size as consolidation continues in the US air- AMERICAS www.airlineeconomics.co Airline Economics: MRO Global 2011 55 the way airplanes are managed.” Delta TechOps seem to be weather- ing the storm well. Tim Bolt, marketing manager of Delta TechOps told MRO Global: “This has been a solid year for our MRO business. We’ve experienced strong current-year and long-term growth. Ear- lier this year, we announced two unique partnerships. In February, Delta TechOps announced it was entering into an exclu- sive MRO partnership with GOL. As part of the five-year deal, Delta TechOps will provide engine overhauls for a minimum of 50% of GOL’s CFM56-7 engines and maintenance services for various parts and components on GOL’s fleet of Boe- ing 737NG aircraft. In addition, Delta TechOps is providing consulting services related to maintenance workflow plan- ning, materials and facility optimisation, and tooling support, and will assist GOL with its eforts to secure FAA Part 145 Repair Station Certification. In August, we announced we are forming a main- tenance joint venture with Aeroméxico, which will help us expand our global footprint into the Mexican and Latin American markets. It will enable us to provide our customers in these regions with a maintenance facility that is near by, provide cost savings to Delta, and at that same time allow us to explore fur- ther leveraging the high-quality airframe maintenance work that Aeroméxico provides Delta today. Both of these part- nerships are great examples of how we are looking at creative opportunities to grow our MRO business going forward. We can no longer rely solely on organic growth. This partnership with Aeromexico will help us to grow our global presence in Latin America and Mexico while also forging ahead toward our goal to achieve $1 billion in annual sales.” When asked if the past few calendar months of 2011 have seen a downturn in business, Bolt stated that “many air- lines are reducing capacity and parking aircraft. This ultimately means reduced maintenance demand and greater com- petition for the remaining opportunities. We are monitoring demand very closely, however; at this time we have not seen a downturn.” Maybe this is the calm before the storm for Delta Tech Ops; the picture will become more clear over the next few months. What is certain is that Delta TechOps has had a successful 2011, over the past – if we roll the clock back 20–30 years – many of the major carri- ers did their own maintenance and also customised their MRO programmemes significantly. Now, when the predomi- nance is towards outsourcing, the diferences actually create a problem. The lessors feel this more acutely because they deal with multiple carriers and even more now that airplanes are being moved more often between carriers. One of the bene- fits of the dominance in the lessor market is going to be a drive back to standardisa- tion. That is a win-win for everybody and it should even help bring maintenance costs down and create more efciency in line industry. When you look at the order books and what the US carriers have ordered, there is not a very clear picture at the moment. Most of the new engine aftermarket business is being captured by the original equipment manufacturers (OEMs) by design, so that is not an easy play for an independent engine shop. The newer engines, unlike the airframes, are going to cost a little more to maintain and the components are also being captured by the OEMs.” When asked about aircraft lessors’ afect in the US MRO market, Doan says: “One of the things the industry is hav- ing difculty with today is the fact that AMERICAS MRO 56 Airline Economics: MRO Global 2011 www.airlineeconomics.co AMERICAS airlines is directly leading to an expan- sion in maintenance facilities across the US. Following the United/Continental merger announcement in May 2010, the two carriers established an integration management department that quickly realised there were substantial differ- ences in terms of their capabilities specific to maintenance and engineering. Conti- nental had always maintained a deeper infrastructure to support line mainte- nance and airframe overhaul at Houston and Orlando, whereas United had a very large maintenance and engineering infra- structure for component and engine overhaul. That maintenance infrastruc- ture is now being strengthened through 40 line support stations for the merged company. There are now calls for new han- gar space by 2013 at United’s Washington Dulles hub, and at Continental’s Newark- Liberty International Airport hub. Both will perform widebody aircraft mainte- nance checks. The combined company is also set to make significant investments at the San Francisco, Chicago O’Hare and Denver facilities. Along with new han- gars, the airlines’ information technology infrastructure for maintenance and engi- neering will be merged, but with the idea that the groundwork will be laid for a new, state-of-the-art system to be procured from the commercial market. That process is currently being planned on a two-phase basis, which will take a few years to com- plete. At the moment United is using the Amis (aircraft maintenance information system) platform while Continental is using Sceptre. It is the plan of the merged airline to migrate all maintenance and engineering information to Sceptre during phase one, building in some of the Amis capabilities. The second phase will involve going to market to upgrade the system for the future, which will no doubt lead to the door of Swiss Aviation Software and its Amos system or indeed Trax. The other more obvious fallout from the merger is that the maintenance and engineering divisions have been working flat out on re-spraying aircraft and refit- ting the interiors to match the new livery and layout for a common image. In 2012, the Continental fleet will be retrofitted with an Economy Plus section, while United’s 14 Boeing 767-300s will undergo interior modifications for international flights. Those interiors will be similar to maintenance mainly in-house while the AirTran fleet has outsourced mainte- nance. In the future, AirTran plans to perform more comprehensive, interme- diate type checks on the 717s at AirTran’s Atlanta facility, which now handles light, routine overnight (RON) maintenance with an aim to Atlanta becoming a cen- tre of excellence for the 717, to include engineering and planning functions to support its maintenance requirements. The merged airlines will continue to use AirTran’s Orlando hangar for RON with a view to extending this site to be a 737 C-check station. Southwest is moving all maintenance-related IT into a single enterprise networking system and has awarded TRAX the contract to merge the data sets of the two airlines, due mainly to the fact TRAX is currently the data pro- vider for AirTran. Under a three-phase programme, Southwest will move all maintenance-related data from Wizard to TRAX starting in the first quarter of 2012. The first phase will cover the 737- 800, while the second phase, scheduled for the third quarter of 2012, will cover the 717 and the 737-700. The 737 Classics will be covered under the TRAX system by the third quarter of 2013. United/Continental is a different matter. The merger of these two huge bringing into play a significant foothold in Central and South America that will in the event of a downturn pay dividends as Delta will be able to be at the very fore- front of competitiveness. The US airline merger rounds over the past two years have not had a huge impact on the MRO sector as yet as there have been few route cuts. The most dramatic of the mergers in terms of fleet diferences has to be the Southwest-AirTran merger. Southwest, running an all-737 fleet, has to absorb AirTran’s 88 717-200s. South- west therefore has to acquire the tooling, and expand technician training, to pro- vide the required level of support for the 717 fleet throughout the entire combined airline network. This means developing a broader intermediate level program- meme for 717 maintenance, which will include more mechanical type work such as elective modifications and component changes dictated by time requirements. Southwest’s total maintenance network will expand from 16 to 23 locations, which includes seven AirTran facilities where overnight checks are performed. Southwest’s 16 locations include four that perform major inspections. A big diference between the two airlines’ main- tenance organisations concerns heavy airframe inspections. Southwest handles CHRIS DOAN, TEAM SAI www.airlineeconomics.co Airline Economics: MRO Global 2011 57 those on Continental’s international fleet. The market is unpredictable at this time and preparation for 2012 is difcult for a third party MRO, with many not wishing to comment on how they plan to confront what 2012 might have to ofer. Delta TechOps, however, is confident it has the global reach to weather any mar- ket contraction. “Our plan is to continue to expand on our partnerships in China, Latin America and South America, and continue to look for creative ways to grow our MRO to achieve long-term sales goals,” says Bolt. “We expect capac- ity cuts will ultimately lead to increased market pressure. We are well positioned to provide maintenance solutions to our airline customers that are looking for maintenance CASM optimisation and a more holistic maintenance approach. For example, through our Complete Fleet Services (CFS) oferings, we are able to provide truly nose-to-tail support for our customers, leveraging our econo- mies of scale and operational excellence. Complete Fleet Services helps clients to consolidate maintenance as well as plan for future maintenance expenses and reduce maintenance CASM spend.” Of course, as airlines come under increasing pressure, they will try to delay maintenance checks by parking aircraft due for D-checks and replacing them with new equipment. Delta is seeing evi- dence of this, and when asked about the phenomenon Bolt stated: “This has been going on over the past few years. Many assets are at a point where the mainte- nance has to be completed or the aircraft have to be parked. This is both a chal- lenge and opportunity.” So, bearing this in mind, are some airlines parking air- craft that are due a D-check and simply using new deliveries to cover for them? Bolt says: “Yes, as an airline MRO we are very familiar with this strategy. Delta, for example, recently announced it will be acquiring Boeing 737-900s to replace our older, narrowbody fleet (DC9s).” The options for airlines in the US are numerous – they can simply park aircraft before a D-check and lease an aircraft or have one delivered new. This is a worrying trend for the MROs, and one that should be watched in 2012. There is likely to be a marked increase in this type of action by airlines as they move to cut costs on maintenance and fuel. AMERICAS 0 2,000 4,000 6,000 8,000 10,000 12,000 2011 2016 2021 North America Latin America and Caribbean Total 7,130 7,028 1,378 8,508 1,562 8,590 7,529 2,003 9,532 AMERICAS’ FLEET FORECASTS 0 5 10 15 20 25 2011 2016 2021 North America Latin America and Caribbean Total $15.0 $2.1 $17.2 $15.5 $2.7 $18.2 $16.7 $3.7 $20.3 AMERICAS’ MRO FORECASTS (US$MILLION) COMPOUND ANNUAL GROWTH RATES Fleet NA LA&C Total 2011 –0.3% 2.5% 0.2% 2016 1.4% 5.1% 2.1% 2021 0.5% 3.8% 1.1% Total MRO NA LA&C Total 2011 0.6% 5.0% 1.2% 2016 1.5% 6.3% 2.3% 2021 1.0% 5.7% 1.7% AAR is a leading provider of products, services and innovative solutions for commercial passenger airlines, cargo car- riers, tier-two suppliers and aircraft and engine OEMs. AAR leverages its diverse MRO, engineering, logistics and fabri- cation capabilities to ofer customised, integrated solutions that lower costs, increase asset availability and ensure high levels of quality, safety and service. Services are performed by highly expe- rienced, customer-focused engineers, technicians and experts that leverage world-class training, technologies and techniques. AAR products are designed to meet customers’ exacting specifica- tions and ofer lasting performance. MAINTENANCE, REPAIR AND OVERHAUL AAR provides aircraft overhaul and modi- fications, landing gear services, wheel and brake services and component repair for the world’s major, regional and cargo airlines, as well as for aircraft leasing com- panies and government/defence agencies. With facilities located throughout the US, AAR is the second largest independent MRO provider in North America and ranks among the top 10 in the world. AAR ofers a full array of component repair, overhaul, exchange and replace- ment options tailored to meet individual customer requirements and designed to improve efciency and reduce over- all costs. AAR’s expert technicians test, diagnose, repair, overhaul and perform scheduled maintenance on avionics, instruments, pneumatics, hydraulics, electronics, fuel controls and electrical accessories. AAR ofers high-value engineering support services to supplement custom- ers’ internal capabilities. Experienced Designated Engineering Representatives (DERs) and Designated Airworthi- ness Representatives (DARs) plan and execute a wide range of projects, from engineering new solutions to designing and executing modifications and attain- ing airworthiness approvals. LOGISTICS AND PARTS SUPPLY AAR provides high-value parts-related services that include supply chain and inventory management, on-site ware- house management, consignment and lease-back programmes, repair manage- ment, repairs and exchanges, as well as PMA parts development, parts provi- sioning and parts trading. Additionally, AAR maintains one of the industry’s largest and most complete inventories of airframe parts, stocking new and ser- viceable components for virtually every commercial aircraft type. AAR is the leading independent supplier of engine components and inventory management services, supply- ing parts for virtually every commercial power plant including General Electric, IAE, Pratt & Whitney and Rolls-Royce. AAR provides aircraft engines for sale or lease to lower customers’ operating costs and keep aircraft in service during engine maintenance cycles. AAR sells and leases aircraft and has an experienced team of professionals that provide start-to-finish guidance in aircraft sourcing, purchasing and remarketing. AAR also ofers techni- cal advisory services and innovative financing solutions to assist customers with adjusting their fleet composition to meet changing economic models, route systems and passenger preferences. AEROSTRUCTURES & MANUFACTURING SERVICES AAR designs and manufactures cargo systems used on commercial cargo and military transport aircraft around the world. AAR holds 95 Supplemental Type Certificates (STCs) with the FAA for the A300, A310, A330, B747, B767 and MD-11 commercial aircraft with systems for the B737, B757 and A320 in development. AAR is a single-source provider of composites engineering and manufactur- ing services to defence, commercial and business aircraft markets. AAR designs and fabricates advanced interior and exterior composite structures as well as specialised molded components. AAR performs precision machining, fabrication, welding and engineering for a wide range of high-end sub-systems and components for aircraft and indus- trial applications. AAR manufactures hundreds of structural components for business jets including aircraft wing fit- tings, crank assemblies, upper rails and engine mounts. AMERICAS 58 Airline Economics: MRO Global 2011 www.airlineeconomics.co AAR Delta TechOps has a unique competi- tive advantage as an airline MRO to provide something most other MROs can’t – operational improvement con- sultation based upon Delta’s 80-plus years’ experience as an operator. Delta TechOps currently operates and main- tains a fleet of nearly 800 airplanes for Delta Air Lines and supports the air- craft and engines of over 150 customers worldwide. This has allowed the MRO to develop unparalleled operational and process knowledge and intellectual property on a real-world basis. It takes unsurpassed technical know- how, a global network of experts and an unwavering commitment to excellence to maintain the world’s largest airline. And that’s just what Delta TechOps delivers – to airline operators all over the world. With more than 8,500 technical oper- ations employees system-wide, Delta TechOps provides full-service mainte- nance to the more than 750 aircraft that make up the Delta Air Lines fleet. Backed by the proficiency and attention to detail found in Six Sigma and Lean processes, Delta TechOps delivers industry-lead- ing operational efciency, quality and responsiveness to more than 150 other operators around the globe. Delta TechOps’ Complete Fleet™ Services include engine/APU, compo- nent, airframe and line maintenance, full Airbus services, and extended engine capabilities that include the CFM56-5 and CF34-8C. Delta TechOps also pro- vides outside operators with technical training, engineering support and inven- tory management. Delta TechOps’ instructors keep their expertise on the cutting edge by pursu- ing continued education, training and advanced computer knowledge. The aver- age length of service for a Delta TechOps aviation maintenance technician (AMT) with an Airframe and Power Plant (A&P) certificate is 14 years. To ensure prompt service and flex- ibility, including technical dispatch reliability greater than 97% fleet-wide, Delta TechOps operates maintenance facilities in multiple locations. Each of these facilities ofers light maintenance for both narrowbody and widebody air- craft. Should emergency maintenance be needed Delta TechOps’ quick-response Disabled Aircraft Recovery Team (Dart) can be dispatched from the Atlanta Technical Operations Centre, the 2.7 mil- lion square foot (about 250,830 square meters or the size of 47 football fields) base of operation. CERTIFIED PERFORMANCE Delta TechOps is a certified repair station in the US (FAA) and the European Union (EASA), as well as in several countries in South America and Asia. · USA: IAA - 121 Cerliñcaled Air Carrier No. DALA026A · USA: IAA - 121 Cerliñed Reµair Station No. DALR026A · USA: IAA - 14õ Cerliñed Reµair Station No. DALR026A · EU: EASA - 14õ Cerliñed Reµair Station No. EASA.145.4380 · ISO µuu1: DeIla TechOµs Component Maintenance, No. CERT-0025376 SERVICES Delta TechOps is the largest airline MRO in North America and the third largest worldwide. Delta TechOps serves more than 150 aviation and airline customers from around the world, specialising in high-skill work such as engines, compo- nents, airframe and line maintenance. Additional Delta TechOps services include compliance and quality assur- ance, engineering, NDT, on-wing, AOG, test cell, engine leasing, MBK, training, inventory and exchange services. AMERICAS www.airlineeconomics.co Airline Economics: MRO Global 2011 59 Delta TechOps Delta TechOps is the largest airline MRO in North America and the third largest worldwide. Delta TechOps serves more than 150 aviation and airline customers from around the world, specialising in high-skill work such as engines, compo- nents, airframe and line maintenance. Additional Delta TechOps services include compliance and quality assur- ance, engineering, NDT, on-wing, AOG, test cell, engine leasing, MBK, training, inventory and exchange services. AIRFRAMES SERVICED Airbus: A318 A319, A320, A321, A330 Boeing: B737 (Classic, NG), B747, B757, B767, B777, MD-11, MD-80, MD-90 ENGINES SERVICED Turbofan: CF34-3A/B, CF34-8C, CF6-80A/ A2, CF6-80C2, CFM56-3, CFM56-5 CFM56- 7, JT8D-219, PW2000, PW4000-94 APUS SERVICED GTCP 131-9B, GTCP 331-200 CERTIFYING AGENCIES FAA, EASA, Argentina, Bermuda, Brazil, Canada, China , Chile, Indonesia, Korea, Trinidad & Tobago P h o t o : B o e i n g C o r p EVA Air’s Engineering and Main- tenance Division was spun of as an independent corporation in Septem- ber 1998 to become Evergreen Aviation Technologies Corporation (EGAT) with General Electric Company (GE) as an equity partner. EGAT was tasked to uphold aircraft maintenance qual- ity and promote technical flight safety while creating adequate business value. EGAT has since evolved into a specialty, high business-value MRO, undertaking mega-scale modifications such as the Dreamlifter in partnership with Boeing, as well as engaging in complete Section 41 skin replacements, Horizontal Stabiliser skin replace- ments, and executing AOG recovery repairs on any portion of the airframe structure. EGAT’s robust management sys- tems and processes the Oracle-based MRO System for engine overhauls, corporate-wide Six Sigma deploy- ment, human resource management, job qualification, balanced scorecard, product safety, knowledge manage- ment and e-commerce. Commercial airlines, aircraft leasing companies, and leading government agencies entrust heavy maintenance work to Evergreen Maintenance Centre (EMC). Located in Marana, Arizona, the EMC is one of the largest full-service commercial maintenance, repair and overhaul (MRO) facilities in the US. Consisting of three maintenance hangars and a large maintenance flight line, the EMC also operates the Pinal Air Park and its 6,850-foot runway rated for Boeing 747-400 through 747-8 aircraft. With 20 million square feet of ramp and storage area able to accom- modate up to 400 aircraft, the EMC is the largest commercial aircraft storage facility with heavy maintenance ser- vices in the world. AIRCRAFT MAINTENANCE: A318, A319, A320, A321 · A, B, C, D checks · CPCP and ISIP · SSID insµeclions · ADs and SBs · Inlerior eeconñguralion · Comµosile reµair · Aging aircrafl insµeclion · Avionic modiñcalions · Aircrafl µainling · SlrucluraI mods FLIGHT LINE: Providing customer support for all types of commercial aircraft: · Engine changes · Bridging changes · A and B checks · IIighl conlroI rigging · Aircrafl modiñcalions AOG DROP-IN AND TDY SERVICES TEAM STORAGE: · 24-hour roving securily · Aclive and µassive video and micro- wave perimeter surveillance · Aclive mainlenance µrogrammes for stored aircraft and engines · Dry, non-corrosive environmenl] climate: aircraft are held at a facil- ity in the dry southwest, the ideal climate for maintenance and stor- age. They are sheltered from natural threats found in the rest of the US, such as earthquakes, hurricanes and tornado activity. COMPONENTS: · Aclualor cyIinders and Iinks · Avionic equiµmenl]accessories · Gear boxes · WheeIs and brakes · Engine cowIings · IIighl conlroIs · Slruclures · Comµosiles · HydrauIics · Pneumalics · Engine accessories PAINTING ENGINE SERVICES All models – boroscope inspection, engine removal and reinstallation;LRU replacements. AMERICAS 60 Airline Economics: MRO Global 2011 www.airlineeconomics.co Evergreen Aveos has been carrying out heavy main- tenance for more than seven decades. The company, now acting as an independent, is fast emerging as one of the leading MROs in the Americas. With the addi- tion of Aeroman to the stable, the firm is able to cover all the Americas. In addition to airframe, engine, and component solutions, Aveos ofers value- added maintenance solutions such as aircraft maintenance training and supply chain management as part of an inte- grated ofering, in turn ensuring efcient demand, process and vendor manage- ment. Aveos fleet management experts allow customers to focus on their core competencies by providing tailored ser- vices that optimise carriers’ maintenance programmes and operational reliability. VALUE-ADDED SERVICES: Inventory management: Planning levels and allotments Forecasting consumption and service levels Inventory ownership and financing Procurement: Sourcing, contracting and purchasing Supplier management Warranty management Logistics: Warehousing Transportation and customs manage- ment Airline operational support: 24-hour emergency support for AOG Expediting support MAINLINE SERVICES: Supply chain management (inventory management, procurement, logistics, business support and airline operational support) Fleet management Engineering services Regulatory compliance and audits Technical publications services Technical records management Aircraft maintenance training Training solutions Aveos/ Aeroman TIMCO Aviation Services is one of the world’s largest independent aircraft MRO providers. TIMCO provides air- frame MRO and modification services from three multi-hangar locations in the US: Greensboro, North Carolina, Macon, Georgia and Lake City, Florida. TIMCO’s services cover light and heavy scheduled maintenance checks, exterior and interior modifications installations, upgrades and conversions for commercial, government and private aircraft. The airframe MRO operation employs over 1,000 mechanics – many of whom are certificated – and uses nearly 1.5 million square feet of hangar and ofce space at its three locations. TIMCO LineCare ofers a range of line maintenance and non-technical support services under FAA Operations Speci- fication D107 certification at a growing number of airports. TIMCO LineCare performs a range of services across its growing network. TIMCO’s Engine Centre provides full engine disassembly (tear down), inspection, repair, parts overhaul and reassembly (build up) services. The engine team at the Oscoda, Michigan facility provides complete non-destruc- tive testing (NDT), engine AD compliance, fuel nozzle overhaul, bleed valve overhaul, gearbox overhaul and HPC disk overhaul. In addition, AOG teams can be sent on field service calls to perform engine on-wing support and recovery services. The TIMCO Engine Center is an FAA certified repair station (T48R384Y) with focus on complete support for the JT8D series of engines, as well as disassem- bly and parts inspection services for the CFM56-3. AMERICAS www.airlineeconomics.co Airline Economics: MRO Global 61 TIMCO PEMCO Pemco specialises in airframe heavy maintenance, as well as interior recon- figuration, avionic and IFE upgrades, and structural and cargo modifications. A leading aircraft MRO services pro- vider for a wide variety of aircraft types, Pemco has maintenance bases in Tampa, Florida, Dothan, Alabama and Cincin- nati, Ohio, as well as partner operations in Southeast Asia. Pemco is also one of the world’s leading aircraft cargo con- version providers with over 300 cargo conversions across 26 models of cargo aircraft. Its new 757 Combi and Freighter programmes are the latest additions to Pemco’s cargo platform, where Pemco presently has four 757 cargo modifica- tions in work, with more projects in the making. PEMCO FACILITIES Dothan, Alabama Aircraft supported include: 737NG, 757, 767, A320, A310 and A330, as well as vet- eran models like the 737 Classics, DC-9, MD-80, B727, DC-10, MD-11, and A300. Going forward, Dothan operations will be more focused on military fixed and rotor wing aircraft. Tampa, Florida The modern five-bay facility, located on- line for most air carriers at the Tampa International Airport, employs 700 people and can easily accommodate 12 narrow- body or six widebody aircraft lines in the hangars, plus an equivalent number on the ramp. The facility ofers a full range of onsite backshops to support metal fabri- cation, seats, galleys, lavs, aerostructures including standard composite repairs, basic avionics, and limited paint. Cincinnati, Ohio To continue serving ExelTech’s existing clientele and improve availability for Pemco’s newest location, in Cincinnati, Ohio, PemCo offers MRO service for regional jets. At the three US sites, PEMCO ofers the following services: · DeveIoµmenl and manufaclure of aircraft cargo systems · Cargo modiñcalions · Aircrafl µarls and suµµorl · ScheduIed and unscheduIed mainle- nance · Engineering services · Reµairs · Precision comµonenls · Avionics · Inlerior modiñcalions AIRCRAFT TYPES SERVICED INCLUDE: · ATR 42],2 Series · Beech 1µuuD · Boeing ,3,, ,4,, ,õ,, ,6,, ,,, Series · Airbus A32u ] A31µ · Bombardier Dash 8 Series 1uu, 2uu & 300 · Bombardier CRJ 2uu ] ,uu · Embraer ERJ 13õ]14õ & E-Jel 170/190 Series · Iokker I 1uu · McDonneII DougIas MD-8u]µu Series · Saab 34u AMERICAS 62 Airline Economics: MRO Global 2011 www.airlineeconomics.co MRO Directory: Americas HEAVY MAINTENANCE DIRECTORY - AMERICAS COMPANY CONTACT DETAILS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES AAR Aircraft Services Hot Springs Chris Jessup VP commercial MRO sales & mktg PO Box 52-2602 Miami, FL 33152 5300 NW 36th Street - Building 850 Miami, FL 33122 Tel: 786-265-4288 Fax: 305-871-5388 CRJ100, 200, 700 Dash 6 EMB120 series BE1900 series All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 2 hangars 55,726sq ft Welding, NDT, complete backshop, machine shop, airframe comp. repair, composites, int. refurbs, Engineering services, Aircraft mods, Interior refurbs AAR Aircraft Services Indianapolis Chris Jessup VP commercial MRO sales & mktg PO Box 52-2602 Miami, FL 33152 5300 NW 36th Street - Building 850 Miami, FL 33122 Tel: 786-265-4288 Fax: 305-871-5388 757/767 737 Classic & NG Airbus 319/320/321 727 MD-80 DC9-10/50 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 10 bays 1.2 million sq ft Welding, NDT, complete backshop, machine shop, airframe comp. repair, composites, int. refurbs, Engineering services, Aircraft mods, Exterior/ interior refurbs, Paint AAR Aircraft Services Miami Chris Jessup VP commercial MRO sales & mktg PO Box 52-2602 Miami, FL 33152 5300 NW 36th Street - Building 850 Miami, FL 33122 Tel: 786-265-4288 Fax: 305-871-5388 717 727 737 Classic & NG 747 757 767 MD-90 MD-80 series DC-8 DC-9 A300 A320 Family All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 A & B Checks Only All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG4 All MPD/MSG2/MSG5 All MPD/MSG2/MSG6 All MPD/MSG2/MSG7 3 hangars - 9 A/C slots 226,000sq ft Welding, NDT, complete backshop, machine shop, airframe comp. repair, composites, int. refurbs, Engineering services, Aircraft mods, Exterior/interior refurbs, Paint AAR Aircraft Services Oklahoma Rick Townsend VP sales, mktg & cust. Support 6611 S. Meridien Oklahoma City OK 73159 USA Tel: 405 218 3033 Fax: 405 218 3614 737NG 707-300 727 series 737-200/-300/-400/-500 CRJ200/700/900 DC-9 series Dornier 328P/J MD-90 MD-80 series SF340 A/B/B+ All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 7 hangars 300,000sq ft FBO services, Dowty/Hartzell/ McCauley, prop repair capabil- ity, brakes, airframe comp. rep, composites, welding/NDT, Exterior/ interior refurbs, Aircraft & avionics, Aircraft mods Aeroframe Services Headquarters located in: Lake Charles, LA Airepairs Subsidiary located in: EO’s, Memphis, TN Bruce Campbell Director of sales & marketing 1945 Merganser Street Chennault Airpark (KCWF) Lake Charles, LA 70615 Tel: 337 312 2672 Fax: 337 312 2699 E-mail: [email protected] www.aeroframe.com www.airepairs.com A300 A310 A318/A319/A320/A321 A330 A340 DC-10/KC-10 MD-10/MD-11 Airepairs capabilites include all of the above plus: Lear 35/36, CRJ-100, 757, 767, 777, DC-9 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 5 hangars able to induct a/c as large as A340/747 2 bays fully equip for strip/paint 12 w/b bays will accommodate up to 16 n/b aircraft with a total area of 650,000sq ft 100 acres of ramp space. 120,000sq ft of shop, and support 30,000sq ft of climate- controlled 10,700 ft-long runway Letter checks, hvy maint. repairs, overhauls, strip & paint, sheet metal, preserva- tion/storage, A/C parking, teardown, mods/completions, Aeroframe electrical, hydraulics, CPCP, SSI, STCs, SB’s, AD’s, EA’s, ageing , engineering, L/G replacement, struct. 717, 727, 737, 747, warehouse Facilities repairs, IFE, avionics, feld support, backshops, CRJ-200 composites, machining, manufacturing, welding, NDT, borescope, calibration, batteries, frebottles, FAA/EASA 145, ISO9100 AA-MRO (American Airlines) John Marshall Director, maint. mktg 3900 N Mingo Rd Kansas City, MD 284 Tulsa OK 74116 USA Tel: 816-891-4049 Cell: 816-729-1369 Fax: 816-891-1817 email: [email protected] www.mro-aa.com A300 737 757 767 777 MD-80 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 8 w/b, 13 n/b Tulsa 6 w/b Alliance Fort Worth 2 - 4 w/b, 10 n/b Aircraft mods, Landing gear, APUs, Engine repairs & overhauls, Field & line maintenance, Landing gear, Avionics, APUs, Wheels & brakes, Component repair & overhaul, Floor boards, Composites, Calibration lab Leasing - engines Associated Air Center Gene Carter Director of maintenance sales 8321 Lemmon Ave Dallas TX 75209 Tel: 972 559 7040 Fax: 214 351 2375 707 727 737 747 757 767 DC-8 DC-9 MD-87 A319 A320 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 3 hangars for w/b & n/b aircraft Interior modifcations, Avionics upgrades, New avionics systems, In-fight entertainment, STCs, CPCP, Structural repairs, NDT AMERICAS www.airlineeconomics.co Airline Economics: MRO Global 2011 63 HEAVY MAINTENANCE DIRECTORY - AMERICAS COMPANY CONTACT DETAILS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES Aveos Gaetan Roberge Director, sales PO Box 6000 Station Airport Dorval, Quebec H4Y 1J9 Canada Tel: 514/856-6754 Cell: 514/928-7501 E-mail: [email protected] A310 A319/320/321 A330/A340 767 A,B,C,D A,B,C,D A,B,C,D A,B,C,D Montreal - 4 lines Toronto - 1 line (paint) Winnipeg - 5 lines Vancouver - 4 lines El Salvador - 4 lines Modifcations & cabin, Conversions, avionics, Upgrades, landing gear, Composite repairs, CPCP, Hushkit- ting, Interiors, Inventory manage- ment, NDT. Strip/paint, SATCOM/IFE ATS – AviationServices Technical Services 3100 112th St SW Everett WA 98204 USA Tel: 425 423 3604 Fax: 425 423 3508 737/BBJ 747 757 767 777 A320/Airbus CJ DC-9 DC-10 MD-80 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D All Phase Checks 8 widebody bays 1,000,000sq ft of hangar, backshop & ofce space Paint/Strip (n/b & w/b), CPCP, Avionics upgrades, VIP Mods, Post Delivery Mods, Engineering Ser- vices, Technical Publications, Cargo Conversions, Component Repair & Overhaul, Composites Winglets STCs Cascade Aerospace Ramsey Sarkis Director planning 1337 Townline Rd Abbotsford British Columbia V2T 6E1 Canada Tel: 604 850 7372 Fax: 604 557 2655 737 DHC-8 C-130 A,B,C,D A,B,C,D All n/b & commuter spaces Major modifcations, Avionics upgrades, IFE, STCs & Engineering, Structural repairs, Component overhaul, Cargo conversions Certifed Aviation Services Jim Anderson Director business development Installation & Modifcation Group 105 S. Leland Norton Way, Ste. 1 Bldg. S795 San Bernardino, CA 92408 Tel: 909-382-3487 Fax: 09-382-2409 www.certifedaviation.com 737 767 A320 C-130 DC-8 DC-9 L-1011 MD-11 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 54,0002 hangar 10,000ft runway ILS approach No curfews Full paint facility Custom modifcations, Seating reconfguration, Passenger/cargo conversion, Engine and landing gear conv. Conversion of civilian aircraft to, Optionally piloted vehicles (OPV), In-fight entertainment (IFE), installation. Commercial Jet David M. Sandri President Miami International Airport Hangars 896 PO Box 668500 Miami, FL 33166 Tel: 305 341 5150 Fax: 305 871 0076 E-mail: [email protected] 707 727 737 757 MD-80 DC-8 DC-9 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 2 hangars 68,000sq ft Interiors, Strip/paint, CPCP SSID, Composites, Modifcations, Avionics upgrades, 727/737 cargo conver- sions, Sheet metal, NDT, Graphic design, VIP confg. TAWS/HF/GPS/ TCAS, ER fuel tanks Coopesa Rodolfo Solis Director, sales & marketing 300 Mts Oeste Aeropuerto Intl Juan Santamaria San Jose Costa Rica Tel: (+506) 2437 2830 / 2828 Fax: (+506) 2437 2829 / 437 28 01 E-mail: [email protected] A320 727 737CL 737NG 757 DC-9 MD-80 C,D C,D,MSG-3 C,D,MSG-3 C,MSG-3 C,D C,D,MSG-3 C,D,MSG-3 6 n/b 86,000sq ft Ageing mods/struct. Rep, CPCP/ SSID, 727 cargo conversions, CPCP, Flight controls/ composites, GPS, TAWS, DFDR, AFIRS, Hushkitting, Interiors refurbish & paint, NDT, strip/paint, TCAS, w/shear,ELTt Delta TechOps Jack Turnbill VP technical sales and marketing Dept 460, 1775 Aviation Boulevard Atlanta GA 30354 USA Tel: 404 714 4949 Fax: 404 714 3281 E-mail: [email protected] 737 757 767 777 MD-80/-90/-11 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 16 bays - Atlanta 1 bay - Salt Lake City 1 bay - Cincinnati 1 bay - Boston Full support repair facility, Comp. & inventory support, Engine/APU repair & overhaul, Eng. condition monitoring, Strip/paint, Tech. train- ing & eng supp, Disabled aircraft recovery, Structural repairs Empire Aero Center David O’Neill or Rob Tilson Director sales and marketing 394 Hangar Road Rome NY 13441 Tel: 604 512 4550 or 514 755 7676 Fax: 315 838 1515 707 727 737 747 757 DC-8 A319, A320, A321, A330 MD-80 DC-10 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D w/b and n/b 12 bays 500,000sq ft hangar area 225,000sq ft ramp space Interiors, Seat Overhaul, Ageing a/c mods, CPCP, Avionics & upgrades, Painting, Winglet Modifcation, IFE Modifcation Evergreen Maintenance Center Steve Cofaro VP sales & marketing Pinal Air Park, MARANA, AZ 85653-9501 USA Tel: 520 682 4181 Ext 5061 Fax: 520 616 5065 E-mail: [email protected] 727 737-200/-300/-400/-500 737NG 757/767 747-Series 777 DC-9/MD-80,MD-90 DC-10/MD-11 A320 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 5 Bays-110,000sq ft CPCP & SSID, component, overhaul, NDT, strip/paint, training, storage/ parking, teardowns, letter checks, avionics upgrades, structure repairs, composite repairs, interiors, struc- tural repairs, VIP Corp Mx Services AMERICAS 64 Airline Economics: MRO Global 2011 www.airlineeconomics.co HEAVY MAINTENANCE DIRECTORY - AMERICAS COMPANY CONTACT DETAILS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES ExelTech Aerospace Donald Kamenz VP marketing & sales 1200 Pitfeld Rd St.Laurent, Quebec H4S 1A0, Canada Tel: 514 631 8999 x 5114 Fax: 514 631 7437 [email protected] www.exeltech-aerospace.com ATR 42 ATR 72 CRJ 100/200 CRJ 700/900 DHC-8-100/200 DHC-8-300 DHC-8-400 SF340 A/B/B+ EMB 145 series 737 series E170/175 E190/195 CL-215 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 3 hangars - 16 line of HVY Maint & one 40,000sq ft line maint facility 290,000sq ft hvy maint (26,955sq m) 240,000 sq ft Exterior storage/parking Avionics, composites, CPCP, feld & line maintenance, Interiors refurbishment, Inventory manage- ment, Land gear remov. & replace, Modifcations, Sheet metal, STCs, Component painting, Structural repairs, NDT First Air Maintenance Services Rashwan Domloge VP maintenance and engineering 20 Cope Drive Kanata, Ontario K2M 2V8 Canada Tel: 613 254 6282 Fax: 613 254 6398 727 737 HS748 C-130/L-100 ATR 42-300 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 17 commuter; 8 n/b 2 hangars total area: 18,000m2 Interiors, Modifcations, STCs, Avion- ics, CPCP Hamilton Aerospace Technologies Gordon Hamilton CEO 6901 S Park Avenue PO Box 11746 Tucson AZ 85734-1746 USA Tel: 520 294 3481 Fax: 520 741 1430 727 737 DC-9 MD-80 A,B,C,D A,B,C,D A,B,C,D A,B,C,D 3 n/b 4,800m2 new east coast ofce Cargo conversions, Strip/paint/ refnish, Interiors, CPCP, SSI, Avionics upgrades, Hushkitting Mexicana MRO Services Hector Cobo Third party maintenance director Av 602, #161 A Col. San Juan de Aragon Del. Venustiano Carranza Mexico City, 15620 Mexico Tel: (+5255) 57 86 65 34 Fax: (+5255) 57 62 15 42 Email: [email protected] A318 A319 A320 A321 A330 727 737 757 767 F100 DC-9 MD-80 Bombardier CRJ200 A,C,D,E A,C,D,E A,C,D,E A,C,D,E A,B,C,D A,B,C,D A,C A,C,D,E A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D Mexico City Maintenance Base with: Heavy maintenance Main hangar with 97,951ft2 for 1 w/b & 3 n/b or 4 n/b. Painting hangar with 45,208ft2. Exterior platform with 1,568,237ft2 for more than 40 A/C. Apare parts with 22,605ft2 werehouse. Guadalajara City Maintenance Base with: Main hangar with 53,206ft2 for two n/b Exterior platform with 1,002,647.5ft2 Modifcations, AD, SBs, SLs Aging, SSI & CPCP, Major comp. re- placement, NDT, Line maintenance in more than 40 locations, Painting, Avionics and electrical, ATEC 5000 & 6000, Communications Sheet metal Instruments, Hydraulic, fuel, oil, pneumatic & accesories shops, Com- posite repairs Interiors Emergency equipment, Cargo conversion, Hushkitting Engineering services, A/C Parking Training Panama Aerospace Engineering (PAE) Stephen Lim SVP marketing, Americas Building 241, Bryant Avenue Howard, Panama Tel : 210 854 9169 Fax : 210 293 2638 E-mail: [email protected] 737 A320 E190 A,B,C,D A,B,C,D A,B,C,D Four hangars, 12 n/b aircraft hangared simultaneously, 260,000sq ft Letter checks, CPCP Eos/SBs, modi- fcation Avionics, mod & upgrades NDT, Fabrication Composite, Shop Strip/paint, IFE/Interiors Completion PEMCO World Air Services Kevin Casey President Dothan, AL 100 PEMCO Drive Dothan AL 36303 USA Tel: 334 983 7000 Fax: 334 983 7022 E-mail: [email protected] 737 747 757 767 DC-8 DC-9 MD-80 DC-10 MD-11 A300 A320 A,B,C,D A,B A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 7 w/b & 10 n/b 543,000m2 2-3 w/b or 5-6 n/b 150,000sq ft Tampa, FL 737-300/400 Freighter, Quick Change & Combi, Conversions, CPCP, Aging Aircraft, Paint/Strip, Avionics Upgrades, Interior Reconfguration, Seats/Gally’s/Lavs, NDT, Composite Repair Engineering Premier Aviation Overhaul Center Dennis De Gonzague/David Hinchclife Director of sales 3750 Airport Road Trois-Rivieres, Quebec Canada, G9A 5E1 Tel: 819 377 4500 Fax: 819 377 7717 E-mail: [email protected] www.premieraviation.ca 727 737 757 A310 A320, A319, A321 CL-215 CRJ 100/200 ERJ 170/190 DHC-8 100/300 Lockheed C-130 MD80, MD90 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 130,0002ft facility 9,000ft runway No Curfew Full paint Storage & Parking Avionics, Composites, CPCP, Structural repairs, Int. refurbs, Land. gear removal/replace, Modifcations, Sheet metal, Welding, STCs, Strip and paint, aircraft and components, On site aircraft/records, inspection San Antonio Aerospace (SAA) (a subsidiary of Singapore Technologies Aerospace) Stephen Lim SVP marketing, Americas 9800, John Saunders Road San Antonio Texas 78216 USA Tel : 210 854 9169 Fax : 210 293 2638 E-mail: [email protected] 727 737 747 757 767 777 A300, A310, A320 DC-9, DC-10 MD-11, MD-80 ERJ-135/145 CRJ-200/700 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C A,B,C 6 hangars 560,000sq ft 6 w/b and 7 n/b aircraft hangared simultaneously Letter checks, CPCP, EOs/SBs modi- fcation, Avionics mod & upgrades, NDT, Fabrication, Composite shop, Strip/paint, Interior refurbishment, IFE/Interiors Completion, VIP/Corp. Jets/Head of State AMERICAS www.airlineeconomics.co Airline Economics: MRO Global 2011 65 HEAVY MAINTENANCE DIRECTORY - AMERICAS COMPANY CONTACT DETAILS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES Seman-Peru Carlos Rodriguez General manager Avenida Coronel EP Edmundo Aguilar Pastor S/N Lima 4 Peru Tel: (+511) 477 5570 Fax: (+511) 4 770877 DC-8 DC-10 L-382 727 737 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 4 hangars smallest has 1,250m2 largest has 4,900m2 (accommodates 2 DC-8s) Avionics upgrades, Standardisa- tions etc, Composite repairs, CPCP - aging mods, Structural repair, NDI: X-ray, ultrasonic, Eddy current, LP, MP Inspection, RVSM, TAWS, Paint- stripping, Machining Stambaugh Aviation M. R. Stambaugh Jr. Accountable manager 1000 Jetport Road Brunswick GA 31525 USA Tel: 912-265-7244 Fax: 912-262-0225 All n/b a/c 747 DC-10 A,B,C,D A,B,C A,B 2 n/b 8+ commuter over 23,250m2 727 & 737 cargo, Door conversion, Interiors, Paint/strip, CPCP-Aging Mods, Avionics upgrades etc, Pro- totype work, NDI & Eng. Borescope, Engine Management, VIP ST Mobile Aerospace Engineering (MAE) (a subsidiary of Singapore Technologies Aerospace) Stephen Lim SVP marketing, Americas 2100 9th Street Brookley Complex Mobile AL 36615 USA Tel : 210 854 9169 Fax : 210 293 2638 E-mail: [email protected] 727 737 747 757 767 777 A300 A310 A320 A330 DC-9, DC-10 MD-11, MD-80 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 8 hangars 671,000sq ft 8 w/b, 10 n/b aircraft hangared simultaneously Letter checks, CPCP, EOs / SBs modi- fcation, Avionics mod & upgrades, NDT, Fabrication, Composite shop, Strip/paint, Interior refurbishment, IFE/Interiors Completion, Pax-To- Freighter Conversion, Inventory management, Line maintenance services, Power-By-Hour Support TAP Maintenance and Engineering Brazil Ricardo Vituzzo GM sales Lstrada das Can-rlas, l862 21941-480 Rio de Janeiro / RJ Brazil Tel: (+55-21) 3383 2140 Fax: (+55-21) 3383 2300 E-mail: [email protected] www.tapme.com.br 727-100200 737-200/300/400 /500 737-700/800/900 747-200/300 757-200 767-200/300 777-200 DC-10 MD-11 A300 A300-600 A310 EMB120 ERJ145 F-50 A, B, C, D A, B, C, D A, C A, C, D A, C A, C A, C A, C A, C A, C C C A, C A, C 12 years Rio de Janeiro Hangars: 1 Hangar capacity: 4w/b Hangar Area: 14,500m2 Total Area: 250,000m2 Porto Alegre Hangars: 5 Hangar capacity: 1w/b, 5n/b Hangar Area: 12,500 m2 Total Area: 140,000 m Heavy Maintenance, Components Overhaul, Landing Gears, Engines & APUs, Avionics, Hydraulics, Mechani- cal Accessories, Pneumatics, Wheels and Brakes, Plating Shop, NDT, Paint- ing, Interiors, Calibration TIMCO Greensboro, NC John Eichten SVP sales 623 Radar Rd Greensboro NC 27410 USA Tel: 336 668 4410 ext 3019 Fax: 336 665 9011 E-mail: [email protected] 727, 737, 757, 767, 777 A300 / A310 A320 series DC-8, DC-9 / MD80 DC-10 / KC-10 / MD-11 CRJ200/700/900 C130 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 7 w/b 14 n/b 704,000sq ft covered Avionics upgrades Winglets Structural, Composites, Avionics, Modifcations (int/ext), Maintenance programme, Planning, Avionics kit fabrication, Interiors, CPCP TIMCO Lake City, FL John Eichten, SVP sales PO Box 1909 5530 East Highway 90 Lake City Airport Lake City FL 32025 USA Tel: 336 668 4410 ext 3019 Fax: 336 665 9011 E-mail: [email protected] 707 / KC-135 727 737 757 A320 series C130 / C141 / P3 DC-9 / MD80 DC-8 DC-10 / KC-10 / MD-11 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 11 bays maintenance 2 bays dedicated paint seven hangars 632,000sq ft covered Structural, Composites, Avionics, Modifcations (int/ext), Cargo con- versions, Interiors, Winglets TIMCO Macon, GA John Eichten, SVP sales Middle Georgia Regional Airport 150 First Drive, PO Box 10136 Macon, GA 31297 USA Tel: 336 668 4410 ext 3019 Fax: 336 665 9011 E-mail: [email protected] 737 757 A320 series DC-8 DC-9 / MD80 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 3 bays n/b up to 757 two hangars 116,000sq ft NDT Structural modifcations (int/ext), Avionics repairs United Airlines (United Services division) Center - SFOUS Paul Lochab MD sales, marketing & services United Services Maintenance San Francisco CA 94128 USA Tel: 650 634 4269 Fax: 650 634 5926 [email protected] 737 747 757 767 777 A319 A320 A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C 4 w/b bays 10 n/b bays 90+ line stations w/ line network a 2.9-million sq ft facility in San Francisco FAA 121 operator, FAA 145 repair station, Avionics, Engine overhauls, Landing gear, Components, APUs, ISO 9000:2001 compliant, Engine test cell, Lease sale exchange, Global emergency/AOG maint, Modifca- tions IFE/interiors, Line maintenance services Victorville Aerospace Julius Smith Director sales & marketing 18200 Phantom West Victorville CA 92394 Tel: 760 530 1767 Fax: 760 246 5159 E-mail: [email protected] www.victorvilleaerospace.com 717 727 737 747 757 767 777 DC9, MD80 DC-10, MD-11 A320, A330 L-1011 A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C 2 w/b, 1 n/b 250,000sq ft Back Shops Heavy Maintenance, Line Mainte- nance, Modifcations 66 Airline Economics: MRO Global 2011 www.airlineeconomics.co MAINTENANCE T he A320 family can be cred- ited for Airbus’ success as an aircraft manufacturer, particularly as it now enjoys one of the widest customer bases in aviation history. Air France took delivery of the first A320 in 1988 and since then the A320 family – which includes the A318, A319, A320 and A321 – has amassed over 7,000 orders with more than 4,600 aircraft delivered to almost 330 customers and operators worldwide. This impres- sive sales record makes it the world’s best-selling commercial aircraft and therefore a maintenance cash cow. The introduction of the A320neo will have little effect on the aircraft type’s popularity as it has over 95% airframe commonality with the existing models making it an easy fit into existing fleets. The global A320 fleet continues to grow at a rate in excess of 10% and this will increase as from Q4 2012 to 42 aircraft per month from the current 36. Pro- duction rates will steadily rise to 38 in August 2011 and to 40 in the first quarter of 2012. Inspecting the A320 The A320s maintenance check intervals have been raised several times since its launch. And Revision 28, which was added to its Maintenance Planning Doc- ument (MPD) in November 2004, stated that although daily and weekly checks were still required every 36 hours and eight days, the tasks were split among three different sub-groups -- flight hours, flight cycles or calendar time. This gave the airline a great deal more flexibility because the check intervals could be defined by the most appropri- ate usage parameter for that carrier. Maintenance glitches such as prob- lems with the air conditioning and brakes have been ironed out and fly-by- wire technology is fully accepted. Airbus is aware that airlines are constantly looking to reduce maintenance costs and MPD Revision 28 allowed opera- tors to extend the intervals between maintenance checks. A checks could be conducted every 600 hours (previously 500 hours), C checks every 20 months (previously 15 months) and heavy checks after six years and 12 years (pre- viously five and 10 years). Equalised checks that focus on optimised usage of each part have also been introduced. CSA Czech Airlines is an example of a carrier that has adopted the intervals offered by MPD Revision 28 and so far it is working well for them. At the time the revision was introduced, the response was very favourable from airlines. Stu- art Mann, Airbus’ director of product marketing of the A320 family at that time said: “Airlines love the extra flexibility that MPD 28 gives them and, naturally, they get the maximum time out of all the components between overhauls.” A popular maintenance option on the A320 is the Airbus AIRMAN system, which allows the aircraft to transmit faults to the ground during flight. This software tool enables the necessary resources and maintenance personnel to be in place when the aircraft touches down and thus reduces the time the air- craft spend not in revenue service. Although unbundling the checks and specifying three different usage param- eters for the individual tasks meant more flexibility for airlines, it also posed more challenges. Airbus acknowledged this by introducing standard mainte- nance packages representing three common types of aircraft yearly utili- sation ranging from 1,800 flight hours annually to more than 3,500. Airlines were then able to choose the ready- made solution that corresponded most closely to their yearly utilisation. Tak- ing the process further, some operators have almost eliminated conventional C checks by following an equalised main- tenance programme. This programme distributes traditional A- and C-check tasks among equal maintenance packages. Having applied it while main- taining the easyJet A320 fleet through several years of growth, SR Technics (SRT) says the equalised maintenance or E check concept reduces aircraft downtime by a total of 17 days during a six-year period. The E checks are sequenced into 36 labour packages, each requiring eight hours of ground time, which can be per- formed during a night stop. No C-checks are required, and the six-year/24,000 flight hour intermediate layover (IL) check is due around the time of the 36th E check. A320-FAMILY MAINTENANCE: Airline Economics surveys the best maintenance providers for A320-family aircraft www.airlineeconomics.co Airline Economics: MRO Global 2011 67 MAINTENANCE problem analysis tools to optimise per- formance of its A318, A319 and A320 aircraft. Lateral trim solutions devel- oped by Airbus can decrease possible drag, reduce fuel consumption and optimise flight paths for its A318, A319 and A320s. The project made swift progress using the data from Airbus’ Production Aircraft Test System (PATS) – used to verify aircraft during pre-delivery pro- cesses – along with problem analysis tools from consultant company Shai- nin. “As technicians we expected a tech- nical solution, however Shainin are statisticians,” said Eric Papy of Airbus’ Mise au Point (MAP) design office repre- sentative team in Hamburg, Germany. “They wanted very specific information from PATS, from measuring aircraft on the final assembly line and the wings at Broughton. It was statistical analyses that found the answer.” Shainin devised a mathematical for- mula for predicting roll values for each aircraft ahead of its first flight, allowing the MAP team to make any necessary adjustments during assembly – virtu- ally eliminating the need for re-flights. The service package offered by SRT consists of fleet technical management, component and parts management, E-check maintenance management and line maintenance management. The maintenance can be conducted at an SR Technics facility or subcontracted to the operator’s selected provider. SRT says it has cut the average turnaround time for the IL check, including strip- ping and repainting of the fuselage and vertical tail, from 21 to 14 days. “We started together with Airbus to ramp up the maintenance activity on the A320,” says a source at SR Technics. “[This included] the complete reshaping and reorganising of the maintenance pro- gram out of the traditional maintenance program and into an aquiline mainte- nance program. After six years we are doing the E check in Malta but we have started to do it in Zurich.” Landing gear overhaul Landing gear overhaul for the A320 fam- ily is required every 10 years or 20,000 flight cycles, but the fatigue threshold was increased from 20,000 to 24,000 flight cycles. The zonal check interval has grown from five years to six, and the requirement for structural inspections has been relaxed from every 10 years (originally eight) to every 12 years. The result of that change, according to Air- bus, was that each operator was able to optimise the checks intervals according to its own aircraft utilisation. The number of landing gear over- hauls required each year equates to the number of 10-year-old aircraft in the fleet. But A320 deliveries are still accelerating. They climbed dramati- cally from 168 in 1998 to 222 in 1999, then stayed in the mid-200s before starting to climb rapidly again in 2005 to reach 387 in 2008. Although the requirement over the next five years is relatively stable, the growth of the overall landing gear overhaul market has resulted in several overhaulers of A320 gears such as AFI KLM E&M, Finnair, Lufthansa Technik and Turkish Technic to enter the mar- ket. Upgrades - Airbus-developed lateral trim solutions Airbus is using data from its Produc- tion Aircraft Test System and additional 68 Airline Economics: MRO Global 2011 www.airlineeconomics.co MAINTENANCE 2011 TOP TEN MRO FIRMS 1 Lufthansa Technik 16.43% 2 ST Aerospace 13.01% 3 SR Technics / ADAT 13.00% 4 TAP M&E / TAP M&E Brazil 11.12% 5 TIMCO 6.40% 6 Pemco 6.08% 7 HAECO 4.18% 8 Aveos / Aeroman 3.84% 9 AFI-KLM Engineering & Maintenance 3.44% 10 Evergreen 3.08% A320 Family maintenance: SURVEY RESULTS Airline Economics asked a selection of A320 family operators from each region (airlines and lessors) who they thought were the best performing maintenance shops. Although the results, to an extent, reflect the size of some opera- tions there are a few surprises. And when smaller market players enter the top ten, it is clear that they are doing something right. These results also reflect the fact that some of the smaller Vote split by region Africa: 1% Middle East: 2% Americas: 32% Asia-Pacific: 22% Europe: 43% Europe, Middle East & Africa (EMEA): SURVEY RESULTS 2011 TOP TEN EMEA MRO FIRMS 1 SR Technics / ADAT 31% 2 Lufthansa Technik 29% 3 TAP Maintenance & Engineering 14% 4 AFI-KLM Engineering & Maintenance 8% 5 Iberia Engineering & Maintenance 5% 6 OGMA 4% 7 JorAMCo 3% 8 Turkish Technics 3% 9 Monarch Aircraft Engineering 2% 10 Finnair Technical Services 1% MRO operations, whether airline-affil- iated, independent or OEM-operated, have responded to an increasingly competitive environment by developing MRO players are able to offer services that are highly tailored to an individual client’s needs. However, for the major- ity, where airlines choose to have their maintenance performed is dependent on location, location, location. Maintenance cost per hour Some of the most detailed studies of aircraft main- tenance costs have been carried out on behalf of Eurocontrol’s Performance Review Commission, which has been working for some years to estab- lish the marginal costs associated with air traffic delays. Researchers from Westminster University, Imperial College, London, and Lufthansa Systems found that unit maintenance costs, including an allowance for overheads such as administration and facilities, equated to approximately 15% of block hour direct operating costs (DOC). For the A320, the researchers concluded, mainte- nance cost per block hour in 2008 ranged between EUR570 and EUR770 for high and low cost sce- narios, with a base figure of EUR620. The figures for the A319 ranged from EUR580-800, with a base of EUR630, while the A321 base costs were estimated at EUR720 with a low of EUR660 and a high of EUR910. For comparison, the equivalent figures for the Boeing 737-800 were estimated to range from EUR500 to EUR670, with a base figure of EUR670. Global A320 fleet by operator region Africa: 1% Middle East: 5% Americas: 29% Asia-Pacific: 26% Europe: 36% Methodology Over 5,000 industry professionals globally were asked: Which maintenance provider offers the best service for the A320 Family taking into account costs, turnaround times, reliability and conve- nience? These results were then filtered by Airline Eco- nomics so that only airline senior management, re-marketers and lessors who have owned and/ or operated A320 Family aircraft, appraisers and investors remained. The 2011 A320 Family Maintenance survey is therefore an accurate reflection of industry think- ing at the very highest levels from decision makers who are involved in the decision making process during the course of an aircraft’s life. more inclusive services to make fuller use of their capabilities and resources while helping their customers contain costs. www.airlineeconomics.co Airline Economics: MRO Global 2011 69 MAINTENANCE MAINTENANCE regulations associated with the lease agreement and to an extent this has slowed and amended their progress as time has passed. Even so SRT has been able to slash turnaround times by shifting and amending the layout of its various workshops, it has put tech- nicians together with managers and client account managers, amended layout in all areas to make the process seamless and linier and adopted an in house program for staff and graduates to develop new practices to help reduce turnaround times. Turkish Technic too has been build- ing up its capabilities in Istanbul; targeting operators in Europe, the Middle East, CIS and northern Africa as well as Turkey itself. The Turkish Airlines subsidiary is building a new narrowbody MRO base, the HABOM Aviation MRO Centre at Sabiha Gökçen International Airport. The estimated total investment requirement for the airframe and component maintenance centres on the whole is around $500 million. By the year 2020, HABOM is estimated to generate a $1 billion share from airframe and component main- tenance segments. Turkish Technic will be the permanent shareholder of the HABOM Project. Turkish Technic is also aiming to establish these new investments as an international joint venture with the participation of a lead- ing global company or companies. With this new investment, Istanbul will be the maintenance hub of the region within a short time period if all goes to plan. The airframe maintenance centre facilities at Sabiha Gökçen International Airport will have a total 372,000m2 area. There will approximately 3,500 employees within all the maintenance, repair and overhaul centres which will be estab- lished within the HABOM Project. Turkey hopes this impressive base will become a global MRO hub, but it is prudent to wonder about the future for the maintenance market in general. The current scenario is one of aircraft flying to bases; having checks performed and collecting the aircraft all via non-rev- enue flights. However, with oil prices above $110 a barrel and Goldman Sachs urging investors to poor into oil with a benchmark of $200 by 2015, it is unlikely that airlines will want to fly aircraft to distant maintenance centres and will opt for doorstep services. Such a trend will play into the hands of Lufthansa and especially SR Technics as they expand to become global, independent MROs through the future slated purchase of a US MRO supplier, possibly TIMCO. Given this scenario, it is difficult to see how the future of very large MRO bases like the one being developed at HABOM can be assured. In the case of HABOM, this will not be possible without a very large route hub being created out of Sabiha Gökçen International Airport, which is not likely. But taking into the account the size of the Middle East fleet on order, the managers of the HABOM project are hoping that they will be well placed to cater to this ever-grow- ing market. But it is SRT, with its Abu Dhabi Aircraft Technologies subsidiary, which seems best positioned to benefit, and further expansion of this site could prove highly popular with the airlines of the Middle East. This train of thought is backed by Lufthansa Technik’s Walter Heerdt, senior vice president marketing & sales. When asked by Airline Economics why he thought the LHT network gives them an edge he said: “Lufthansa Technik’s Group network is definitely a big advantage. The size, geographi- cal location and capability mix of our Lufthansa Technik’s comprehensive suite of total support offerings covers landing gear, engines, components and material, while overall Total Technical Support can be combined with Techni- cal Operations Management and the management Technical Operations Websuite. And at a time when cost control is more crucial than ever, the company says its Total Component Sup- port (TCS) service provides what are normally mutually exclusive benefits: low costs, yet with the greater aircraft availability that normally demands heavy investment in a big stock of spares. LHT says membership of its com- ponents pool -- the equivalent of being part of a Boeing and Airbus fleet nearly 400 strong -- reduces operating costs to a level normally achievable only by operators of much larger fleets. The service can be extended to include everything from writing the specifica- tions, initial provisioning studies and home base allocation to repair and overhaul, troubleshooting, documen- tation and engineering services. And it is tailored to the operator’s specific requirements. Dublin Aerospace was awarded EASA Part 145 approval in October 2009 for its new maintenance and overhaul operation in the former SR Technics Hangar 5 at Dublin Airport. Already offering heavy maintenance on the A318, A319 and A320 and overhaul, and major refurbishment of the Honeywell 131-9[A] APU, the company achieved A320 landing gear capability in 2010. The company also offers on-wing repair ser- vices, including seal changes and gear replacement, at any location. The Aer Lingus A320s that SRT used to maintain at Dublin are now handled by Sabena Technics. SR Technics, the A320 maintenance leader through their various agree- ments which include Easyjet and AirBerlin, has been trying everything it can to cut turnaround times and costs. The operation in Zurich has been a particular headache for the manage- ment. The buildings and hangers at the SRT base in Zurich are not owned but rented. This means that when SRT came to streamlining its processes, it had to factor in various building 70 Airline Economics: MRO Global 2011 www.airlineeconomics.co MAINTENANCE C2s and C3s and will be moving into heavier [checks] later this year. Those aircraft are here for five to seven days, it’s a very, very high burn rate, which is essential for not having any late fines from an inspection standpoint. Not hav- ing the right materials on hand could slow down the turnaround time, so we have to plan routine and non-routine materials because there is no time for recovery while the airplane is on base so it is a high-velocity maintenance concept that we apply in Tampa. We get it done well and we literally have had perfect airplanes in our Tampa base as measured by our client’s scorecards. We include liability, quality, time and value. It doesn’t mean that we always get everything right, but by and large the A320 fleet is one we do as well as anything else we do.” PEMCO’s Casey is very well aware of the fact the US fleet is due to be replaced with newer and more fuel efficient air- craft that will require less maintenance, but he is prepared for this. In fact, he sees it in a very positive light. “Newer airplanes require shallower maintenance checks as you would imag- ine,” he says. “But many maintenance providers are able to run extremely high burns and compress the mainte- nance schedule into fewer days so the airline gets higher yields. They have got sufficient scale to keep their lines from gapping, which keeps the whole pro- gram efficient from a cost and quality standpoint – so it is good for everybody. Even though newer airframes take fewer total man hours for maintenance, it is clear that many MROs are going to be able to do more airplanes in the same footprint with the same number this trend: “We have grown about 50% overall throughout our three bases. We used to have one location – Alabama – and about two years ago we expanded to Tampa and last year we doubled Tampa and also opened our Cincinnati mainte- nance base. But the point is, although we have grown 50% in size we have essen- tially sold out already. We are trying not to do a whole lot of growing right now because it is challenging and requires a lot of resources and it is critical we are making sure we are adhering to the process that helped us deliver the per- formance that led to the growth. Actually our year-to-date growth rate is 73% but we are making a decision to reduce this rate. The point is we have been pretty well sold out over the past year and a half but we will have the capacity in the fall in two of our locations. We expect to pursue A320 maintenance from North American carriers – to date we haven’t had many customers ferrying airplanes across the Atlantic to our shop.” He adds: “We have been doing C1s, eight overhaul facilities in Europe and Asia secure that most of the NB and WB aircraft can be serviced close to the customers home base. The size of the network guarantees slot flexibility and capacity, which enable LHT to offer base maintenance services to all sizes of fleets.” He adds: “We want to be perceived by our customers as a reliable next- door supplier which provides them with exactly those services they individually need in the expected quality. I think MAINTENANCE Americas: SURVEY RESULTS 2011 TOP TEN AMERICAS MRO FIRMS 1 ST Aerospace (SAA and ST Mobile) 22% 2 TIMCO 20% 3 PEMCO 19% 4 TAP M&E BRAZIL 16% 5 AEROMAN / Aveos 12% 6 Mexicana MRO 4% 7 AAR 3% 8 Evergreen 2% 9 United Services 1% 10 Aeroframe Services LLP 1% In the Americas one such well-placed MRO base is PEMCO, which is based in Tampa, Florida. PEMCO has made great inroads into the A320-family maintenance market and, as shown in the following survey results, it is doing a good job. President Kevin Casey explains: “Customers are drawn to the location. They fly their last airplane in last thing at night full of passengers and we can taxi their aircraft to our hanger from there and then deliver them the aircraft we have just wrapped up. So at 6am they can light the fires and kick the tyres and head on out with passengers. So there is no non-revenue ferry flight. We have two big beautiful hangars with substantial capabilities, which I think is really resonating with the A320 com- munity.” This philosophy is the future for many MROs. As customers demand faster turnaround times at lower cost, it is important to factor in flight and fuel time/costs into the equation and delete the same where possible. Casey backs that the mixture of our broad service portfolio, our world-wide network, the high quality and the motivation of our employees are guarantees for our suc- cess. Lufthansa Technik is continuously investing in its facilities. Lean manage- ment, often in joint workshops with the customer, help to keep costs low or even drive it down due to smart interface solutions. The exchange of best prac- tises within the LHT Base Maintenance network constantly helps to drive down ground times, for example just recently an A319 D-check was completed in 16 days. The Lufthansa Technik produc- tion processes have been standardized throughout the facilities by analysing and optimizing of all production steps to secure higher efficiency in MRO services. Customers also value the tight cooperation on base maintenance procedures as well as on optimizing of individual maintenance schedules which lead to MRO cost savings for the airlines.” www.airlineeconomics.co Airline Economics: MRO Global 2011 71 MAINTENANCE airlines as well as the service providers as there will be a much larger fleet. Each of the airplanes will require far fewer man hours per year, but most MROs are going to be able to continue with approximately similar mainte- nance facilities because they are getting the burn rate up much higher than they would have otherwise in the absence of heavy structures requirements, which they will not have for a very long time to come.” airplanes require lots of maintenance man hours but they are not nearly as effi- cient and therefore in a world of mostly fixed-price maintenance services they are more challenging for the more typi- cal MRO to be profitable. Airlines that are operating newer aircraft than are maintained by fixed-price providers; they will be able to have budget control and confidence in when that aircraft is going to be completed and returned. This is an excellent future for the US MAINTENANCE of mechanics, where previously they were doing fewer airplanes each of which required much more man hours for heavy checks.” He adds: “It is widely thought that the new airplanes are so much more sophisticated in how they tell you what’s wrong, help you diagnose what’s wrong, and help you go about fixing it, that they offer far fewer maintenance surprises both in operation and in the maintenance hanger. The bigger, older pany grouping of MROs who work with the manufacturer across a range of ser- vices. Kortas says; “I believe [consolida- tion] is a trend that may accelerate in the near term. It is a global phenomenon, but as the Asia-Pacific is so dynamic it could be the forerunner of such a move- ment. It has been a constant trend.” Because Asia is now a driver for avia- tion growth, the fundamentals are there for it to continue growing stronger in MRO demand and development of MRO capacity. A380 maintenance is currently being conducted in-house, at Singapore Air- lines and Qantas Airways and now Korean but there is potential even on this type for components outsourcing. Many A380 operators have asked Airbus for Flight Hour Service (FHS) mainte- nance programs for example. The Asia Pacific market is pointing towards India for strong MRO growth and there is no reason to assume that South East Asia will not be the largest MRO market in the world by 2050. Asia Pacific: SURVEY RESULTS 2011 TOP TEN ASIA PACIFIC MRO FIRMS 1 ST Aerospace 27% 2 HAECO 19% 3 Lufthansa Technik Philippines 18% 4 Evergreen 14% 5 TAECO 11% 6 SIA Engineering Company 4% 7 GAMECO 3% 8 MAS Engineering 2% 9 Air New Zealand Engineering Services 1% 10 China Airlines International 1% Both Airbus and Boeing are bullish about MRO trends in the APAC region; their eyes are fixed firmly on China and India and a need for the manufacturers to provide full package solutions to air- lines. Of course newer aircraft equals a reduction in demand for parts and ser- vices, but it also means an increase in demand for more MRO solutions to increase efficiency in airline operations and maintenance. Airbus senior director, maintenance and customer service, Wolfgang Kortas, said aviation’s current global downturn should accelerate the consolidation of some MROs, including a number in Asia-Pacific. He said consolidation was beginning to happen among members of the Airbus MRO Network, a 15-com- THE TOP TEN A320 MRO COMPANIES PROFILED 1. Lufthansa Technik Lufthansa Technik is one of the leading manufacturer-independent providers of maintenance, repair, overhaul and modification services in the civil aviation industry. With tailored maintenance programs and state-of- the-art repair methods, LHT ensures the unbroken reliability and availability of its customers’ fleets. Walter Heerdt, LHT’s senior vice president for marketing & sales, says: “Lufthansa Technik has survived the last economic and financial crisis relatively well through increases in efficiency, high utilisation of flexible working hours and process innovations. 2010 saw a slight increase in revenue, but as expected we were not quite able to match the record earnings of the year before. Operatively, the smooth introduction of Lufthansa’s new Airbus A380 flagship was a particular high point for Lufthansa Technik in 2010.” The Lufthansa Technik Group comprises more than 30 subsidiaries and joint ventures in Europe, Asia, North America and Australia. It has two joint ventures with OEMs: N3 engine overhaul services (with Rolls- Royce, based in Arnstadt / Germany) is a maintenance and repair facility for large Rolls-Royce turbofan jet engines; and Airfoil Services Sdn. Bhd. ((ASSB), 72 Airline Economics: MRO Global 2011 www.airlineeconomics.co MAINTENANCE MRO services for the B748, B787, EMB190 and A380. Heerdt says: “As Lufthansa is one of the first customers for the new Airbus A320 neo series Lufthansa Technik will definitely extend its MRO capabilities also to this type of aircraft in the coming years. From base maintenance side, Lufthansa Technik has recently launched a new T-product (“Total”- products, offered by LHT for every kind of MRO service), called TBS – Total Base Maintenance Support. The TBS is especially designed to make Base Maintenance easier for fleet operators and offers a broad range of included and optional sub-products as well as different financing models, to better suit each operator’s financial situation or preferences.” surplus parts enables the operators to save costs. In the end it is an individual strategic and economic decision of the specific operator if and to which range he will go this way.” But he also admits further consolidation is expected: “Despite new entries, we see an ongoing consolidation process in the MRO industry. The introduction of new aircraft generations and engines types is combined with high investments in infrastructure, tools and employee training and complex questions about intellectual property. These challenges can only be handled successfully by MRO providers operating globally and at a certain scale, having the ability to tailor packages to individual needs.” LHT is looking to further grow its market share via the launch of new With over three decades of experience in providing quality engine services and managing over 500 engines for a diverse customer base comprising over 80 operators worldwide, ST Aerospace consistently invests in new capabilities and expands technical resources to bet- ter deliver innovative and integrated solutions. Its extensive experience serving major airlines, air freight operators and low cost carriers embodies the company to customise solutions to suit unique requirements, meeting outsourcing needs and operational demands. ST Aerospace provides: Aircraft Maintenance º Bcheduled Light & Heavy Maintenance º Transit/Turnaround Bervicing & Checks º Aircraft Bervicing, Inspections & Repairs º BB/ AD Compliance and Modifications º Non Destructive Inspections º Aircraft Painting Aircraft Modifications º Iassenger-To-Ireighter ¹ITI) Conversionsº Ileet Btandardisations º Cabin Interiors Upgradesº In-Ilight Ðntertainment ¹IIÐ)º Avionics Upgrades & Installationsº Other 2. ST Aerospace Because SR Technics and Abu Dhabi aircraft Technologies are now essen- tially a group under the ownership of the Mubadala Development Company (Mubadala), their votes have been grouped together. Mubadala is a catalyst for the eco- nomic diversification of Abu Dhabi. Established and owned by the Gov- ernment of Abu Dhabi, the company’s strategy is built on the management of 3. SR Technics Modifications including Winglet Installation Off-Site/Aircraft-On-Ground (AOG) Recovery Services º AOC Bupport º Aircraft Recovery & Repairs Engineering Design & Development º Design Organisation Approval - ÐABA-21 and BAR-21º Bupplemental Type Certificate (STC) Development & Certificationº Liaison Ðngineering Engines ST Aerospace offers customized integrated solutions for your fleet of engines, helping clients achieve the longest on-wing time at the lowest lifecycle costs for an airline’s engine operations. Its full service spectrum includes: º Technical management º On-wing maintenance º Off-wing maintenance º Asset management Management º Ðngine condition monitoring º Ierformance trending & diagnostics º Maintenance planning º Workscoping º Lease return planning º Iailure analysis º Configuration management º Reliability improvement programme º Warranty & insurance management On-Wing maintenance º Ðngine defect/damage assessment & rectification º Borescope inspection º In-situ airfoil blending º Top case removal º Modular repairs º Ðngine troubleshooting º Ðngine/LRU removal & installation º Ðngine wash Asset Management º Bpare engine support º Ðngine leasing & pool access º Inventory management º Logistics º Iinancing e.g. sale and lease back Off-Wing maintenance º Ðngine maintenance, repair & overhaul º Iarts & accessories repair/ overhaul º AD/BB compliance º Modifications & upgrades º Iost-lease certification with MTU Aero Engines) which is specialized in repairing high pressure compressor blades and vanes as well as low pressure turbine blades. Heerdt says: “LHT has developed a very comprehensive monitoring and supplier management to avoid delays in parts delivery. We are following a pro-active and transparent information exchange with our suppliers regarding volume and usage of parts for on-time delivery. Additionally, together with our subsidiary Lufthansa Technik Logistik we have created an effective supply chain for a global provision with spare parts.” Heerdt is bullish on future growth for the MRO market: “We think that the MRO market will further increase in the next years including the business with surplus parts, as the use of www.airlineeconomics.co Airline Economics: MRO Global 2011 73 MAINTENANCE MRO states that it is its “independence [that] ensures every customer receives the same high-quality service and treat- ment under one SR Technics service umbrella”. The MRO firm offers total solution packages to airlines, where it takes over the technical management and technical operation of the entire fleet, and provides many types of services tailored to each customer’s individual requirements – including elements such as aircraft checks, engine over- haul or component management and repair. SRT’s proprietary IT system sets it apart from its competitors. Via this system, the company is able to manage aircraft and component data online and real-time wherever the airline or air- craft is located. ADAT in Abu Dhabi provides com- prehensive line and light maintenance services including ‘A’ checks, aircraft casualty and AOG response, engine and major component replacement, trouble- shooting and defect rectification. ADAT services º !|I|:i| c|ec|: I|ú Ii|c|Il| µu:| uIc|: º ûIil], Wee|l] I|ú 'A c|ec|: º |i|o| co|µo|e|| |eµlIce|e|| I|ú :e|.ici|ç (wheel change etc.) º ||çi|e:, A|u :e|.ici|ç & |eµlIce|e||: (boroscope, vibration survey etc.) º Ai|c|Il| Weiç|i|ç º |I|o| co|µo|e|| |eµlIce|e|| I|ú :e|.ici|ç (MLG seal replacement, landing gear swing etc.) º |i|o| co|µo:i|e I|ú :||uc|u|Il I::e::|e||: and repairs (fuselage dents, cargo hold damage etc.) º CIui| |Ii||e|I|ce i|cluúi|ç Iú.I|ceú li|:| and business class seating systems, galleys and IFE º |uel |I|| e|||] (|uel :e|:o| |eµlIce|e|| e|c.) º Ai|c|Il| e/|e|io| WI:|i|ç º Ai|c|Il| :µeciIl i|:µec|io| (ui|ú :||i|e, |I|ú landing, volcanic ash exposure etc.) º S|o|| |e|| |Ii||e|I|ce µlI||i|ç º ûelec| |I|Içe|e|| º |Ii||e|I|ce Co|||ol Ce|||e :e|.ice: º A0û: I|ú Ii|c|Il| cI:uIl|] |eco.e|] º ûelec| ||ouule:|oo|i|ç I|ú |ec|ilicI|io| º Riúi|ç e|çi|ee|: TAP Maintenance & Engineering (TAP M&E) is the MRO (Maintenance, Repair and Overhaul) organization of TAP Por- tugal, the Lisbon based operator, that provides maintenance and engineering services in aircraft, engines and com- ponents. TAP M&E is duly certified by several aviation authorities amongst which is the FAA and EASA. Since the foundation of TAP, in 1945, TAP M&E has been responsible for the maintenance of its entire fleet, presently with more than 50 Airbus aircraft. In the 70s started providing services to third party customers – this now accounts for more than half total revenue. The long-term involvement with a commercial operator, made TAP M&E aware of the importance of on time delivery of products (aircraft, engines and components) and services. TAP M&E is therefore committed to offer its customers cost efficient maintenance with short turn-around times and high quality and reliability standards. 4. TAP M&E / TAP M&E Brazil TAP M&E Brazil has the most up- to-date MRO technologies - including the only Inertial Navigation System in Latin America, one of the five Griffon GTW-U3 cylindrical milling machines in existence in the world, and a horizon- tal Gemini GE-1600S lathe, which can machine very long parts for the landing gears repair services. The company is certified to maintain the entire Boeing line 727, 737Classics, 737NG, 747, 757, 767, 777, BBJ, MD11 and DC10, Embraer EMB120 (Brasí- lia), ERJ 135, ERJ 145, EMBRAER 170, EMBRAER 175 and EMBRAER 190, EMBRAER 195 and Legacy 600 and Lineage, Airbus A300, A300-600, A310, A320, A330 and A340. Services offered include: º Daily and overnight Checks º Compo- nents Overhaul º Ðngineering Iro|ects with Technical Bupport º Interiors Iro|- ects and Overhaul º Avionics Bystems and Installations Iro|ects º Airframe Repair, Iro|ects and Improvement º A, B, C and D Checks partnerships and long-term, capital-in- tensive investments that deliver strong financial returns and tangible social benefits for the Emirate of Abu Dhabi, and contribute to the growth and diver- sification of its economy. SR Technics provides technical solutions for airlines on a global basis. Services are provided either directly to the airline or through other parties such as aircraft leasing companies, OEMs (Original Equipment Manufacturers) or component trading companies. With headquarters at Zurich Airport, SR Technics (SRT) offers an extensive network of maintenance facilities, logistic centres, line stations and sales offices across the globe. SRT has been providing mainte- nance services to customers since the early 1960s as the former maintenance division of Swissair and a founding member of the largest European main- tenance consortium. SRT offers services for most Airbus and Boeing aircraft and their associ- ated engines and components, and is one of the largest independent provid- ers of these services in the world. The 5. TIMCO TIMCO Aviation Services is one of the world’s largest independent aircraft MRO providers. TIMCO provides air- frame MRO and modification services from three multi-hangar locations in the United States: Greensboro, North Carolina, Macon, Georgia and Lake City, Florida. TIMCO’s services cover light and heavy scheduled maintenance checks, exterior and interior modifications installations, upgrades and conversions for commercial, government and private aircraft. The airframe MRO operation employs over 1,000 mechanics--many of whom are certificated--and uses nearly 1.5 million square feet of hangar and office space at its three locations. TIMCO LineCare offers a range of line maintenance and non-technical support services under FAA Opera- tions Specification D107 certification at a growing number of airports. TIMCO LineCare performs a range of services across its growing network, grouped into two broad categories as follows: 74 Airline Economics: MRO Global 2011 www.airlineeconomics.co MAINTENANCE TIMCO’s Engine Center provides full engine disassembly (teardown), inspection, repair, parts overhaul and reassembly (build up) services. The engine team at the Oscoda, Michigan facility provides complete non-destructive testing (NDT), engine AD compliance, fuel nozzle overhaul, bleed valve overhaul, gearbox overhaul and HPC disk overhaul. In addition, AOG teams can be sent on field service calls to perform engine on-wing support and recovery services. The TIMCO Engine Center is an FAA certified repair station (T48R384Y) with focus on complete support for the JT8D series of engines, as well as disassem- bly and parts inspection services for the CFM56-3. Pemco specializes in airframe heavy maintenance, as well as interior recon- figuration, avionic & IFE upgrades, and structural and cargo modifica- tions. A leading aircraft MRO services provider for a wide variety of aircraft types, Pemco has maintenance bases in Tampa, Florida, Dothan, Alabama and Cincinnati, Ohio, as well as partner operations in Southeast Asia. Pemco is also the world’s leading aircraft cargo conversion providers with over 300 cargo conversions across 26 models of cargo aircraft. Its new 757 Combi and Freighter programs are the latest addi- tions to Pemco’s cargo platform, where Pemco presently has four 757 cargo modifications in work, with more proj- ects in the making. At the three US sites, PEMCO offers: º Development and manufacture of aircraft cargo systems º Cargo modi- fications º Aircraft parts and support º Bcheduled and unscheduled mainte- nance º Ðngineering services º Repairs º Irecision components º Avionics º Interior modifications Aircraft types serviced include: º ATR 42/72 Beries º Beech 1900D º Boeing 787, 747, 757, 707, 777 Beries º Airbus A820 / A819º Bombardier Dash 8 Beries 100, 200 & 800 º Bombardier CRJ 200 / 700 º Ðmbraer ÐRJ 185/145 6. PEMCO & Ð-Jet 170/190 Beries º Iokker I 100 º McDonnell Douglas MD-80/90 Beries º Baab 840 Airline Economics: What makes PEMCO a good destination for A320 maintenance? Kevin Casey, president of Pemco: The fundamental requirement our cus- tomers want is for us to provide them with reliable aircraft, on schedule and without budget surprises. The opera- tion team does a good job on the A320 fleet. We routinely get aircraft back on time and early. We have periods of time strung together that are literally perfect ten score cards for one customer. Princi- pally, A320 customers have historically been Northwest, Delta and JetBlue but we have also done leasing customers for RBS and ILFC. Our customers want to have aircraft to fly well after they leave us and our in service reliability is man- aged by our quality department. Every day they track the aircraft we have seen out at least for a month or so and our in service reliability has in that 21 day period is very high. Our schedule is very easy to mea- sure. We only have a couple of days to turn around the airplanes and we get the airplanes out early. On the Northwest fleet, which is a slightly older fleet than the JetBlue fleet, so it is a more involved check and that work was split between ourselves and another provider, we rou- tinely produce the airplanes two and a half days early. Our average on time performance was two and a half days early. That kind of extra utilisation is huge to an airline. In Tampa we have a different com- plex. The JetBlue fleet is younger, we have been doing C1s, C2s and C3s and will be moving into heavier later this year. Those aircraft are here for five to seven days, it’s a very, very high burn rate, which is essential for not having any late fines from an inspection stand- point, not having the right materials on hand that could slow down the turn- around time. AE: Are your good turn times advertised as a competitive advan- tage? Casey: It is clearly an advantage to have an aircraft returned early from a maintenance check because they can get so much extra revenue out of the airplane. But not every airline is agile enough to take on aircraft out of service unexpectedly and replace with another quickly. The A320s that we routinely get out early, with one or two exceptions, they went a long way to ratchet down our turn times. There is another reason that is more esoteric and objective that some cus- tomers are drawn to the location. They fly their last airplane in last thing at night full of passengers and we can taxi their aircraft to our hanger from there and then deliver them the aircraft we have just wrapped up so at 6am they can light the fires and kick the tyres and head on our with passengers. So there is no non revenue ferry flight. We have two big beautiful hangars with substantial capabilities, which I think is really resonating with the A320 community. AE: Are you seeing any price sen- sitivity because of the overcapacity in the market? Casey: We are not seeing too much overcapacity. In North America over the past 10 months we have been affected by a lack of capacity, not physical hangar space, but competence mechanic capac- ity. There has been an interesting shift over the past few years where mechanic wage rates have gone up significantly through a combination of retirement, diminishing the talent pool and airlines re-hiring mechanics – Delta for exam- ple has hired a lot of mechanics recently – and there has also been an increase in overall maintenance and modification rates as a result of the rebound in the economy and the desire of the mainline carriers to capitalise on the restoration of business travel demand – so lots of first class modifications on widebod- ies and even on their narrow body and regional feeder aircraft. A lot of that has consumed the capacity over the past year and a half in the United States and in Canada. We haven’t experienced a great deal of overcapacity that has affected rates, however, having said that, our costs have increased faster than our pricing. Once we join forces with a customer, we have a very active and lean team so we www.airlineeconomics.co Airline Economics: MRO Global 2011 75 MAINTENANCE from the MRO world who thinks they can bring their expertise to Boeing and leverage that to provide MRO services that no one else can match. But the truth is airlines like a buffet, they don’t order off the limited menu. They are going to pick their engine services from the best provider – many times that is the OEM but many times it is not. They are going to pick their airframe services from the best providers – in house light check or outsource the heavier checks. I agree with the trend that the OEMs are going to have a heavy impact on high intel- lectual property items – engines and components – and particularly those items where the invoice is highlighted by the cost of parts, which they con- trol, but it won’t be the case in airframe maintenance, full stop.” very rarely increase prices. Last year, all three of our major legacy programs we did not increase the price at all. But at the same time our labour costs and retirement costs have all increased. The only was we can afford that is to increase efficiency, and so far we have been able to do that. AE: Does the rise of OEM after- market agreements worry you? Casey: Sure! The only way the OEM has a real advantage and has real potential value is where the invoices have a high cost component and where technical data is effectively controlled by the OEM – this is either the engine manufacturers or in the high-value components such as black box record- ers. An engine bill is 75% parts; an air- frame bill is 75% labour. We all know OEM labour costs more. But they haven’t cornered the market on skill. In fact we have hired OEM mechanics. These guys are used to dealing with clean airplanes, shallow dive, not dif- ficult and lighter, checks. They don’t get into heavy stuffs or modification. These are the things that more experi- ence mechanics, hopefully with some grey hair, are much better at. So when your invoice is 75% labour and the skills of the mechanics aren’t just about reading a manual or putting an engine back together as per the tolerances in the manual, they really have to think on their feet and be more of a crafts- man than just assembly. That’s where independent airframe MROs have the advantage over OEMs, and where they will always have an advantage over the OEMs. In the eight years I have been at Pemco, the US level of outsourced heavy maintenance has gone up from about 35% to about 68%. That trend is continuing. And they are not going to Boeing. Every decade or decade and a half, the OEMs have gone into this mode where they want to extract some more vertical integration and over their services in a Goldshare programs or whatever their term-du-jour is, and it always fails. Sometimes it is motivated by offshore requirements such as China or India, and sometimes it is motivated by somebody that came to the OEM Hong Kong Aircraft Engineering Com- pany Limited - better known as HAECO - has provided comprehensive aero- nautical engineering and maintenance services to airlines and operators since 1950. When HAECO signed a 20-year fran- chise agreement with Hong Kong’s Airport Authority, it became the only full service provider at the new Hong Kong International Airport at Chek Lap Kok offering comprehensive line to heavy maintenance packages including air- craft component overhaul support and AOG/aircraft recovery service. HAECO has, over the years, expanded beyond the boundaries of Hong Kong SAR into other cities in China with Taikoo (Xiamen) Aircraft Engineering Co. Ltd. (TAECO) at Xiamen, Fujian, and Taikoo (Shandong) Aircraft Engi- neering Co. Ltd. (STAECO) at Jinan, Shandong. Recently, a joint venture, Taikoo SIchuan Aircraft Engineering Ser- vices Co, has been formed in Sichuan. It also operates maintenance facilities in Singapore - Singapore (HAECO) (SHAECO), and Bahrain. In addition, HAECO has established joint ventures with key major Original Equipment Manufacturers (OEMs) in pursuit of providing “Total Care” services to its customers. 7. HAECO Aveos, in its various guises has been car- rying out heavy maintenance for more than seven decades. The company, now acting as an independent is fast emerg- ing as one of the leading MROs in the Americas. With the addition of Aeroman to the stable the firm is able to cover all the Americas as a modern local pro- vider of services. Supply chain, fleet and logistics man- agement In addition to airframe, engine, and component solutions Aveos offers val- ue-added maintenance solutions such as aircraft maintenance training and supply chain management as part of an integrated service offering, in turn ensuring efficient demand, process and vendor management. Aveos fleet management experts allow customers to focus on their core competencies by providing tailored services that opti- mize carriers’ maintenance programs and operational reliability. Mainline Services º Bupply chain management ¹inventory management, procurement, logistics, business support and airline opera- tional support) º Ileet management º Ðngineering services º Regulatory compliance and audits º Technical pub- lications services º Technical records management º Aircraft maintenance training º Training Bolutions º 24-hour engineering support (AOG) Facilities and Locations º Montreal - 7 lines 290,000 sg. ft. º Winnipeg - 0 lines 220,000 sg. ft. º Vancouver - 2 lines 820,000 sg. ft. º Ban Balvador - 0 lines 580,000 sg. ft. Aveos has signed a five year contract with ABC Aerolíneas, S.A. de C.V., oth- erwise known as Interjet, of Mexico, to repair and overhaul all components on its growing fleet of 24 Airbus A320 air- craft. The agreement includes access to an inventory pool for Interjet as well as the placement of main base stock in Toluca, Mexico. Aveos will also support the development of Interjet’s in-house component and repair capability. Aveos is an MRO to keep an eye on. 8. Aveos/AEROMAN 76 Airline Economics: MRO Global 2011 www.airlineeconomics.co MAINTENANCE AFI KLM E&M provides MRO ser- vices while also guaranteeing a whole raft of requirements ranging from safeguarding air safety, properly man- aging aircraft operation, and minimizing costs. The firm has a 75-year-plus track record,during which it has achieved a level of undisputed excellence in managing large aircraft fleets. The operating units responsible for produc- tion place their skills in the service of Air France-KLM’s fleet as well as those of its customers. AFI KLM E&M has set up a com- bined organization responsible for strategy, marketing, business develop- ment, sales force (present throughout the world) and external communica- tion. Its airline-MRO position also guaran- tees its independence when it comes to choosing the most effective options for customers’ engines. AFI KLM E&M is able to get the best from its strong part- nership with OEMs as well as to develop alternative solutions that increase cus- tomers’ benefits. AFI KLM E&M provides: º guaranteed TAT º engineering Ðxpertise to optimize both costs and “Mean Time Between Removal” (MTBR) º slot flexibility through its engine MRO network º workmanship guality based on a high skilled and experienced labour force º contract flexibility ranging from T&M to Fixed Prices, or different kinds of Flight Hours programs. Engines Measurements carried out on engines provide daily data, allowing the AFI KLM E&M engineering team to monitor performance (fuel consumption, EGT margin, oil consumption, etc.) and rec- ommend on-wing maintenance actions. This approach leads to increased engine on-wing lifespan; incident prevention; reduced engine operational and main- tenance costs. Drawing on its extensive operational expertise, AFI KLM E&M can recom- mend customized engine performance 9. AFI-KLM E&M 10. EVERGREEN EVA Air’s Engineering and Mainte- nance Division was spun-off as an independent corporation in September 1998 to become Evergreen Aviation Technologies Corporation (EGAT) with General Electric Company (GE) as an equity partner. EGAT was tasked to uphold aircraft maintenance quality and promote technical flight safety while creating adequate business value. EGAT has since evolved into a specialty, high business-value MRO, undertaking mega-scale modifications such as the Dreamlifter in partnership with Boeing, as well as engaging in complete Section 41 skin replacements, Horizontal Stabilizer skin replace- ments, and executing AOG recovery repairs on any portion of the airframe structure. EGAT’s robust management sys- tems and processes the Oracle-based MRO System for engine overhauls, corporate-wide Six Sigma deployment, Human Resource Management, Job Qualification, Balanced Scorecard, Product Safety, Knowledge Manage- ment and E-Commerce. Commercial airlines, aircraft leasing companies, and leading government agencies entrust heavy maintenance work to Evergreen Maintenance Cen- ter (EMC). Located in Marana, Arizona, the EMC is one of the largest full-service commercial maintenance, repair and overhaul (MRO) facilities in the United States. Relativity Capital has recently acquired EMC. Consisting of three maintenance hangars and a large maintenance flight line, the Evergreen Maintenance Cen- ter also operates the Pinal Air Park and its 6,850-foot runway rated for Boeing 747-400 through 747-8 aircraft. With 20 million square feet of ramp and storage area able to accommodate up to 400 aircraft, the EMC also holds the distinction as the largest commer- cial aircraft storage facility with heavy maintenance services in the world. Aircraft maintenance A818, A819, A820, A821 º A, B, C, D Checks º CICI and IBII º BBID Inspections º AD `s and BB`s º Interior Reconfiguration º Composite Repair º Aging aircraft Inspection º Avionic Modifications º Aircraft Iainting º Structural Mods Flight Line Providing customer support for all types of commercial aircraft: º Ðngine Changes º Bridging Changes º A & B Checks º Ilight Control Rigging º Aircraft modifications º AOC Drop In and TDY Services Team Storage º 24-hour roving security º Active and passive video and microwave perim- eter surveillance º Active maintenance programs for stored aircraft & engines º Dry, non-corrosive environment/cli- mate Components º Actuator cylinders and links º Avionic eguipment / Accessories º Cear Boxes º Wheels and Brakes º Ðngine Cowl- ings º Ilight Controls º Btructures º Composites º Hydraulics º Ineumat- ics º Ðngine accessories ºIainting Engine services All Models - Boroscope Inspection, Engine Removal & Reinstallation; LRU Replacements. Location: Evergreen Maintenance Centre is famed as the site where aircraft are stored. The Marana, Arizona location provides the ideal dry southwest USA climate for aircraft maintenance and storage. Painting: Whether your flight path takes your fleet around North America or around the world, Evergreen Maintenance Center is your source for aircraft paint- ing. The firm’s worldwide customer base, combined with 30 years of experi- ence in aircraft exterior painting equals distinctive results. Contact EMC to discuss how Evergreen Maintenance Center can provide the finest aviation services in the industry. monitoring parameters. warranties on all parts that have not come fully up to expectations. 78 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE E uropean airlines spend $12.2 billion on mainte- nance, which equates to 24% of the global mainte- nance, repair and overhaul expenditure. Eastern European and Commonwealth of Independent States carriers account for only $2.1 billion of this figure, but David Stewart, vice- president, ICF, at SH&E, predicts their portion of this expenditure will grow faster than the global average of 3.4%, at a 4.7% compound average growth rate. Meanwhile, Team SAI also foresees Euro- pean MRO growth will stay solid, with firms in eastern Europe leading the way. It expects overall European growth of 4% over the next five to 10 years, with western Europe, as a mature region, experiencing 3% growth. Year-to-date fleet growth has remained slightly stronger than expected, with western Europe returning to fleet growth after recent years of decline. East- ern Europe, meanwhile, is among the fastest growing regions worldwide and is forecast to gain 8–9% of the overall Euro- pean market share by 2021. European MROs are global players in the main, and so the subject of cur- rent market performance should be approached with an eye on global events. This year has brought much by way of political uncertainty to the North Afri- can region, which has had an efect on MRO companies across Europe as flights have been grounded and/or cut back. The Egypt political crisis was a heavy blow, with tourism to the county still nowhere near pre-political crisis levels. The most powerful MRO company in Europe remains Lufthansa Technik (LHT), and the company could be seen as a barometer for the industry. Lufthansa Technik chief executive August Henning- sen spoke to MRO Global about the events of the past 12 months: “Although global demand for maintenance, repair and over- haul services in the first six months in 2011 has been growing once more in a number of regions, it has been recovering at a slower rate than the passenger and cargo business. The Middle East, North Africa and Japan are all important markets for Lufthansa Technik, and the consequences of the political unrest and natural disasters there are prompting revenue to shrink and are delaying contract negotiations. Cost pressure on airlines and growing MRO capacities around the world mean margin pressure in the MRO business has risen further. The volume and structure of our growth reflect this trend. Despite the chal- lenges posed by the market, Lufthansa Technik grew its revenue vis-à-vis 2010 in the first half of the year.” The second half of calendar 2011 has been a very diferent story from the first half. Political unrest in North Africa and the Middle East has continued but global economic confidence has fallen away sharply as austerity measures take efect across Europe and beyond. In Europe dur- ing 2010, MROs enjoyed a strong return to growth on the back of aircraft premium seating upgrades, but that business has fallen away in 2011. Despite the challenges posed by the market and the competition, Lufthansa Technik grew its revenue in the first half of 2011 compared with 2010 figures. However, it was unable to match the previous year’s operating result mainly due to provisions and revenue losses asso- ciated with clients from the crisis-hit parts of North Africa. Against this backdrop, Lufthansa Technik is working on a num- ber of projects to further improve its cost base and its competitive position. P h o t o : G r e g o r S c h l ä g e r / L u f t h a n s a T e c h n i k EUROPE MRO www.airlineeconomics.co Airline Economics: MRO Global 2011 79 As one would expect, the MRO busi- ness is dependent on the fortune of the airline business. And the aviation indus- try is sensitive to regional or international economical, ecological and political cri- ses, resulting in cyclical ups and downs. Additionally, airlines are facing strong cost pressures due to increasing oil and spare part prices, and rising fees and taxes. All of this has a direct impact on MRO businesses. The challenge is to have a good financial, organisational and technical foundation in place to weather these pressures. Henningsen sums it up: “There is a clear trend in regard to the customisation of the MRO business. Air- lines expect tailored service packages that are optimised to their specific needs. Best possible turn-around times, high quality and minimised cost are the terms to be fulfilled by the Lufthansa Technik Group.” The large, global MRO companies based in Europe are still very much focused on the regions that have a strong growth in aviation, namely Asia-Pacific, the Middle East and Africa. Western European MROs have for some time suffered from stiff competition from lower-cost regions when it comes to wide- body aircraft, which lend themselves to undergoing heavy airframe maintenance in far-flung locations with low labour rates. This has led to a focus among the European maintenance bases to service the huge domestic narrowbody fleets of local carriers and those of North Africa. The introduction of the European Emissions Trading Scheme (ETS) in 2012 will both help and hinder MROs based within the European Union. LHT’s Henningsen is sure the ETS will have a marked impact on his business. “For our customers it will be even more important to reduce fuel consumption and minimise emissions than it has been in the past. We are already working on several research and development proj- ects to help our customers achieve these goals. Currently, our engine-wash system Cyclean™ already helps several airlines to run aircraft engines at lower tempera- tures, use less fuel, and therefore emit less CO2 and other greenhouse gases.” This is just one aspect of the story though. The key for MROs within Europe and the rest of the world will to become a local maintenance provider and a global player that is able to provide services wherever an aircraft might be. Companies such as LHT will be in a good position to benefit, although it also means all MROs, including giants such as LHT, will have to increase joint ventures with other MROs to ensure they retain a good local presence. One MRO that can claim to be both the bespoke local provider and a global player is Monarch Aircraft Engineering (MAEL). It is perhaps a perfect tem- plate for the MRO industry to follow when adjusting to uncertain times. Over a year ago MAEL was in the middle of a resizing exercise, where some roles were made redundant. At that time, there were enormous pressures on the industry, such as consolidation among airlines. Two of MAEL’s key customers consolidated, meaning that MAEL now counts among its customers airlines that have their own MRO shops. Mick Adams, managing and technical director at Monarch Aircraft Engineering, com- ments: “We faced significant pressures but the good news is that since that time we have secured new business and we have resized the business and, thanks to our people who are absolutely dedi- cated and loyal to our brand and values, we have emerged stronger. Another high is the long-term investment – despite those pressures, we have continued to invest in systems, people and the airline – we are attached to an airline and we understand an airline. We can absolutely punch above our weight and back that up with our values, our service and our qual- ity. We are very flexible. A lot of the work we have done recently was all around having flexible working initiatives – we have a SMART team of engineers that are ready to go in two hours anywhere in the world. They have done 60-70 sorties in the past year to diferent parts of the world, rescuing aircraft etc. That scheme is indicative of the way Monarch Engi- neering delivers a service.” SMART is the Special Monarch Air- craft Response Team, which can be contracted or maybe ad hoc: “Typically it is an ad hoc service where a customer has called in to our integrated operations centre,” says Adams. “We have surprised customers with how quick we have responded. We have had overseas repairs, major skin repairs, engine replacements, engine recoveries, you name it.” Origi- nally SMART was set up for the Monarch Airline operation “but it very quickly showed so much value and we got such a huge amount of interest that we actively promoted it to the marketplace. Says Adams: “We have customers that make significant use of it, even ones who have their own engineering arm too. We have also picked up a considerable amount of maintenance work of the back of it.” MAEL has also successfully reduced turnaround times: “A-checks on nar- rowbodies, two or three years ago had a turnaround time averaging 23–24 hours,” says Adams. “Today they take eight hours on an overnight check. The MRO under- stands the pressures and requirements of an airline. It knows it needs the aircraft back in service as quickly as possible. The responsibility of the MRO is to say to the operator that we can do that, provided we maintain the service, the quality, and the standards when we deliver that aircraft. There is a point where an MRO can do no more, and at that point the quality of an MRO’s customers comes into play.” WHERE WILL THE INDEPENDENT MRO BE IN 10 YEARS? The key to the future of MRO is to be global, bespoke and part of a global net- work through joint ventures with the OEMs, there can be no doubt about this. EUROPE COMPOUND ANNUAL GROWTH RATES Fleet WE EE Total 2011 2.7% 9.9% 4.1% 2016 3.2% 6.9% 4.1% 2021 2.9% 8.4% 4.1% Total MRO WE EE Total 2011 3.2% 9.3% 4.3% 2016 3.2% 7.5% 4.1% 2021 3.2% 8.4% 4.2% EUROPE Moreover, the key is to be quick to move with the market, much like the airlines in the US who are now able to trim capac- ity and adjust prices at will. MROs need to be able to meet the needs of clients in a manner that ensures the airline or les- sor can hold their margins. The MAEL management team is clear. “I absolutely believe we will still be punching above our weight,” says Adams. “We are small but very bespoke, and we are not going to take on the big guys because we are too busy. We are not going to be distracted from our clients by trying to compete in all areas. In terms of market and custom- ers, we have Boeing Gold Care and the 787 on the horizon with Thomson. We have done in excess of 80 inputs for easy- Jet last year. We have also completed a maintenance contract with Cyprus Air- ways, done by our Manchester MRO. We are pleased about this, as previously it had its narrowbody and widebody contracts with diferent maintenance providers. The way it operates and its requirements are quite diferent to other operators – but of course no one opera- tor is the same – we are quite adaptive. We aren’t so big that we don’t understand what it is they need. We want to grow and go beyond our current territories. The SMART team is a good example of that marketing strategy. If you look at the rates in Middle East shops three or four years ago, it would have been worth flying an aircraft down there for main- tenance work. But the fuel costs today, and in the near future the emissions costs, don’t make this viable. For lessors this might be diferent as aircraft avail- ability is absolutely key, so having slots open to be able to do the work makes this strategy attractive. Operators look very favourably on MRO shops that can turn around an aircraft in three days. Depend- ing where the operator is located, flying an aircraft to the Middle East could mean losing a few days as well as fuel. So being based in the UK, we are in a very strong position and are backing that up with the service delivery, quality and values.” The ETS will have an efect on all facil- ities that require additional flights. One facility in the firing line is Mubadala, with its dedicated narrowbody airframe overhaul centre in Malta. Mubadala has halted a planned expansion of the cen- tre in Malta for the time being because it has been unable to attract customers in addition to existing customer easy- Jet. This operation was launched from a leased two-bay hangar in October 2010, and the intention was to build a four-bay facility by early 2012, but this was post- poned in January this year. And this is while airlines were still growing. The European MROs, like most others, are adapting to a world where maintenance events are becoming more individualised and less predictable. Overhaul events, where the aircraft is in a hangar for up to a month, are becoming increasingly rare, as operators try to phase traditional D-check tasks over multiple C-checks on modern aircraft. These usu- ally take eight to 10 days for a narrowbody, and involve less labour and material than a full overhaul. This does mean the tradi- tional model for an MRO is being ripped apart and teams of technicians have to be broken up to work on more aircraft. This trend is important for airlines to note because, as the MROs move away from aircraft spending long hours in a hanger with large teams, when an older aircraft requires a structural repair the costs will be higher as the business model of the MRO will make this project an exception to the norm, with the additional costs that entails. This could especially be a prob- lem for operators of older narrowbody aircraft, as issues such as wing corrosion become a regular find at the C-check stage and will lead to additional hanger time. European MROs are acutely aware that striking the right balance between team size and skills and facility capacity are becoming more important. As new-gen- eration aircraft enter fleets across Europe, there is a long-term shift in the workforce from traditional airframe maintenance jobs – such as structural technicians and painting staf – to more licensed mechan- ics and avionics experts. SR Technics has been at the forefront of adapting its practices to suit clients, and its current E-check, named due to its bespoke nature for client easyJet, is proving to be a big hit with UK low-cost carriers. The elephant in the room for all MROs, including those in Europe, is OEM mar- ket incursion. Third-party maintenance providers face a fundamental challenge in the growing aftermarket influence of the original equipment manufacturers. Access to construction and maintenance documentation has become increasingly restricted, as OEMs look to capture the aftermarket and operate in competition with third-party MROs and MRO data providers alike. The OEMs have reached a critical mass on a global scale in both clients and support facilities, made possible by partnerships with MRO facilities. The move from tradition- ally separate onboard systems towards software-controlled components on the 787 and A380, whereby the equipment is linked up to work as an integrated server network, has contributed to 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Western Europe Eastern Europe Total 4,246 5,136 890 4,841 6,266 1,425 5,668 7,657 1,989 2011 2016 2021 EUROPE’S FLEET FORECASTS 80 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE further OEM control. It was most likely designed to do so. The OEMs hold all the cards to control the aftermarket in the future. MROs, like airlines, will become detached from what is going on with their client fleets as new aircraft come online. Airline-affiliated MRO providers, such as LHT or AFI-KLM Engineering & Maintenance, still retain a great deal of leverage at the point of aircraft purchase and this could give them the in-house fleet knowledge on the 787 and A380 to carry over to retain third-party maintenance business. The MROs will have to be a part of the various OEM aftermarket networks, as increasingly large, non-maintenance- afliated aftermarket orders continue to be captured by the OEMs. The lessors also have to be considered with care by the MROs. The leasing mar- ket holds close to 40% of the global fleet and will be a strong partner for any MRO. Lufthansa Technik’s Henningsen thinks the requirements of both, lease compa- nies and airlines, must be met or exceeded accordingly. “Despite the fact a leased air- craft has to have the same basic servicing as a regular owned aircraft, there are sev- eral circumstances that call for a specific approach to aircraft management,” he says. “These include limited ownership (generally lease contracts can vary from a few weeks to five years) and the asso- ciated short-term MRO and especially documentation services, as well as the occasionally incalculable state of an air- craft used by an airline for several years.” For this reason Lufthansa Technik has started ofering its Aircraft Leasing and Trading Support (ALTS) service. ALTS is an all-embracing product that recognises and supports the dynamic behaviour of the owners and operators of leased com- mercial aircraft. Following an aircraft transition, the requirements for this aircraft are likely to change, and transfer- ring it from one operator to another often means far more than just changing the cabin interior or the paint scheme on the fuselage. Depending on aircraft age and use, comprehensive maintenance might have to be carried out to comply with re-delivery conditions and certain air- worthiness requirements in the countries of future aircraft operators. This product looks set to gain momentum over the coming years. REGULATORY CONCERNS WITHIN THE EUROPEAN MARKET There is growing concern that airline outsourcing of maintenance is leading to a lack of direct oversight and there- fore control of maintenance activities carried out on commercial passenger aircraft. Engineers are on the front line of this problem. Their job is to ensure operational aircraft are safe and fit to fly. To ensure safety is monitored objec- tively, licensed engineers are examined independently from their employers. On achieving a successful examination result, a maintenance licence is then issued. This should provide the engineer with an ele- ment of independence from the airline, with the licensed engineer remaining the only person authorised to certify an air- craft is ready to enter commercial service following maintenance. Although cur- rent aviation regulations contain clear and specific references to the respon- sibilities of these engineers, regulators including the European Aviation Safety Agency (EASA) have failed to enforce the requirement that an engineer have the final say independently of their employer. The result is that airlines have been able to severely reduce the influ- ence of licensed engineers. At this time the non-reporting of aircraft defects and abuse of the minimum equipment list (MEL) is fast becoming common prac- tice, which some commercial airlines are supporting. This involves the reporting of aircraft technical defects not when they occur but rather when they become convenient to rectify. There appears to be no real will from regulators to deal with this issue across the globe, even large NAA’s have allowed their oversight of airlines to become compromised. But the European Commission has acted. With an increase in safety-related findings uncovered within European air- lines by the Safety Assessment of Foreign Aircraft (SAFA) programme, the Euro- pean Union could no longer ignore the situation. In April, the EU went public and published German-related safety issues in Europe’s airline operator black- list. Since then, however, the Commission has moved very slowly on the issue of fines and penalties for breaches of aviation safety regulations. In the US, the FAA has been fining air- line operators for many years now and to great success. Large fines and the inevi- table negative publicity act as a strong incentive for airlines to ensure safety is truly paramount. Airlines in the US are named and shamed by such actions and this can only be in the best interests of both the passenger and safety. So the ongoing EU consultation into introduc- ing a similar system in Europe is welcome, but there are concerns the process has lost momentum, and many engineers remain sceptical the 2008 EU whistleblower pro- tection legislation will save them if they turn on their employers. 0 5 10 15 20 25 Western Europe Eastern Europe Total $11.6 $13.7 $2.2 $13.6 $16.9 $15.9 $20.7 $3.4 $4.8 2011 2016 2021 EUROPE’S MRO FORECASTS (US$MILLION) www.airlineeconomics.co Airline Economics: MRO Global 2011 81 82 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE Based in the UK and at several inter- national locations, Monarch Aircraft Engineering (MAEL) is an award-win- ning MRO ideally placed to provide value-adding aircraft maintenance and engineering solutions to include heavy maintenance, line maintenance, design services, engineering and consultancy. The MRO can also ofer full component support, and Part 147 technical training for Airbus and Boeing aircraft types. Monarch Aircraft Engineering has had a highly successful 2011, having secured a number of large long-term con- tracts for MRO services, including a deal with Thomas Cook Scandinavia for heavy maintenance support of the Airbus A321 C-checks, which also included embodi- ment of Rear Spar Corrosion Service Bulletins. Jens Elm Nielsen, technical director for Thomas Cook Scandinavia, said: “We are delighted that Monarch Aircraft Engineering has demonstrated it is able to provide us with a high-quality maintenance service at excellent value.” Despite a buoyant year, Monarch Air- craft Engineering saw its ambitions of a home fleet of 787s end in 2011 when sis- ter airline Monarch Airlines cancelled its long-delayed order in the third quar- ter. The business does not have much to worry about, however, as the MRO has been an approved Boeing GoldCare maintenance provider since 2009, and this success places the business in a strong position for the future. Monarch Aircraft Engineering was selected by Boeing as the airframe MRO supplier for GoldCare launch customer TUI Travel with its 13 787s, and is the only Boeing GoldCare- approved supplier in the UK. UK-based Thomson Airways is one of four TUI group airlines due to operate the 787. Thomson was created follow- ing the merger of Thomsonfly and First Choice, which in 2007 became the first 787 customer to publicly state it intended to sign up for the GoldCare package. The other TUI subsidiaries now scheduled to receive 787s, plus the full GoldCare maintenance, engineering and material management package, are Sweden-based Tuifly Nordic, Belgium-based Jetairfly and Dutch carrier Arkefly. Boeing says the TUI group is to begin taking delivery of 787s in 2012. Imple- mentation of the GoldCare service will begin about 12 months prior to delivery. For each of its 787s, TUI has committed to GoldCare for 12 years, which is when the first heavy check for the 787 will be required. As Boeing continues to roll out GoldCare across the aircraft range, Mon- arch Aircraft Engineering will continue to work on building capability for the additional GoldCare types. HEAVY MAINTENANCE Heavy maintenance, from ‘A’ checks up to heavy ‘C’ and ‘D’ checks on Boeing and Airbus family aircraft, are carried out at Monarch Aircraft Engineering’s hangar facilities at London Luton and Manches- ter International airports. With a highly experienced and motivated team, the MRO is ideally positioned to meet all heavy mainte- nance requirements. Since the business was established in 1967, MAEL has conducted many thousands of heavy maintenance checks, major modifica- tion campaigns and complex structural repairs for clients around the globe. More recently, Monarch Aircraft Engineering has formed a team of specialist engineers who have completed more than 100 Rear Spar repairs for its customers. LINE MAINTENANCE Line maintenance is carried out across the globe, with permanent stations established at London Gatwick, London Luton, Birmingham International, Man- chester International, Malaga, Alicante, Canary Islands, Kiev, Goa and the Mal- dives, where line maintenance technical handling is carried out on Boeing 737CG, B737NG, B757, B767, B777, Airbus A300-600, A300B4, A310, A320 family and A330 aircraft. Monarch Aircraft Engineering’s base at Male in the Maldives has had a great Q3 2011, having been selected for a line maintenance technical handling agree- ment with XL Airways France. The agreement sees the business continue to provide support for the French airline’s fleet of Airbus A330 aircraft from its line station at Male International airport in the Maldives. This technical handling agreement will take place throughout the winter season, when XL Airways France will operate flights to Male from Charles De Gaulle. Patrick De Mare, line mainte- nance manager for XL Airways France, said: “Our extension of this agreement is testament to Monarch’s professionalism and the first-class service it provides. We look forward to its continued support in the Maldives this winter.” In September the same line station also signed a tech- nical handling agreement with Alitalia to provide full maintenance support for the Italian based airline’s Airbus A330 aircraft operating out of Male in the Maldives. Agrimi Alessandro, manager of line maintenance, sales and procure- ment for Alitalia said: “Monarch Aircraft Engineering has provided us with a cost- efective maintenance solution, which suits our business needs.” In September, Monarch Aircraft Engineering secured a line maintenance technical handling agreement with Turk- ish Airlines. The agreement sees the MRO provide support to the Turkish operator’s twice-weekly flights into Gat- wick for its Airbus A310 freighter fleet. Osman Ozdilek, line maintenance out- station manager for Turkish Airlines said: “This agreement reflects Turkish Air- lines’ decision to strengthen our working relationship with Monarch and we look forward to its continued support.” Monarch Aircraft Engineering www.airlineeconomics.co Airline Economics: MRO Global 2011 83 EUROPE Monarch Aircraft Engineering has also this year extended its line mainte- nance technical handling agreement with Aer Lingus. The agreement sees the business continue to provide support to the Irish flag carrier’s fleet of Airbus A320s at its line stations in Gatwick. Dominic Ryan, director of maintenance and engineering for Aer Lingus said: “We are delighted to be continuing our ongo- ing working relationship and extending this line maintenance agreement.” DOWN ROUTE AOG SUPPORT AND RESCUES With a large number of line maintenance clients and its sister Airline Monarch, Monarch Aircraft Engineering is acutely aware of the significant impact to air- line operations and revenues when AOG events are not responded to immediately. The business has created a Specialised Monarch AOG Response Team (SMART) comprising highly qualified engineers who are available 24/7 and are armed with the necessary tools and equipment to carry any AOG or specialist support requirements. This service is available on demand and is managed through Mon- arch’s Integrated Operations Centre. Since introduced, SMART has been dis- patched on more than 60 occasions to 17 diferent countries, and the rescues have ranged from a routine test or basic com- ponent change, to engine changes and major structural repairs, in some of the toughest locations. COMPONENT SUPPORT Monarch Aircraft Engineering has a team of experts who can advise clients about the benefits of contracting for full component and material support across both Airbus and Boeing aircraft types. With an extensive component inventory with both EASA and FAA certification it is able to provide power-by-the hour programmes or single unit loans and exchanges. Through its consulting divi- sion, it can also provide expert advice on initial provisioning strategies. COMPONENT MAINTENANCE CENTRE Situated at its London Luton and Man- chester facilities, Monarch Aircraft Engineering has established a mod- ern Component Maintenance Centre. The facility has a full range of special- ist tooling and test equipment and can provide services for mechanical, avion- ics, safety equipment and engines. The Composite capability is MRO leading and a key area of growth for the future as new technology aircraft enter into service. The Component Maintenance Centre turn times lead many other sup- pliers, thus assisting with the supreme on-time performance Monarch Aircraft Engineering continues to deliver to its customers. Whether an individual com- ponent repair or a long-term contract to support operations, MAEL’s highly moti- vated and flexible workforce can provide a cost-efective maintenance solution. ENGINEERING SERVICES Monarch Aircraft Engineering, with its highly skilled workforce, can assist air- line operators with a multitude of fleet support solutions, including planning, technical records, technical service sup- port, reliability management, engine trend monitoring, and warranty and consultancy service, to name but a few. As an approved Part 21J Design organisation it has built up an enviable reputation for modification design on many diferent aircraft types. The design capability – coupled with the extensive Part M engineering knowledge and capability lends itself to a full turnkey solution for operators who have to flex and change the fleet configurations and sizes to meet today’s very demanding and changeable market. TECHNICAL TRAINING Monarch Aircraft Engineering’s tech- nical training facility has gained a worldwide reputation for its continu- ing high standards providing full EASA Part 147 B1 and B2 courses and Part 66 category A basic training. Its highly skilled and professional instructors are approved under Part 147 by the UK Civil Aviation Authority and are able to complete the training in Monarch’s own facilities if preferred, at the client’s own facilities worldwide. To ensure instructors remain at the forefront of aviation technology and to support the company’s status as a Boeing GoldCare provider, they have attended and completed the first EU-based EASA- approved Boeing 787 training courses, and will now begin to develop this train- ing capability in-house. Next year will be equally busy for Monarch Aircraft Engineering as it seeks to develop other revenue opportunities in support of the growing customer base. When asked how the company can help clients get through these worry- ing times, sales and marketing director Ian Bartholomew commented: “We are committed to seeing our customer oper- ations succeed and working closely with them, we challenge non-value-adding processes and find innovative ways of working together. We are now seeking out opportunities with potential cus- tomers in two of the largest emerging markets, developing new and increasing revenue streams from training, technical consultancy, spares trading and engi- neering services management.” HOW CAN POTENTIAL CUSTOMERS BENEFIT FROM AN AGREEMENT WITH MAEL OVER COMPETITORS? Bartholomew says: “Monarch Aircraft Engineering is an airline MRO and as such we are acutely aware of the needs of an air- line operator, and we really know what an AOG or return-to-service delay means in terms of cost and passenger impact. We are located at major airports in the UK and overseas, and we can ofer a fully net- worked total MRO management solution. We are also sized to meet the demands of large customers and not too big to be unable to adapt to smaller operators. We are nimble, dynamic and innovative and can flex our services to suit.” In exceptionally tough times for our industry, Monarch Aircraft Engineering has demonstrated it can provide cost- efective and innovative solutions for its customers and is determined to develop and grow the business as it enters into the next phase of its long-standing history. "Nonarch A|rcraII Eng|naar|ng |s an a|r||na Nßû and as such Wa ara acuIa|y aWara oI Iha naads oI an a|r||na oparaIor, and Wa raa||y |noW WhaI an Aûû or raIurn-Io-sarv|ca da|ay maans |n Iarms oI cosI and passangar |mpacI." 84 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE Lufthansa Technik is one of the leading manufacturer-independent providers of maintenance, repair, overhaul and modifi- cation services in the civil aviation industry. With tailored maintenance programmes and state-of-the-art repair methods, LHT ensures the unbroken reliability and avail- ability of its customers’ fleets. Walter Heerdt, LHT’s senior vice- president for marketing and sales, says: “Lufthansa Technik has survived the last economic and financial crisis relatively well through increases in efciency, high use of flexible working hours and pro- cess innovations.” The Lufthansa Technik Group comprises more than 30 subsid- iaries and joint ventures in Europe, Asia, North America and Australia. It has two joint ventures with OEMs: N3engine over- haul services (with Rolls-Royce, based in Arnstadt, Germany) is a maintenance and repair facility for large Rolls-Royce turbo- fan jet engines; and Airfoil Services Sdn Bhd ((ASSB), with MTU Aero Engines), which is specialised in repairing high- pressure compressor blades and vanes as well as low-pressure turbine blades. Heerdt says: “LHT has developed a very comprehensive monitoring and sup- plier management to avoid delays in parts delivery. We are following a proactive and transparent information exchange with our suppliers regarding volume and use of parts for on-time delivery. Additionally, together with our subsidiary Lufthansa Technik Logistik we have created an efec- tivesupply chainfor aglobal provision with spare parts.” Heerdt is bullish on future growth for the MRO market. “We thinkthe MRO market will further increase in the next years including the business withsur- plus parts, as the use of surplus parts enables the operators to save costs. In the end it is an individual strategic and eco- nomic decision of the specific operator if and how muchit will go this way,” he says. But he also admits further consolida- tion is expected. “Despite new entries, we see an ongoing consolidation process in the MRO industry. The introduction of new aircraft generations and engine types is combined with high investments in infrastructure, tools and employee training and complex questions about intellectual property. These challenges can only be handled successfully by MRO providers operating globally and at a certain scale, having the ability to tailor packages to individual needs.” LHT is looking to further grow its market share through the launch of new MRO services for the B748, B787, EMB190 and A380. “As Lufthansa is one of the first cus- tomers for the new Airbus A320neo series, Lufthansa Technik will defi- nitely extend its MRO capabilities to this type of aircraft in the coming years,” Heerdt says. “From the base maintenance side, Lufthansa Technik has recently launched a new T-product (‘T’ for ‘total’ – the product is ofered by LHT for every kind of MRO service) called TBS – Total Base Maintenance Support. The TBS is especially designed to make base mainte- nance easier for fleet operators, and ofers a broad range of included and optional sub-products as well as diferent financ- ing models to better suit each operator’s financial situation or preferences.” Lufthansa Technik COMPANY FACILITY LOCATIONS Lufthansa Technik AERO Alzey GmbH, Alzey, Germany Lufthansa Technik AG, Hamburg, Germany Lufthansa Technik Airmotive Ireland, County Dublin, Ireland Lufthansa Technik Brussels, Steenokkerzeel-Melsbroek, Belgium Lufthansa Technik Budapest , Budapest, Hungary Lufthansa Technik Intercoat GmbH, Kaltenkirchen, Germany Lufthansa Technik Maintenance International, Frankfurt Airport, Germany Lufthansa Technik Malta, Luqa, Malta Lufthansa Technik Milan, Somma Lombardo (VA), Italy Lufthansa Technik Philippines, Pasay City, Philippines Lufthansa Technik Sofa, Sofa, Bulgaria Lufthansa Technik Switzerland Basel, Switzerland AIRFRAMES SERVICED: - A300, -600 - A3l0 - A3l8, A3l9, A320, A32l (including Airbus Corporate Jetliner) - A330 - A340 - A380 - 737CL, NG (lncludlng Boeing Business Jet) - 747 - 757 - 767 - 777 - 787 - MD-ll - MD-80 - Avro P1/8Ae l46 - Lmbraer Legacy - Lmbraer l35/l45 - Gulfstream - 8ombardler Challenger, Learjet, Global Express - Dassault Palcon 1et - Cessna Cltatlon - Lockheed 1etstar - Paytheon Hawker - |A| westwlnd - Sabrellner - Saab 2000 APUS SERVICED: - APS 2000 - APS 3200 - Pw90lA - GTCP85 ENGINES SERVICED: - CP6-80C2, CP6-80Ll - CP34-3/-8/-l0 - CPM56-2C/-3/-5A/-58/- 5C/-78 - Trent 500/700/900 - P82ll-535L4 - Spey/Tay - 1T9D-7/-7A/-7P/-71/-7Q, 1T9D-59A/-70A - Pw4000 - Pwl50 - Pwl00 - |ALv2500-A5/-D5 - ALP507/LP502 www.airlineeconomics.co Airline Economics: MRO Global 2011 85 EUROPE MTU Maintenance provides custom- ers with service packages and one-stop solutions for all current engine types of practically all thrust categories. Its line of service includes the maintenance of commercial engines and component repair. Its portfolio is rounded out by comprehensive additional services, such as engine leasing through its e.pool ser- vices. The MTU maintenance segment operates afliates in Germany, Canada, China and Malaysia. Because of its near 80 years of experi- ence on the Iberia fleet and for third parties, Iberia Maintenance increas- ingly is exploring ways to help customers, keeping not just costs but also eforts to a minimum on airframe heavy main- tenance, engine overhaul, component maintenance and field maintenance. Moreover, Iberia Maintenance provides essential, sector-specific services custom- ised to fit client needs and budget. With almost 4,000 experienced techni- cians and engineers, Iberia Maintenance provides a wide array of MRO solutions, from relatively simple options to the more complex ones. In every Iberia Maintenance service there are hundreds of hours dedicated to improve process, reduce turnaround times, increase force efectiveness and cut down on logistics and engineering man- agement expenses. With the new aviation environment and the expanding globalisation of the MRO industry, Iberia Maintenance has updated its management and technical services, gearing them towards developing concrete solutions to help clients define maintenance plans and ensure efciency. The installation of the SAP system for complete management has been very successful. STATS AT A GLANCE: · t3õ6.õ miIIion lhird-µarly lurnover · 2uu,uuu sq m MRO faciIilies · More lhan 8u years` exµerience · AImosl 1uu inlernalionaI lhird-µarly customers · Around 4,uuu emµIoyees · Seven hangars, lwo dedicaled for painting · Engine lesl ceII caµacily: 1uu,uuu Ibs. · More lhan õu,uuu comµonenls repaired a year · CaµabiIily Iisl incIudes more lhan 3,000 components with 14,000 P/N. · 2õu,uuu µarls numbers in slock AIRFRAME MAINTENANCE SERVICES Almost 150,000 m2 gives Iberia Main- tenance space to perform a wide range of airframe maintenance. The facilities include the necessary back-up shops such as safety equipment, structural repair, wheels and brakes, galleys, interiors, painting, marking and labelling provid- ing services in material processing for wide- and narrowbodies. Iberia Maintenance offers seven complete production lines for heavy maintenance checks and two dedicated hangars for painting, marking and label- ling works. It handles a wide range of temporary and permanent hole and dent repairs on wing and in shop from diferent com- posite and metallic parts in fuselage and flight controls. It also ofers refur- bishment, ageing aircraft and corrosion prevention programmes. Portable and fixed oxygen cylinders, fire MTU Maintenance Iberia Maintenance ENGINES SERVICED CF6-50, CF6-80C2, CFM56-7, V2500, Pw2000, Pw6000, CP34-3/-8/-l0L, PT6A, Pw200, Pw300, Pw500, |ndustrlal Gas Turbines LM 2500, LM5000, LM6000, CF6- 50, CPM56-3, v2500-A5, CPM56-3/-58/-7. ADDITIONAL AIRCRAFT SERVICES MAJOR TOPICS: Minor checks: A A310 A3l9/A320/A32l A330 A340-300/-600 B707 B757 B767 MD80s Major checks: C, overhaul and struc- tural A3l9/A320/A32l A330 A340-300/-600 B707 B757 MD80s Gulfstream Palcon 20/Palcon 900 Hercules C-130 P3 Orion Emergency equipment (available in stock) Slide ramps Fire extinguisher cylinders Slide raft and door cylinders Oxygen cylinders wheel and brakes (avallable ln stock)   Painting, marking and labelling (temperature and humidity computer controlled hangar)   Major modifcation of avionics and interiors Composites Cabin interiors MTU MAINTENANCE HANOVER, LANGENHAGEN, GERMANY The Langenhagen facility is the cen- trepiece of the MTU Maintenance group. It is responsible for the maintenance of medium- and large-size commer- cial engines. These include the General Electric CF6-50 and CF6-80C2, Pratt & Whitney PW2000, International Aero Engines V2500 and CFMI CFM56-7. Comprehensive service oferings comple- ment the company’s line, such as engine leasing, 24-hour AOG service, training and Total Engine Care. The location is MTU’s centre of excellence for high-tech repairs, which is busy developing novel repair techniques. 86 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE extinguishers, slide raft and door cylinders can be recharged immediately. Furthermore, its seven day/24-hour AOG service provides the most efec- tive and flexible support on emergency service. LINE MAINTENANCE Iberia Maintenance knows every minute that an aircraft is on ground represents a loss of potential airline revenue and how a skilled workforce is absolutely necessary in reducing downtime for line maintenance. It provides line maintenance services at Barajas Airport (Madrid-Spain) and in strategically located centres around the world. Precision repairs and testing is per- formed by highly skilled technicians. Furthermore, it ofers to dispatch emer- gency teams of expert mechanics to any location around the world, another flex- ible and very afordable alternative. Iberia Maintenance technicians are very aware of the aircraft’s needs and are very proud when a customer is satisfied. FULL LINE MAINTENANCE COVERAGE Pre-flight Transit Daily Service Weekly A-checks On-call requirement/support On-wing support Full member of Line Maintenance Organisations IATP International Airlines Technical Pool ELMO European Line Maintenance Organisation POWER PLANT MAINTENANCE SERVICES The engine repair centre assist custom- ers in the design of customised services to suit any specific requirements. The repair centre is integrated in Iberia Mainte- nance global maintenance network. Occupying an area of 52,560 m2, Ibe- ria Maintenance provides MRO services for the RB211-535E4, RB211-535C37 CFM56-5A1/-5B/-5C4/-7x, CF34-3A1/- 3B1, JT8D-217/-219 engines and a full range of engine accessories, in accordance with its capability list. ENGINE FULL OVERHAUL: RR RB211-535E4 RB RB211-535C37 RR PEGASUS MK 150/-152/-157 CFMI CFM56-5A/-5B/-5C CFMI CFM56-7B GE CF34-3A1/-3B1 PW JT8D-217/-219 Iberia Maintenance is one of Europe’s maintenance providers that is still grow- ing. Recently, it added CF34-3A1/-3B1 to its maintenance portfolio (which already includes CFM56-5x /-7x, RB211-535E4 and JT8D-217/-219). Each operator has its own unique engine maintenance requirements. Expe- rienced and highly trained technicians and engineers are committed to giving customers the highest quality service and spare parts support in the industry. The focus is on parts repair wherever possible to avoid costly replacements. By employing an efcient workforce and developing the most productive maintenance workscopes, Iberia works to improve on-wing durability and reduce non-scheduled events or requirements. To ensure a competitive service the company has committed to reduce unfore- seen turnaround time. Iberia Maintenance provides MRO and engineering services for engine, APUs, power-generation systems and associated accessories and thrust reverses. Iberia Maintenance has a 100,000 lbs test cell capacity. APU FULL OVERHAUL GTCP85-98DHF (MD80) GTCP36-300 (A320) 131-9A (A320) MAJOR TOPICS: Full overhaul including parts repair Engine lease pool LRU pool On-wing support Engine trend monitoring Work scope preparation Full range of engine services Round-the-clock spare parts service Test cell capacity: 100,000 lbs. www.airlineeconomics.co Airline Economics: MRO Global 2011 87 EUROPE TAP Maintenance & Engineering (TAP M&E) is the MRO organisation of TAP Portugal, the Lisbon-based operator, which provides maintenance and engi- neering services in aircraft, engines and components. TAP M&E is duly certified by several aviation authorities among which are the FAA and EASA. Since the foundation of TAP, in 1945, TAP M&E has been responsible for the maintenance of its entire fleet, pres- ently with more than 50 Airbus aircraft. In the 70s TAP started providing ser- vices to third-party customers – this now accounts for more than half total revenue. The long-term involvement with a commercial operator made TAP M&E aware of the importance of on-time deliv- COMPANY FACILITY LOCATIONS Brussels Paris Dinard Bordeaux Nlmes Merseille Moscow Monastir Koweit Singapore Papeete Noumea Phoenix Miami Louisville Martinique AIRCRAFT SERVICED Airbus A300 B2-B4, A300-600, A310, A319CJ, A320 family, A330, A340, C-160 Transall, 8oelng 8707 TCA, 8737 CG/NG, 8747/8747-700, 8757, 8767, DC-8, DC-9, DC-10, KDC-10, MD-11, MD-80, MD-90, ATP 42, ATP 72, 8Ae l46, 8Ae P1 85/l00, Bombardier Canadair CL-415, Dash 8, CP1 l00/200, CP1 700, Twln Otter, Das- sault Falcon 20, Embraer ERJ 135, ERJ 145, Xingu, Fokker F70, F100, Grum- man Tracker, Lockheed Martin C-130 Hercules TAP M&E Sabena Technics LINE MAINTENANCE Important platforms providing services 24 hours a day, seven days a week include Brussels and Paris Charles de Gaulle, as well as numerous outstations adaptable to customers’ needs. LIGHT MAINTENANCE Modern hangars and expert technicians across numerous sites provide quality and proximity services with, if necessary, the assistance of the infrastructure the firm’s heavy maintenance activities ofer. HEAVY MAINTENANCE Sabena Technics benefits from a pool of expertise specialising in regional, Airbus and Boeing aircraft heavy maintenance services. Sabena Technics’ service ofer- ing and centralised slot management system enable it to ofer unrivalled flex- ibility and adaptability tailored to the customer’s needs. MODIFICATIONS AND UPGRADES Sabena Technics benefits from the experience of a strong engineering department, an EASA Part 21J design ofce and an EASA Part 21G product ofce, providing an array of à la carte modification and upgrade services. Recent projects include first and busi- ness class cabin modifications and IFE upgrades, VIP cabin modifications and implementations of ATC/TCAS. ery of products (aircraft, engines and components) and services. TAP M&E is therefore committed to ofer its custom- ers cost-efcient maintenance with short turn-around times and high quality and reliability standards. TAP M&E Brazil has the most up-to- date MRO technologies – including the only Inertial Navigation System in Latin America, one of the five Grifon GTW-U3 cylindrical milling machines in existence in the world, and a horizontal Gemini GE-1600S lathe, which can machine very long parts for the landing gears repair services. The company is certified to maintain the entire Boeing line 727, 737Classics, 737NG, 747, 757, 767, 777, BBJ, MD11 and DC10, Embraer EMB120 (Brasí- lia), ERJ 135, ERJ 145, EMBRAER 170, EMBRAER 175 and EMBRAER 190, EMBRAER 195 and Legacy 600 and Lineage, Airbus A300, A300-600, A310, A320, A330 and A340. SERVICES OFFERED INCLUDE: Daily and overnight checks Components overhaul Engineering projects with technical support Interiors projects and overhaul Avionics systems and installations projects Airframe repair, projects and improvement A, B, C and D checks 88 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE AFI KLM E&M provides MRO services while also guaranteeing a whole raft of requirements ranging from safeguard- ing air safety, properly managing aircraft operation, and minimising costs. The firm has a 75-year-plus track record, during which it has achieved a level of undisputed excellence in managing large aircraft fleets. The operating units responsible for production place their skills in the service of Air France-KLM’s fleet as well as those of its customers. AFI KLM E&M has set up a combined organisation responsible for strategy, marketing, business development, sales force (present throughout the world) and external communication. Its airline-MRO position also guarantees its independence when it comes to choosing the most effec- tive options for customers’ engines. AFI KLM E&M is able to get the best from its strong partnership with OEMs as well as to develop alternative solu- tions that increase customers’ benefits. AFI KLM E&M PROVIDES: · guaranleed TAT; · engineering exµerlise lo oµlimise both costs and Mean Time Between Removal (MTBR); · sIol ßexibiIily lhrough ils engine MRO network; · workmanshiµ quaIily based on a highIy skilled and experienced labour force; · conlracl ßexibiIily ranging from T&M to fixed prices, or diferent kinds of flight hours programmes. ENGINES: Measurements carried out on engines provide daily data, allowing the AFI KLM E&M engineering team to monitor performance (such as, fuel consumption, EGT margin, oil consumption) and rec- ommend on-wing maintenance actions. This approach leads to increased engine on-wing lifespan; incident prevention; and reduced engine operational and maintenance costs. Drawing on its extensive operational expertise, AFI KLM E&M can recom- mend customised engine performance monitoring parameters. AFI-KLM E&M P h o t o : P a t r i c k D e l a p i e r r e / A F I - K L M E & M www.airlineeconomics.co Airline Economics: MRO Global 2011 89 EUROPE Turkish Technic is the provider of main- tenance, repair and overhaul operations primarily to the Turkish Airlines fleet in its existing facilities at Istanbul Ataturk International Airport. It also provides services to various customer airlines from Turkey and surrounding countries. The years of experience earned within the existing technical facilities, combined with the developed and well-qualified labour force, the strategic location and the increasing market demand has pushed Turkish Technic to setup a new MRO facility. The new facility will be located at the Sabiha Gökçen International Airport, an area reserved for the set-up of an inter- national MRO centre, which is around 70 km’s away from the existing facilities located at Istanbul Atatürk International Airport, Yesilköy. The geostrategic loca- tion of the new facility will enable the new maintenance centre to reach to Euro- pean, Asian, North African and Middle Eastern MRO markets, as well as the Turkish market. The new international maintenance, repair and overhaul centre project and all the investments by Turkish Technic within Sabiha Gökçen International Airport, are named as the Habom Project (Havacılık Bakım Onarım ve Modifikasyon Merkezi – in English the Aviation Maintenance, Repair and Overhaul Centre). THE HABOM PROJECT During the establishment of the business plan for the Habom Project investment, the Turkish Technic project team has worked together with world-renowned consulting firms and established a feasibility study to assess the various opportunities, market demand and required investments to meet those demand for the establishment of this new international MRO centre. As a result of these studies, the new international maintenance centre is designed to be a full service provider for both narrowbody and widebody aircraft, by doing heavy maintenance, engine and components maintenance. The maintenance centre will be established as a centre-of-excel- lence, having full capacity for specific types of aircraft for which the projections indicate quick fleet growth and increas- ing outsourcing rates. The estimated total investment requirement for the airframe and com- ponent maintenance centres on the whole is around US$500 million. By the year 2020, Habom is estimated to gen- erate a $1 billion share of the airframe and component maintenance segments. Turkish Technic will be the permanent shareholder of the Habom Project. Besides that, Turkish Technic is aiming to establish these new investments as an international joint venture with the par- ticipation of a leading global company or companies. With this new investment, Istanbul will be the maintenance hub of the region within a short time period. Airframe maintenance centre facilities at Sabiha Gökçen International Airport will have a total 372,000 m2 area. There will be approximately 3,500 employ- ees within the maintenance, repair and overhaul centres established within the Habom Project. All the facilities that will be constructed within the scope of the Habom Project are environmentally friendly designs that will provide maximum energy savings. FOREIGN PARTNERSHIPS Turkish Technic aims to establish inter- national joint ventures with potential partners that are leaders and global play- ers in their segment and that will bring with them the desired technology and know-how. As a result, a joint-venture Turkish Technic agreement was signed with Pratt & Whit- ney on January 8, 2008. Pratt & Whitney is one of the most important OEMs in the engine segment and a strong player in the engine aftermarket. The company also signed a memoran- dum of understanding with Goodrich Aerostructures on November 8, 2007 to establish a joint-venture company on the nacelle and thrust reverser maintenance, repair and overhaul segment. Goodrich Aerostructures is the leading OEM in this area. Negotiations on the joint-venture agreement with Goodrich Aerostruc- tures are ongoing. Considering the growth trend in the Turkish aviation industry, and the quickly growing fleets of the other airlines, the total aircraft number within Turkey is estimated to be over 300 within a short time period. Adding the highly increas- ing aircraft numbers of the surrounding region leads up to the idea of establishing a completely new maintenance centre at the heart of these emerging markets. Habom Project, as a newly established and a totally customer-oriented mainte- nance centre, will aim to serve the aircraft belonging to various surrounding coun- tries. One unique feature of the Habom Project area is that a circle drawn with a radius of three-hours flight distance centred at Istanbul includes 55 coun- tries. This ensures many opportunities for doing MRO business at the Habom Project area with the establishment of a greenfield facility. 90 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE HEAVY MAINTENANCE DIRECTORY - EUROPE COMPAN¥ CONTACT DLTA|LS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES Aeroplex of Central Europe |mre Nemcsok Business development director PO Box 186 Budapest Ferihegy International Airport H-1675 Hungary Tel: +36 1296 7214 Fax: +36 1296 7218 E-mail: [email protected] 737 767 A320-family P70/l00 A-D A-C A-C A-C 2 w/b 6 n/b 7,253 m2 CPCP, Agelng a/c mods, |nterlors, Refurbishments, Composite repairs, Sheet metal work, Phase-ln/-out (lncl. lease returns), Engineering services, Loglstlcs support, NDT airberlin technik (Part of the Air Berlin Group) Steven wllllams Head of Technical Sales Flughafen, Halle 8 40474 Düsseldorf Germany Tel: +49 178 94 18 444 Fax: +49 211 94 18 5847 www.airberlin-technik.com 737 757 767 A319 A320 A321 A330 A340 A-C A-C A-C A-C A-C A-C A-C A Düsseldorf, Munich Base Maintenance facilities 3 Hangars approx. 45,000m2 Component support, Engineer- ing mgmt, Design & modifcation, Technlcal tralnlng, NDT, Sheet metal work, Modifcations, Structural re- pairs Airbus Freighter Conversion GmbH Lars Becker, CEO Grenzstr. 1a 01109 Dresden Germany Tel: +49 351 8839 1400 Fax: +49 351 8839 1499 E-mail: [email protected] www.afc.aero A320 A321 6 n/b A320P2F and A321P2F passenger-to-freighter conversion with integrated maintenance checks Air France Industries - KLM Engineering & Maintenance Rob Pruim VP sales international PO 8ox 7700 (SPL/TQ) 1117 ZL Amsterdam Airport Schiphol The Netherlands Tel: +31 6 51535504 Fax: +31 20 6488044 Email: [email protected] 737 (incl. BBJ) 747 767 777 A320-family ACJ A330 A340 A380 BAE146 CRJ 100-700 LP1 l35/ l45 L-l70/ l90 P70/l00 MD-11 A-D A-D A-C A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-C 77 bays 7 industrial sites Exteriors, Cabin modifcations, Con- fguration changes, Post-delivery programmes, Phase-ln/-out (lncl. lease returns), Engineering services, Avionics upgrades, Technical train- ing, Logistics support, Global operational & maint. Support Alitalia Compagnia Aerea Italiana Fleet Maintenance Services Fabio Schinelli Marketing, sales & contracts management Leonardo da Vinci Airport 00054 Fiumicino Italy Tel: +39 066543 3050 Fax: +39 066543 2117 E-mail: [email protected] 767 777 A320-family A330 DC-10 MD-11 MD-80 A-S8C A-C 12-yr Light Maint. A-D A-D Light Maint. 700,000m2 4 hangars wlth 5 w/b and l2 n/b 40 workshops Engine test cells Training centre Avionics upgrade, Composite re- palrs, NDT, Landlng Gears, Structural repairs, Cabin interiors refurb. and rework, Plating processes ATC Lasham Nlgel 8ruce Sales manager ATC Lasham Ltd Lasham Southend Hampshire England 727 737 (incl. BBJ) 757 A320-family AR ops sub part GU34 5SP A-D A-D A-D A-C 160,000ft2 (Lasham) 4 n/b 140,000ft2 (Southend) 4 n/b Avionics upgrades, Corrosion con- trol, JAR 147 eng. Training, Lasham & Major airframe & component manufacture & overhaul, Major modifcations, M tech manage- ment NDT Austrian Airlines Technik Pobert wanek MD ATM (marketing & sales) Airport base A-1300 Vienna Airport Austria Tel: +43 5 1766 63838 Fax: +43 5 1766 65115 E-mail: [email protected] webslte: www.austrlantechnlk.at 737 767 777 A3l9/320/32l A330 A340 CP1l00/200 P70/Pl00 Global Express & Chal- lenger A-C A-C A-C A-C A-C A-C A-C A-C A-C v|L: 3 hangars (w/b) 24,000m2 workshops Training Center 8TS: l hangar (n/b) workshops Avlonlcs upgrades, NDT, Sheet metal, Comp. maintenance, Classroom & pract. training (Part 147), Design engineering (Part 21), Executive Jet Maint. Cargolux Airlines International Tony Arcone Mgr, maint. sales & cust. svcs L-2990 Luxembourg Airport Luxembourg Tel: +352 4211 3290 Fax: +352 4211 3441 E-mail:[email protected] 737 747 757 767 A-C A-C A A New double bay 747 hangar full back shop supp. Capabs Avionics upgrades, Composite repairs, Struct. repairs & CPCP, Modi- ñcatlons, world. AOG support Cimber Air Maintenance Centre Tony Baubof VP maintenance Lufthavnsvej 2 DK-6400 Sønderborg Denmark Tel: +45 7412 2366 Fax: +45 7443 2458 E-mail: [email protected] 737NG (8lllund faclllty) ATP 42/72 CRJ200 A A-D A-D 7 bays 6600m2 hangar ATP42/72 cargo conv, |nterlors, Avl- onics upgrades, VIP upgrades, CPCP MRO Directory: Europe www.airlineeconomics.co Airline Economics: MRO Global 2011 91 EUROPE HEAVY MAINTENANCE DIRECTORY - EUROPE COMPAN¥ CONTACT DLTA|LS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES CSA Czech Airlines Ondrej Konyvka Director aircraft heavy maintenance Hangar F, Praha Ruzyne International Airport 160 08 Praha 6 Czech Republic Tel: +420 2 2011 4118 Fax: +420 2 3309 6766 E-mail: [email protected] 737 A310 A320 ATP 42/72 A-D A-C A-D A-D l w/b 6 n/b 12,400m2 Avionics upgrades, Composite re- pair, Struct. repairs & CPCP, Interiors, Sheet metal work, Landlng gr o/ haul (737), 737-800 winglet mod., Modifcations European Fred Hilgeman Director Hamersveldse weg 84A 3833 GT Leusden The Netherlands Tel: +31 33 434 3040 Fax: +31 33 494 8101 E-mail: [email protected] 737 757 767 A320-family A330 A340 A-C A A A-C A-C A-C Amsterdam - Paris Chateauroux - Lisbon Madrid On-wing eng. support Maintenance, Eco engine wash Solutions, Disman- tling of aircraft, Painting Finnair Technical Services Mikko Koskentalo Manager, Sales & Marketing Finnair Technical Services Helsinki-Vantaa Airport 01053 Finnair Finland Tel: +358 9 818 6233 Fax: +358 9 818 67 E-mail: [email protected] 757 A320-Family A340 ATP 42/72 L-l70/l90 MD-11 A-D A-D A A-D A-C A-D 2 w/b 3 n/b Strlp/palnt/labelllng/marklng, Sheet metal shop MU/83, Composlte rep. shop, Platlng processes, NDT, Cabln lnt. refurb/mods, Structural reps/ mods, DOA engineering Technical training, Logistics support AOG Desk 24H, Avionics shop Engine, APU & LDG shop & testlng. wheels & brakes Fokker Services Stephen Hands VP marketing and sales PO Box 3 Aviolandalaan 31 4630 AA Hoogerheide Netherlands Tel: +31 164 618 642 Fax: +31 164 618 666 E-mail: [email protected] 737 A320-family ATP 42/72 CRJ ERJ 145 F27 F28 P50/60 P70/l00 A-D A-D A-D A-D A-D A-D A-D A-D A-D l2 med. slze a/c B.V. Hangar Avionics upgrades, Structural repair, Component repair, Logistics programmes Hapag Lloyd Fluggesellschaft mbH Uwe Kopelke Manager Sales & Contracts Flughafenstrasse 10 30855 Langenhagen Germany Tel: +49 (0)511 97 27 275 Fax: +49 (0)511 97 27 611 E-Mail: [email protected] 737-300 737-400/500 737NG A320-family A A-D A-D A 2 hangars Two base maint. bays Four line maint. bays NDT Approval, Component workshops, Cabin interior, Sheet metal workshop, Major system and structure modifcation, Part-21 approval Iberia Maintenance Ignacio Diez Commercial director Madrid Barajas Airport, La Munoza Edifcio Motores 1a planta 28042 Madrid Spain tel: +34 915 875 132 Fax: +34 915 874 991 E-mail: [email protected] www.iberiamaintenance.com 707 757 A310 A3l9/320/32l A330, A340 MD-80 Falcon 20 Falcon 900 Gulfstream C130 Hercules P3 Orion A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D 7 hangars ll w/b 9 n/b 2 general workshops 1 painting hangar Cargo conversion, Composite repairs & surface treatment, CPCP, Logistic support, Strlp/palnt, labelllng/ marking, Sheet metal work, Insula- tlon blankets, NDT test, Upgrades, Cabin & interior mod., Post delivery progrms, Engineering services, Tech- nical training, Global operational & maint. Support, Avionic upgrades, EASA design organization, Inventory mgmt Icelandair Örn Ingibergsson Customer services Maintenance Centre 235 Kefavik Airport Iceland Tel: +354 4250 142 Fax: +354 4250 188 E-mail: [email protected] 737 Classic 737NG 757 767 A-D Line maintenance A-C A-C 1 hangar 2 bays 12.500m2 (incl back- shops) Avionics upgrades, Composite repairs, CPCP, Sheet metal work Jat Tehnika d.o.o (Jat Technics Ltd.) Radoslav Ilic Director, mktg, sales & contracts Alrport Nlkola Tesla 59 11180 Belgrade Serbia Tel: +381 11 2280 115 Cel: +381 63 8199 412 Email: [email protected] 727 737 ATP 42/72 DC-9 A-D A-D I A-D 3 hangars 5 bays n/b , 3 bays w/b 35.000m2 (incl backshops) Modifcations, Aircraft ageing programs, Corrosion prevention & protection, Interior repairs, Struct. lnspect. & repalrs, Strlp/palnt, Avlon- ics upgrades Engine maintenance Component maint. Jet Aviation AG Michael Sattler SVP & accountable Mgr for Basel & Geneva bases PO Box 214 CH-4030 Basel-EuroAirport Switzerland E-mail: [email protected] 707/720 727, 737 (incl. BBJ) 747, 757, 767 A310 A320-family (incl. ACJ) A330, A340 Challenger Global Express Learjet, Gulfstream Dassault Falcon Hawker A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D 7 hangars 60,000m2 (incl backshops) Avionics, Composite repairs, CPCP, Strlp/palnt, |nterlors, v|P comple- tions, Sheet metal work 92 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE HEAVY MAINTENANCE DIRECTORY - EUROPE COMPAN¥ CONTACT DLTA|LS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES Lufthansa Technik AG Robert Gaag Dir. Central Europe weg belm 1aeger l93 22335 Hamburg Germany Tel: +49 40 5070 2590 Fax: +49 40 5070 8866 E-mail: [email protected] 737 (incl. BBJ) 747 757 767 777 A300/300-600, A3l0 A3l9/320/32l/AC1 A3l9/320/32l/AC1 A340 Avro RJ CRJ LP1-l35/l45 MD-11 MD-80 Saab 2000 A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-C A-D l6 n/b, 6 w/b, 3 P1, 3 dedicated painting bays Structural mod Lufthansa Technik (HAM) Agelng a/c mod/CPCP Lufthansa Technik (SXF) Shannon Aerospace (SNN) Insulation blankets LT Budapest (BUD) LT Malta (MLA) LT Sofa (SOF) LT Switzerland (BSL) LT Malntenance |nt/l (PPA) Coop. w. Austrian Ailines (VIE) Coop. w. Croatia Airlines (ZAG) Avionics mod, Sheet metal work, Design & modifcation, Freighter conversions, Tanker conversions, Thrust revr & nacelle overh., Cust. eng servlces, NDT test, Strlp/palnt Embraer, Interior completion, Cabin refurb, VIP & corporate refurb, |nternet-on-board lnstallns, |PL/ satcom Support structure, Airline support teams, Technical training Labelllng/marklng Marshall Aerospace Michael Milne Director of marketing & bus. dev. Marshall Aerospace The Airport Cambridge CB5 8RX England Tel: +44 1223 373737 Fax: +44 1223 373373 mick.milne@ marshallaerospace.com 747 767 777 A3l9/320/32l DC-10 MD-11 L-1011 L-l00/C-l30 BAe 125-700 Cessna Cltatlon 550/650 A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D 6 w/b l5 n/b 1.2m m2 Conversions, design svcs, Engineer- ing services, Installation services, |nt. mods & reconñgns, NDT, overhs, paint remov., Project mgmnt, recov- ery, Renovations, repairs, support, Logistics, technical pubs, Training, fying, Manufacture & assembly of airframe & components Design & manuf. of long-range fuel tanks MNG Technlc Volkan Eser Marketing manager Ataturk Havalimani B Kapisi Teknik Hangar Binasi ¥esllkoy-|stanbul 34l49 Turkey Tel: +90 212 465 06 86 Fax: +90 212 465 06 99 E-mail: [email protected] 727 737 757 A300 A3l9/320/32l DC-9 MD-80 A-D A-D A-D A-D A-D A-D A-D 2 w/b 4 n/b 5,000m2 Supply & loglstlcs Alrcraft, wheel & break unit shop Maintenance, Emergency equip. shop Ser- vices, Compressed cylinder, valve & regulator shop, Cabin interior, Paint shop, Hydraullc Shop, NDT works Structural works, Composite repair Avionic works Monarch Aircraft Derek Gibson Engineering Commercial director London Luton Airport Luton Beds. LU2 9LX England Tel: +44 1582 398 764 Fax: +44 1582 706 984 E-mail: [email protected] 737 757 767 A300-600/A30084 A3l9/320/32l A330 line A-D A-D A-D A-D A 5 w/b 8 n/b Avionics upgrades, Composite repalrs, CPCP, |nterlors, Strlp/palnt, Sheet metal work, Line mainte- nance, EASA 145 Part J, (Design) EASA Part M OGMA Mario Lobato Faria Aviation Services VP 2615-173 Alverca Portugal Tel: +35l 2l 958 l000/957 9000 Pax: +35l 2l 958 040l/l288 E-mail: [email protected] web: www.ogma.pt A320-family ERJ-145-family L-l70/l75/l90 C212 Aviocar C-l30/L-l00 Legacy 600 Lineage 1000 P-3 A-D A-D A-D A-D A-D A-D A-D A-D 139,000m2 Fleet management, Avionics modi- fcations, Calibration, Components, Engineering services, Hydrostatic testing, Aerostructures manufactur- ing, Airframe assembly Composite manufacturlng & reps, Machlnlng/ platlng NDT, Strlp/palnt, Sheet metal Saab Aerotech Johan Claeson Sales mgr, aircraft maintenance SE-581 88 Linköping, Sweden Tel: +46 13 18 3102 Fax: +46 13 18 5115 johan.claeson @sat.saabgroup.com Saab 340 Saab 2000 A-D A-D 6 n/b Aircraft inspections, Composite repairs, Modifcations, Painting, Refurbishments Sabena Technics TAT Group Damien Erceau SVP Sales & Marketing Tour Maine-Montparnasse BP 47 33 Avenue du Maine 75755 Paris Cedex 15 France Tel : + 33 1 56 54 42 30 Fax : + 33 1 43 21 70 91 737 757 767 A300 A310 A320-family A330 A340 A-D A-C A-C A-C A-D A-D A-C A-C Hangars for 23 aircraft across Europe Landlng gears, wheels & brakes, Dry strlpplng/palntlng, Components shops, Test nacelle equipment, Lo- gistics centre, Cabin refurbishment, Cockpit upgrade SAS Tech Birgitta Hogman SE-19587 Stockholm Sweden E-mail: [email protected] www.sastech.net 737 A320 A330 A340 MD-80, MD-90 A-D A-D A-D A-D A-D 2 n/b Avionics upgrades Shannon Aerospace Paul Murray Head of Marketing and Sales Shannon Airport Shannon, County Clare Ireland Tel: +353 613 70006 Fax: +353 613 61020 E-mail: [email protected] 737 757 767 A3l9/A320/32l DC-9 MD-80 A-D A-D A-D A-D A-D A-D 5 maintenance bays plus 1 paint bay 32,000m2 CPCP, Strlp/palnt, LASA & PAA 145 repair stn Interiors, Avionics upgrades, Cargo conversion, Com- posite repairs, Lease end transitions, Technical & engineering services, Line maintenance, EASA 147 train- ing school, 767 BS955 mods & reps, A320 rib 5 modifcation SR Technics Peter Kamenz Executive VP Sales & Marketing PO.Box CH-8058, Zurich Airport Switzerland Tel: +41 43 812 11 88 Fax: +41 44 810 97 98 E-mail: [email protected] 737 747, 757 767 777 A300-600, A310 A320-famlly/A330, A340 F100 MD-11 A-D A A-D A A A-D A A-C 6 w/b 7 n/b 2 n/b A-check bays 4 n/b casualty bays Composite repairs, Int. refurbish- ment, Comp. repr & overh., Modifca- tions, Repairs, Sheet metal work, NDT, CPCP, Avlonlcs upgrade, thrust, |PL/sltcom, Deslgn organls. appr., Pleet & lnventory mgt, Strlp/palnt re- verser and nacelle overhaul, Engine overhaul/test cell www.airlineeconomics.co Airline Economics: MRO Global 2011 93 EUROPE HEAVY MAINTENANCE DIRECTORY - EUROPE COMPAN¥ CONTACT DLTA|LS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES TAP Maintenance & Engineering Carlos Ruivo VP marketing and sales P.O. Box 50194 1704-801 Lisboa Portugal Tel: +351 21 841 59 75 Fax: + 351 21 841 59 13 E-mail: [email protected] 727,737,747,767,777 A300-600 A310 A320-family A330, A340 DC-10 MD-11 Embraer 120 Embraer 145 Legacy F50, F100 L-1011 A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D 8 w/b l0 n/b 53,380m2 Composite repairs, CPCP, Interiors, v|P, Strlp/palnt, Sheet metal work TAROM Lorin Dumitrescu Deputy Technical Director 8ucharest |nt/l Alrport Henrl Coanda Calea Bucurestilor nr. 224F Otopeni Town, County of Ilfov Romania Tel: +40 21 201 4549 E-mail: [email protected] 737 A320-family ATP 42/72 A-nC A-C A-nC l w/b 3 n/b Strlp/palnt, Sheet metal work, Ma[or structural mods, Major avionics mods Turkish Airlines Technic Dr._smail Demir General Director Maintenance Center (Bakim Merkezi) Ataturk Airport (B Kapisi) ¥esllkoy-|stanbul 34l49 Turkey Tel:+90 212 465 25 74-75 Fax:+90 212 465 25 57 E-mail: [email protected] 737 A300 A310 A320-family A330 A340 Avro P1l00/70 Gulfstream GIV A-D A-D A-D A-D A-D A-D K-D A-D 2 hangars Hangar No.l: 25,000 m2 Hangar No.2: 60,000 m2 Avionics upgrades, Comp. mainte- nance, Test/rep./ovh./callb., Com- posite repairs, CPCP, SSIP, Engine & APU, overhaul/test cell, |nterlors, Modifcations technical training, Landing gear overhaul Painting, HMU repair 737NG MAINTENANCE W he n Bo e i ng l aunched t he 7 37 NG pr o - gramme, one of its design targets was a 15% reduction in maintenance costs. With that in mind, the new models’ designers worked to reduce part counts, and increase commonality among models, improve the corrosion detec- tion, enhance fault identification and improve accessibility. Boeing also used state-of-the-art 3D computer mod- els with maintenance access solids to reserve space for parts access, removal and installation. The main landing gear assembly was simplified and brake change time reduced by 30%, engine removal and installation time was cut by more than 50% and the auxiliary power unit was redesigned for improved access and maintainability. The electronics and equipment bays were also redesigned, and built-in test equipment (Bite) inter- faces were made more consistent and user-friendly. Increased seals between critical parts and protective finishes were added to prevent corrosion. A digital cabin pressure control system used fewer mechanical parts than the analogue system it replaced, while improved Bite capability increased mean times between unscheduled remov- als (MTBUR) by around 75%. Mean time between failures of flight deck sys- tems was improved by more than 60% through a combination of reliability, redundancy and Bite. The wing of the 737NG has 30% fewer parts than its 737 Classic predecessor, with leading-edge panels designed to make access easier. Other changes that helped reduce the scheduled maintenance workload included the trailing edge flap-drive sys- tem. This now uses grease lubrication instead of an oil reservoir: in conjunction with the application of corrosion-resis- tant steel in place of the original chrome plating, the new design enables the High tech, low maintenance Boeing designed the new generation 737 with a reduced scheduled maintenance workload in mind. MRO Global takes a look at the various features of the new design and the cost- and time-saving benefits they provide 94 Airline Economics: MRO Global 2011 www.airlineeconomics.co www.airlineeconomics.co Airline Economics: MRO Global 2011 95 scheduled maintenance interval to be extended from 20,000 to 75,000 flight cycles, in line with the wishes of airlines. Redesigned air conditioning packs that use air instead of ball bearings, similarly, dispense with the need for oil servicing. At the same time, the maintenance steering group MSG-3 Rev 2 process uses 737 Classic maintenance and reliability data to optimise maintenance intervals for each task and allow operators to group them in suitable packages rather than specifying the content of each let- ter check. There are new fault reporting and fault isolation manuals, along with an enhanced structural repair manual. Documents are available digitally on CD-ROM, via the portable maintenance aid software tool and on the MyBoeing- Fleet website. New training courses have been developed to help mechanics make better use of these information sources. Boeing states that early in-service experience confirmed the new series is delivering substantial maintenance savings. In its second and third years of service (1999 and 2000), aggregated air- frame maintenance costs for the 162-seat 737-800 compiled from US Department of Transportation data were nearly 10% lower than those for the 147-seat -400 in total, and 18% lower per seat. IATA data indicates overall costs for the 737- 700 are almost 14% lower than those for the -300. A joint review by Boeing and a European operator identified an 18% reduction in actual maintenance costs for the year to June 1999. A study carried out in the mid-2000s by the University of Westminster for Eurocontrol attempted to quantify maintenance costs in order to estab- lish the costs resulting from aircraft sufering technical delays at the gate. It suggested that by the end of the last decade the maintenance cost per block hour for a 737-800 was in the range of $500–670, compared with $690–900 for the -300, $710–930 for the -400 and $570–770 for the -500. The now large and still growing 737NG fleet has led Lufthansa Technik to extend its 737NG support capabilities gradually in line with fleet increases. It now carries out heavy maintenance at Shannon Aerospace in Ireland, Ameco in Beijing, Budapest in Hungary and Sofia in Bulgaria, as well as C-checks at Berlin-Schoenefeld and other locations. The engine on the 737NG is the CFM56- 7. This is overhauled at Hamburg, at Lufthansa Technik Qantas Engineering in Melbourne, and at Lufthansa Technik Airmotive Ireland. Landing gear over- haul is provided by subsidiary Hawker Pacific in Los Angeles and London, in addition to the Hamburg and Beijing shops and others. There is also mainte- nance and overhaul of airframe-related components such as engine cowlings, and the company deploys airline sup- port teams for quick aircraft on ground (AOG) support and on-wing trouble- shooting. The 737NG will continue to increase in number over the next two decades, with the greatest growth being experienced by low-cost airlines in the Asia-Pacific region. The region’s biggest MRO, Sin- gapore Technologies Aerospace, ofers integrated MRO services for the 737NG that range from airframe maintenance and modification, to component and engine repair, and overhaul including engineering and technical services. ST Aerospace’s airframe maintenance and modification capabilities include heavy maintenance (C and D) checks, corrosion prevention and control programmes, and ageing aircraft inspections and modifications. Close co-operation with the original equipment manufacturers enables the company to ofer 737NG cus- tomers maintenance solutions based on actual OEM data. ST Aerospace already has a materials services agreement and an engine overhaul support agreement with engine manufacturer CFM. Its CFM56-7B capabilities include on-wing and spare engine support, engine lease programmes, engine sale and lease-back programmes, and engineering support. The company also ofers maintenance, repair and overhaul of a wide range of 737NG components, including landing gears, along with component exchange services on demand from an extensive component and rotables inventory for aircraft on-ground situations. As part of an integrated service ST Aerospace can ofer customised solu- tions to fit the operational requirements of a wide range of customers with very diverse needs: Fixed fee per flight hour schemes, integrated services and cus- tomised solutions are ofered with ST Aerospace’s maintenance-by-the-hour (MBH) programmes for the 737NG engines and components all of which have been popular over recent years. Customers who have signed up for MBH programmes for 737NG include AirAsia, China United Airlines, Jeju Air, Primera Air, SAS and Xiamen Airlines. Having 737NG facilities located in the key aviation hubs across the globe means operators are assured of con- sistent service standards, whether in Asia-Pacific, Europe or the Americas. ST Aerospace and Lufthansa Technik were once among the only MROs to have full global networks, but with the advent and expansion of the Boeing GoldCare net- work for the 737NG with joint ventures with MROs across the globe, airlines are able to obtain complete global cover- age for their aircraft maintenance needs more readily and at less cost. Boeing ofers a growing range of support options for the 737NG, ranging from parts sup- ply to support for electronic logbooks hosted on electronic flight bags (EFBs). As well as maintaining what it claims is the industry’s most comprehensive spare parts sales and distribution net- work, Boeing ofers repair, overhaul and exchange services covering avionic and hardware components. Its global airline inventory network programme manages the supply chain for expendable airframe parts, and materials management solu- tions are ofered under the integrated materials management (IMM) pro- gramme. IMM is intended to relieve airlines of the burden of purchasing, inventory management and logistics of expendable aircraft parts: Boeing and its suppliers, which include Hamilton Sundstrand and Honeywell, own the parts, which are stored near an airline’s base and paid for only as they are used. 737NG MAINTENANCE "8oa|ng sIaIas IhaI aar|y |n-sarv|ca axpar|anca conI|rmad Iha naW sar|as |s da||var|ng subsIanI|a| ma|nIananca sav|ngs. IATA daIa |nd|caIas ovara|| cosIs Ior Iha 737-700 ara a|mosI 14% |oWar Ihan Ihosa Ior Iha -300." 737NG MAINTENANCE 96 Airline Economics: MRO Global 2011 www.airlineeconomics.co In 2006 Boeing spent $2 billion on the acquisition of Aviall, until then one of the biggest independent providers of parts and aftermarket service, to enhance and accelerate the IMM programme. Boeing and KLM Engineering & Maintenance (KLM E&M) established the 737NG component services pro- gramme (CSP) in 2005, following the formation of a similar programme for the 777 with Air France Industries in 2003. KLM E&M already provided base maintenance for the 737NG, and overhauled 737 landing gears and the CFM56-7. The CSP, located alongside the partners’ joint spares distribution centre near Amsterdam Schipol, makes a pool of high-value components available to members, reducing their inventory and repair costs by as much as 30%. By 2009 the 737NG CSP was supporting a global pool of around 200 aircraft. Airframer and MRO have equal shares in the inven- tory: Boeing manages the repair of its own proprietary parts, and KLM E&M handles the rest. Boeing has also been developing a component repair and leasing services network, which covers 737NG com- ponents such as nacelles and landing gear. Both Spirit AeroSystems and the Goodrich Aerostructures service cen- tres in Singapore and Scotland provide nacelle component repair and overhaul services. In 2008 Boeing extended the landing gear overhaul and exchange programme initially established for the MD-11 in 1997 to include the 737NG, among other models, with Messier Services Asia, SR Technics and Guangzhou Aircraft Maintenance Engineering (Gameco) as 737NG MAINTENANCE www.airlineeconomics.co Airline Economics: MRO Global 2011 97 service providers. Fiji-based Air Pacific became the first 737NG operator to sign up the programme in April 2007. Beyond material management and component exchange, Boeing has also embarked on many MRO joint ventures. Boeing Shanghai Aviation Services, in which the airframer has a 60% stake, is one such venture that has been awarded FAA repair station certification. Having introduced digital manuals and other maintenance aids with the 737NG series, Boeing has broadened the scope of its electronic-enabled port- folio to include a variety of additional services. The maintenance performance toolbox, for example, consists of a suite of web-based tools available through MyBoeingFleet that help manage tech- nical documentation and records. The first six modules cover authoring, library, structures, systems, tasks and training. The first three of those provide access to updated maintenance data such as manuals and catalogues, give users the ability to customise the information and support the development, approval and management of task cards. Airlines and MROs, including Ryanair, South- west Airlines and Turkish Technic have all been signed up for some time now. Enhancements over recent years include the ability to integrate with parts provi- sioning systems, on-demand training and additional engineering tools that will enable operators to evaluate alter- native courses of action. Also available via MyBoeingFleet is the now-vital Airplane Health Man- agement (AHM) maintenance decision support capability, which collects, moni- tors and analyses real-time data such as maintenance messages and flight deck efect faults from the aircraft condition monitoring system (ACMS) to determine current and predicted serviceability. Automatic notification of issues identi- fied in this way is sent to operators. On the 787 this facility is key, and the sign- up by Boeing at point of order to AHM has been impressive. AHM also collects data from EFB-equipped aircraft, which has a growing number of 737NG users for the Class 3 (built-in) EFB more com- monly found on the flight deck of the 777, but in March 2009 Boeing revealed it had reached an agreement with Ester- line CMC Electronics to provide Class 2 (that is, installed but removable) EFB hardware, initially on the 737NG and subsequently on other models for both production and retrofit. As well as the CMC PilotView hardware, Boeing is offering end-to-end integration with commonality across EFB classes. Many Class 2 providers ofer no integration, leaving it to be done by the airline. This can add unanticipated cost, and increase technical and schedule risk, but the Boe- ing EFB solution is fully integrated, with Boeing support throughout the lifecycle of the product. Where the original EFB was an elec- tronic repository of the information normally carried in paper form, its func- tionality has been expanded to include an electronic logbook (ELB) applica- tion. The ELB is rapidly replacing paper logs and in the process is also enhancing operators’ ability to plan unscheduled maintenance ahead an aircraft’s arrival, co-ordinate logbook data with aircraft- generated maintenance messages, and extend AHM capabilities beyond the ACMS function to encompass other types of faults. 98 Airline Economics: MRO Global 2011 www.airlineeconomics.co MIDDLE EAST MRO A strategic axis shift in trade routes has fuelled the growth of air trans- portation in the Middle East, particularly the Gulf countries. The aggressive emergence of the Middle East Airlines on the global aviation industry has been a notable development for many established play- ers. Emirates, Qatar Airways and Etihad Airways – the Big Three Gulf carriers – are changing the dynamics of international avi- ation and have quickly emerged as the new global challengers. The region’s airports are being developed in tandem to handle the exponential trafc growth that is forecast. The development of the Middle East region as an aviation hub has lead to a major shift in the global air transport mar- ket as the Middle East carriers, particularly the Big Three, have altered the way trafc flows have been routed. A paradigm shift has materialized that has transplanted European and Asian hubs to Gulf-based hubs such as Dubai, Doha and Abu Dhabi. These carriers are largely responsible for this growth and have capitalized on their geographical centricity by cannibalizing the traditional trafc flows between other hubs and by connecting secondary cities as a result of exercising their sixth freedom trafc rights using their hub and spoke network. Approximately 4.5 billion people reside within an eight-hour flight of the Middle East, providing a huge potential to connect that population to any city though a single stop. The Arab Air Carriers Organization MIDDLE EAST MRO "N|dd|a EasI carr|ars, parI|cu|ar|y Iha b|g Ihraa, hava a|Iarad Iha Way IraII|c I|oWs hava baan rouIad" ity on order that poses the major threat to established European and Asian airlines. The Big Three airlines have specific long-term strategies guiding their success- ful business models. They essentially are network carriers that use a hub and spoke mechanism to collect short haul trafc into long haul operations through their respec- tive mega hubs. They ofer one of the best in-flight products as full service airlines to attract the high-yield customers. They have continuously stimulated demand through continuous brand awareness campaigns. And they have a much lower cost struc- ture due to labour policies diferent than the West and an abundance of labour from South Asia and Arab countries outside the Gulf. The most significant strategy of these carriers has been capitalizing on their www.airlineeconomics.co Airline Economics: MRO Global 2011 99 MIDDLE EAST MRO $0.0 $4.0 $6.0 $8.0 $10.0 $14.0 AP CH IN ME LA&C EE NA WE AF C o m m e r c i a l J e t A i r c r a f t R e t i r e d $12.0 $2.0 $16.0 2010 2011 APAC CHINA MIDDLE EAST INDIA $6.6 $2.4 $0.6 $2.4 $1.9 $1.8 $13.9 16% 6% 1% 6% 5% 4% 33% 5.3% 9.6% 9.4% 5.3% 6.6% 9.8% 1.6% LATIN AMERICA EAST EUROPE NORTH AMERICA Global CAGR 4.4% Market ($B) Market Share (2010) CAGR (2010-20) NIûûLE EA8T I8 A 8ûLIû ûßûwTh ßEûIûh Ahû I8 8üßßûühûEû 8Y 8ûNE ûF ThE 8TßûhûE8T ûßûwTh ßEûIûh8 lists 25 airlines at its members covering the entire Arab World. Yet it is the rise of Emir- ates, Etihad Airways and Qatar Airways as the fastest growing full service airlines that is the most spectacular. Emirates is the dominant carrier with Qatar Airways and Etihad Airways com- bined being 70% of its size. Together these airlines currently operate a fleet of 303 air- craft (EK-155, QR-91, EY-57) and have a further order book of 470 aircraft (EK-190, QR-182, EY-98). These airlines are forecast to increase their capacity by more than 15% per year over the next five years. The Big Three have 57% more long-haul seat capac- ity on order than the 35 member carriers of the Association of European Airlines (AEA) and 27% more than the 17 member airlines of the Association of Asia Pacific Airlines (AAPA). It is this increased capac- strong hub and spoke network model in a region with a geocentric potential of 4.5 billion people in an 8-hour flight radius. Emirates started the unique insight that it was theoretically possible to connect any two significant cities on the planet with only one stop in Dubai. Emirates’ strategy is to provide connecting long-haul services via its hub in Dubai, connecting city pairs worldwide with only one stop in Dubai. Both Qatar Airways and Etihad Airways also follow this model. The competitive cost structure at these airlines also helps. Fuel and labour cost are the two most significant operating costs for any airline, but the Gulf carriers enjoy advantageous positions in both. Fuel is cheaper in the region due to its proximity to oil production and refining facilities, which reduces their supply chain costs compared 100 Airline Economics: MRO Global 2011 www.airlineeconomics.co MIDDLE EAST MRO ME 12% AF 13% EE 12% Asia 63% ME 12% AF 10% EE 14% Asia 64% 2010 6,913 2011 8,995 5.4% CAGR Lûhû TEßN FLEET ûßûwTh Lûûk8 8ûLIû E8PE0IALLY Fûß TAßûET ßEûIûh8 to European, American or Asian airlines. Their young fleet age also helps keep their fuel costs as the latest generation aircraft burn fuel much more efciently. Low labour costs exist, as workers are sourced from the cheap labour markets of India, Pakistan, Sri Lanka, Bangladesh and Nepal. The man- agement friendly labour laws, with trade unions and strikes being banned, has also helped keep the costs of skilled labour low. This has been a huge advantage in running a labour-intensive operation such as the massive transit hubs at Dubai. Each airline has succeeded in elevating their brand to an international level to stim- ulate customer demand in line with their global aspirations. Emirates, Etihad and Qatar Airways are all devoting a huge bud- get to their brand awareness campaigns in a bid to position themselves as full-service carries and generate sales throughout the world. Global advertising and sport spon- sorships are being used extensively by these carriers to carry their marketing message. Emirates has in particular been very prolific in the range of world sports that is sponsors as a brand. In fact it would not be far from the truth to say that it would like to become the Coca Cola of the airline world. It is not surprising that each of these air- lines is part of a broader city master plan for growth in the world and reflects the New New World order as well as the New Mari- time Silk road. The airports in the cities of Dubai, Doha and Abu Dhabi are playing a significant role as prominent stops in international trade routes. And they are stimulating this through the growth of their airlines and respective hub airports. The Arabian Gulf had the luxury of being able to start with a blank piece of paper to create the airline and the airport infra- structure model. They formulated a plan to prepare for the post-oil era by diversifying their industrial base, and aviation was an important sector. The development of the mega-hub airport is influencing the growth of cities through industrial development, relocation of corporate headquarters, light manufacturing, international conferences, trade shows, sporting events, increased tourism and the growth of a logistics and distribution hub. By integrating these cities into global trade markets, their gov- ernments have positively impacted their economic prosperity. Dubai certainly was the pioneer of this model as its oil supplies dwindled and it raced to integrate itself into 1,000 1,500 2,000 2010 2015 2020 B i l l i o n s 500 2,500 ME AF EE Asia ME AF EE Asia ME AF EE Asia A8N ûßûwTh º FLEET ûßûwTh FûßE0A8T AT 6.9% 0Aûß Tû 12,219 Ih 10 YEAß8 (46% ûF ûLû8AL FLEET) º NE FLEET I8 0ûNPAßA8LE Ih 8IZE Tû AF Ahû EE 8üT I8 EXPE0TEû Tû hAVE NûßE TßAFFI0 º A8N ûßûwTh wILL Ih0ßEA8E AT 6.7% 0Aûß ûVEß 8ANE PEßIûû global trade markets before the oil ran dry. This is the reason why it currently enjoys a lead over Doha and Abu Dhabi as an avia- tion hub. Another development has been the rise of low-cost carriers that are capturing the boom in point-to-point budget travel with the region. The success of Air Arabia, Fly Dubai, RAK Airways in UAE, Jazeera Airways in Kuwait, Bahrain Air in Bahrain www.airlineeconomics.co Airline Economics: MRO Global 2011 101 MIDDLE EAST MRO North America Western Europe Eastern Europe South America Africa Asia Pacifc Middle East st Ea ddle and NAS Air in Saudi Arabia, have clearly show that the market for air travel has grown to unprecedented levels. The low fares have stimulated many people to fly that previously would not have flown at all or as frequently. The rise of these carriers has further given the region a stamp of approval as one of the leading air transportation markets in the world today. Airlines in the Middle East have huge fleets and have a surge of new aircraft deliveries coming in. This is keeping them focused on their main business of air trans- portation. And they are using cost saving measures in other areas such as engineer- ing to outsource work to external parties. Thus they are outsourcing contacts of maintenance work to established MROs which creates more work potential in the Middle East region. The new trend is for these MROs to provide a package of customized services for airlines that addresses all their line and base maintenance needs in order to win their business. TeamSAI is an aviation consulting firm providing strategic and tactical solution in MRO. During MRO Middle East exhibition in 2011 the company presented research that showed profits have been pretty elusive for aftermarket companies in the region so far but a lot of positive developments have taken place in preparation for the coming growth in maintenance work. In the next ten years, the total aftermarket spend base in the Middle East, including air transport, military, business aviation and civil helicop- ter, is expected to grow substantially. The total will grow from $7 billion in 2010 to $11.2 billion in 2019 showing a 5.3% annual increase, according to figures presented by Aerostrategy. MROs and airline mainte- nance companies are therefore expanding in preparation for such a high growth rate. Currently Mubadala Aerospace in Abu Dhabi is working in partnership, through its subsidiary Abu Dhabi Aircraft Tech- nologies, with GE and the Engine Alliance on engine maintenance, and SR Technics bringing the first network overhaul pro- vider approved by OEMs to the region. Mubadala Aerospace is also creating a military MRO in Al Ain called Ammroc Advanced Military Maintenance Repair and Overhaul Centre that is supported by Sikorsky. The focus on companies in the region continues to be fleet performance of aircraft in operation. However, the Middle East can play a vital role as a hub for aircraft maintenance for the region covering Africa, Middle East and Australasia. As the fastest growing aviation region, this presents an enormous economic potential. · As the central location, Middle East is ideally situated to capitalize on the area growth · 37% of the global MRO market sur- rounds the ME · $15.4B in 2010 · Regional CAGR is a very healthy 6.7% (2010-2020) · Market is equivalent to that of Ameri- cas, but in 10 years time will exceed the share of the Americas by 14% The efect of the European Emissions Trading Scheme on Middle East MRO companies should not be overlooked, it is sure to give them an additional boost and further enhance their cost savings to cus- tomers over European Union based MRO suppliers. 102 Airline Economics: MRO Global 2011 www.airlineeconomics.co MIDDLE EAST MRO Abu Dhabi Aircraft Technologies Abu Dhabi Aircraft Technologies (ADAT) services the Etihad fleet, which, given the age of the same leaves quite a bit of capacity for third party work. ADAT is owned by the Mubadala Development Company, which is a strategic investment vehicle wholly owned by the emirate of Abu Dhabi which also owns SR Technics. ADAT is in a position to challenge the very best in the market as it now has base maintenance capabilities for all major current and future aircraft mod- els and has just built its A380 hanger which will receive its first A380 aircraft in 2012. A recent deal with General Electric means that the MRO is now a specialist centre for GE90 AND GEnx engines. ADAT caused a stir in 2010 when it launched Sanad, which provides it with a leasing and man- agement capability through the purchase of an airline’s component stock allowing it to maintain the same on a contract basis through ADAT and SR Technics. IAI Bedek Aircraft Group Thanks to its location, IAI Bedek Aircraft Group sits alongside its Middle Eastern peers. This MRO remains a very strong conversion specialist but of late, in 2011 at least, business has been quiet in the third- party maintenance sector. This MRO continues to perform well but there have been few new contracts of late to shout about and one cannot help but see this MRO becoming more and more isolated as the Gulf region continues to grow rapidly. Will the Chinese and Indian airlines look to Israel for their MRO needs? JorAMCo is proof that the business is there to be won. IAI Bedek Aircraft Group is certainly one to watch through 2012 and as a specialist converter the outlook in this market is far from bleak. It will be interesting to see if this MRO is able to make some gains in third- party maintenance and if it will be able to keep up the pace in the conversion market with so many airlines opting for new air- craft. Moreover the European ETS will lead to many more airlines/operators being forced to opt for new cargo aircraft rather than conversions, this will hit Bedek. That said this MRO remains a prolific military service provider and it will not be short of business on that front. The roll list of ser- The ones to watch are coming to the fore but what of Qatar? vices remains impressive: Services include: Heavy maintenance services, Total mainte- nance services on “Flight Hour Rate” basis, On-site maintenance services, Cargo con- versions - B737, B747 and B767 Aircraft, Customized interiors, Avionics modern- ization and numerous military upgrade programs, Life extension and aging air- craft AD note compliance, Cabin/cockpit standardization/modernization programs, Communications and navigation systems modernization programs, Re-engining and/or hush kit installation. Bedek is able to ofer services for: B707, B727, B737, B747, B757, B767,DC-10, MD-80, MD-11, A320 and A340 Series among others. Emirates Engineering Emirates Engineering, which has a remit to support the Emirates airline fleet, has confirmed that it has plans in place to seek third-party maintenance work in the future. At the same time however its eight hangers, which together form the largest free-span structure in the region, are reporting heavy utilisation, something that is a surprise given the age of the Emirates fleet. This does mean that Emirates is in no position to move into third-party services in earnest as there remains only very limited spare capacity with no new capacity coming into play in the near term and its own airline still growing at a very fast pace. Emirates is cur- rently in the process of developing in-house practices and skills to move forward with third party maintenance as a core business. Gulf Technics This MRO was formed through a joint- venture between Bahrain state holding company Mumtalakat and Singapore’s SIA Engineering (SIAEC). The new MRO will not only service the Gulf Air fleet but will actively seek third-party work with a new facility that will become operational in 2012. Gulf Technics (GT) is a subsid- iary of Mumtalakat established to act as the Technical Investment and Innovation $10.0 $20.0 $25.0 2010 2015 2020 B i l l i o n s $5.0 $35.0 ME AF EE Asia $30.0 $15.0 $15.4 $20.8 $29.6 NIûûLE EA8T Nßû ßELATIVE Tû 8üßßûühûIhû ßEûIûh8 www.airlineeconomics.co Airline Economics: MRO Global 2011 103 MIDDLE EAST MRO is the best option to take. If there is spare capacity for third party maintenance then so be it. The current crop of global MRO provid- ers needs to have presence in the Middle East if they are to be at the forefront of the market in fifteen- to twenty-years time. The problem for many MRO companies is that financing is very hard to come by. Some pro- viders will no doubt be looking to launch a joint venture with Qatar in the near future. This would be both a bold and rewarding option. to perform D-Checks on six B737NGs oper- ated by the Indian Carrier; the confirmed checks include landing gear and thrust reverser removal and installation and paint. The agreement is another building block for a more tangible business for JorAMCo in the Indian Market and a continuation of JorAMCo’s strategy in that region as JorAMCo continues to establish presence there, with a noticeable increase in Indian operators frequenting JorAMCo’s facili- ties with their maintenance requirements. JorAMCo has successfully positioned itself as a serious alternative option for Indian operators. Qatar Airways Qatar is the big question out there at the moment - Will the airline move to create an MRO arm in the near future? Qatar’s fleet is growing at a staggering rate and more aircraft orders are being announced at the 2011 Dubai Air Show. The airline, by the time of the FIFA World Cup in Qatar in 2022, will have a huge fleet with a massive network and will need maintenance facili- ties to match. The investment going into the new Doha International Airport, open- ing in 2012, gives Qatar Airways the option to start bringing fleet maintenance services in-house. Any other airline in the US or the EU would be mad to bring maintenance in- house as high labour costs means it would not be economically viable, but, as with so many things in the Middle East, state own- ership and relatively cheap labour costs mean that bringing maintenance in house arm of Mumtalakat. GT’s role is to identify and establish viable industrial and techni- cal investments and to establish technical research capabilities. Currently the company can perform: Import, export and logistics of aviation parts, aviation components repair and overhaul, aviation Maintenance, Repair and Overhaul (MRO). GT also has a research and development centre. Planned for 2012 are: Line Mainte- nance, modular engine repair and overhaul, aviation components manufacturing, auto- motive components manufacturing. GT is actively establishing research capabilities, both numerical and experi- mental, in various fields including MRO, NDT, reliability, aluminum and steel met- allurgy, energy, aerodynamics, combustion, and heat transfer. JorAMCo JorAMCo a Jordanian based Maintenance, Repair and Overhaul (MRO) facility is a dynamic aircraft maintenance center that specializes in aircraft airframe services, component repair and overhaul covering Airbus, Embraer and Boeing products. JorAMCo is an EASA- and FAA-approved MRO supplier and performs all levels of aircraft maintenance for a number of air- lines in the Middle East, Europe and Asia. 2011 has been a success story for JorAMCo and has seen it collect new business from emerging markets. A highlight of 2011 came in September when Jet Airways signed an agreement whereby JorAMCo is Airline Financial Results Intensifies the COST Focus º Profits have been elusive in many regions, and the Middle East has had its troubles too – Surrounding regions like Asia have been most profitable though º The quest for profitability drives business behavior – Revenue focused innovation is evident – Cost improvements are needed at every turn º For MRO value stream, this means – Motivation toward best value – Outsourcing will continue to grow – Supply chain innovation will be imperative – Preparing for a new generation of technol- ogy – Consolidation will be important to value creation – Value-oriented innovation will be rewarded 22-Jan-10 SIA Engineering and Gulf Technics to set up and operate MRO facility in Bahrain. 15-Jul-10 Turkish Technic and Goodrich complete agreement for MRO JV. 21-Jan-10 Mubadala and Goodrich sign JV agreement. 20-Aug-10 NAS Tech and Lufthansa Technik sign strategic cooperation agreement. 16-Dec-10 ADAT unveils timetable for GE and Engine Alliance Network Partner Shop for the GEnx and GP7200 Engines. 27-Jan-11 ADAT signs deal to overhaul IAE jet engines. Mubadala Aerospace launches component and engine fnancing company, Sanad Aero Solutions. 3-Feb-11 Mubadala and Honeywell form strategic partnership. 20-Jul-10 Pratt & Whitney and Turkish Technic strengthen partnership with Advanced CFM56 and V2500 Center of Excellence. 1-Nov-10 Turkish Technic, Turkish Airlines, and TAI launch cabin interiors business. 29-Dec-10 1-Feb-10 1-Mar-10 1-Apr-10 1-May-10 1-Jun-10 1-Jul-10 1-Aug-10 1-Sep-10 1-Oct-10 1-Nov-10 1-Dec-10 1-Jan-11 104 Airline Economics: MRO Global 2011 www.airlineeconomics.co MIDDLE EAST MRO The Middle East may have a high por- tion of growth but it is no diferent to any other region in that the most successful MROs will be those able to ofer a full array of services across all aircraft types ofering total maintenance through a long term partnership. The advantage for MROs independent from OEMs as independent third party or in house providers is data sharing. If you are able to service a mixed fleet at any time in any zone with one ser- vice provider that is working with you and will share data at all times over all types that will also embrace the latest cost saving tech- nologies be they PMA, DER or whatever is needed – then you have a flexible and cost efcient service that an operator will be at pains to refuse. This is the blunt truth of the MRO sector moving into 2012. And for many it is a truth that will require either expansion, acquisition or investment. There is no middle ground and although an MRO may inform you that they are secure in their sphere of influence, if they do not meet the aforementioned criteria, then they are operating on borrowed time as globali- sation of the aviation sector speeds. $0.0 $20 $30 $40 $50 $70 2001 2002 2003 2004 2005 2006 2010F $60 $10 $80 $100 $90 $110 2007 2011F -$13.0 -$11.3 -$7.5 -$5.6 -$4.1 -$0.1 -$16.0 -$9.9 $15.1 $12.9 $9.1 -$0.1 2008 2009 -$0.3 -$0.6 $0.7 $0.4 ûLû8AL AIßLIhE8 V8 NIûûLE EA8T AIßLIhE8 AhhüAL hET PßûFIT (8ILLIûh8 ü8û) V8 AVEßAûE wûßLû 0ßüûE ûIL (ü8û PEß 88L) www.airlineeconomics.co Airline Economics: MRO Global 2011 105 A frican maintenance, repair and operations is currently estimated to be worth some $1.2 billion per annum but this is forecast to grow by over 40% to $1.9 billion by the end of the decade. Ethiopian MRO expenditure in Africa is expected to increase but forecasts difer due to the continent developing a north-south split with the Ethiopian Airlines maintenance arm with Egyptair Maintenance & Engineering looking to dominate the north, while South African Airways Technical (SAA Technical) con- tinues to dominate the south. Ethiopian and Egyptair are in the better position due to geography – being on the periph- ery of Europe and the Middle East gives an obvious edge. Boeing projects that Africa will need 710 new airplanes between 2009 and 2029 with African airlines not just replacing old aircraft, but actively grow- ing their fleets. African carriers account for approximately 100 aircraft in Boe- ing’s backlog for delivery over the next ten years with a mix of 737s, 777s and 787s on order. African MROs are no diferent from any other. If African MRO is to grow beyond servicing the local airlines of the continent then they must position them- selves to attract business from Europe and the Middle East in the north and, in the case of SAA Technical in the south, it must expand to have teams across the local regions. The African MROs will need to prove a record for safety, turn- around reliability, competitive pricing and be full service providers. African MROs must know their strengths and weaknesses as well as look at outsourc- ing areas of low competitiveness, such as large engine overhauls and low-volume components. SAA Technical outsources large engine overhauls as its throughput is not enough to make it competitive for the firm to do the work alone. Yet African MROs remain well positioned to provide MRO services to African airlines, and at reasonable prices. As new technologies are introduced, so African MROs need to source capital to invest in the new tooling, equipment, systems and training required to under- take MRO on new generation aircraft and engines. African airlines therefore need to collaborate to grow. They need to outsource work within Africa when- ever possible, throughput needs to be increased by pooling resources and creating centres of excellence through the sharing of expertise and mutual assistance. African MRO’s best bet is to partner with OEM (Original Equipment Manufacturer) programs to increase expertise, improve systems, develop worldwide marketing coverage and gen- erate reciprocal business. AFRICA MRO AFRICA Established in 1945, Ethiopian Airlines maintains modern and complete aircraft, engine and component overhaul and repair facilities. With an all-Ethiopian workforce of over 750 technical person- nel – most of whom are trained by the airline’s Aviation Maintenance Techni- cians School and are US Federal Aviation Administration and Ethiopian Civil Avia- tion Authority licensed – Ethiopian has gained a distinguished recognition for its high standard and excellent safety record. APPROVED CAPABILITIES Airframe maintenance The base provides complete package maintenance on: Boeing Models B767, B757, B737, B727; Bombardier DHC-6; Fokker Model F-50. Engines maintenance · ComµIele reµair, modiñcalion, and overhaul · ModuIar mainlenance · Engine µerformance lesling · A range of sµeciaI µrocess shoµs for parts, salvage work and modification Component overhaul/testing · ComµIele reµair, overhauI and lesl- ing of components fitted on the above mentioned fleets · The avionics comµonenl shoµ uliIises a state-of-the-art Automatic Test Equipment, ATEC 5000, for Avionics components Non-destructive testing (NDT) with spe- cialised inspection: x-ray, radiography, eddy current, ultrasonic, magnetic par- ticles and dye penetrant. General engineering support Development of · Major reµair]modiñcalion · Engineering orders · Mainlenance µrograms · ComµIele insµeclion]check work packages Operational assistance through · Aircrafl µerformance anaIysis · Engine condilion moniloring · HandIing of: lechnicaI records keeµ- ing, technical planning functions, reliability analysis Facility evaluation, development plans and recommendation TechnicaI evaIualion]damage assess- ment on aircraft at any location Line station technical handling In addition to our base at ADD, the MRO ofers service at various international stations such as NBO, FCO, BOM, CAI and LOS. Experienced mobile technical team and crew available for a short- and long- term assignment upon request. Spare parts inventory · Exchange]Iending of µarls for Boeing, Fokker, ATR, De Havilland and Lock- heed aircraft. · SaIe of surµIus aircrafl µarls. · Aulomaled slores and invenlory con- trol services AFRICA 106 Airline Economics: MRO Global 2011 www.airlineeconomics.co Egyptair Maintenance & Engineering (M&E) is a leading provider of aircraft maintenance services in the Middle East region with over 75 years’ experience. Egyptair M&E has a base maintenance facility at Cairo International Airport. This base maintenance has been designed to act for a variety of diferent aircraft types, components and associated equip- ment. Our team of highly qualified and motivated engineers is ready to provide all the professional services you require, included in European Aviation Safety Agency (EASA) 145 Scope of Approval. Egyptair M&E provides the following base maintenance services: · Heavy mainlenance · Ageing aircrafl µrogramme · Inlerior renewaI and seal reconñgura- tion · Corrosion µrevenlion and conlroI µro- gramme · Engineering suµµorl Hangar 8000 is fully equipped with docking system to accommodate A320, A321, A330, A340 A300-600, A300-B4, B777 and EMBRAER 170. It obtained the EASA approval Part 145 through the certifying staff and hangar’s facilities to perform scheduled checks on A319, A321. A320, A330 and A340. Hangar 7000 i s used to perform scheduled checks on B737- 3uu]4uu]õuu]6uu],uu]8uu and µuu and the B777. Hangar 6000 is used to perform sched- uled checks on the A300-600, A300-B4, A321, A32u and lhe EMBRAER 1,u]1µu. TAKING BETTER CARE OF YOUR AIRFRAMES AND ENGINES Egyptair M&E has a well-established operational background and extensive knowledge of airframe and engine main- tenance and airline operations. · Cuslomers can counl on comµeli- tive downtimes and guaranteed on-time redelivery. · Aircrafl are redeIivered wilh zero check-related discrepancies. · Exlensive engineering caµabiIilies make Egyptair M&E a specialist in customised maintenance and modi- fication programmes. Examples include various successful cockpit, structure and cabin modifications. · Egyµlair M&E offers cerlified solutions for many EASA and Fed- eral Aviation Regulations-driven mandatory modifications. Smartly combining regular maintenance checks with modifications makes it possible to minimise turnaround times. TOTAL AIRFRAME CARE Total Airframe Care services includes regular aircraft checks, monitoring and scheduling of ADs. Egyptair Maintenance & Engineering Ethiopian airlines maintenance HEAVY MAINTENANCE SAA Technical has a reputation for high- quality work at very competitive labour rates, earned over decades of providing heavy maintenance services to local and international airlines. Aircraft downtime is reduced by world-class facilities and equipment and through scheduling aircraft modi- fications and repaints during C and D checks. SAA Technical has nearly 85,000 square metres of hangar space. This includes the 36,000 square metre major maintenance hangar, the largest in Africa, capable of accommodating five B747 aircraft simultaneously. A mul- tipurpose dock is capable of handling A34u-2uu]3uu]6uu aircrafl, aII B,4, aircraft and MD11 aircraft. SAA Technical does all major main- tenance for SAA. It also provides major maintenance to a number of European, African and Middle East airlines. The high capability in modifications includes strut modifications, FQIS (Fuel Quantity Indication System) replace- ment, ACARS-ARINC (Communication and Reporting System) installation, EGPWS (Enhanced Ground Proximity Warning System) installation, Satellite Communication installation, Traffic Collision Avoidance System, enhanced IFE system installation, GPS (Global Positioning System), HUD (Head Up Display) installation and yaw damper modification and cabin reconfiguration. SAA Technical has a dedicated paint hangar, equipped to do all levels of painting including complete repaints as well as internal and external decals. SAA Technical is a one-stop shop for all heavy maintenance, including the capability to test, repair and release components on site. Capabilities for C and D-checks include: · B,4, Series · B,3, CIassic]NG · MD11 · A31µ Series · A32u Series · A34u Series LINE MAINTENANCE SAA Technical has more than 700 tech- nical staf providing line maintenance services to South African Airways and a large number of international airlines. These services are provided at Johan- nesburg, Cape Town and Durban as well as other centres. Line maintenance includes A and B checks, technical defect rectification and aircraft exterior cleaning. SAA Techni- cal is the only maintenance facility in the world providing customers with the spe- cialist service of hand-polished aircraft. In addition to the normal mainte- nance programme, a dedicated team ensures that aircraft interiors are main- tained to a high standard. When all airlines have similar aircraft and techni- cal facilities, the cabin appearance and functionality is a key consideration in customer satisfaction and loyalty. SAA Technical is expanding its foot- print into Africa. It has locally trained technical staf placed in Lusaka, Lan- seria, Mauritius, Dakar, Luanda and Kigali. This not only assists SAA, but it facilitates the development of aviation services, especially technical mainte- nance, on the African continent SAA Technical provides an aircraft recovery service through a specialist team on a 24-hour standby basis. This team is fully equipped to handle any type of emergency in Africa and the Indian Ocean Islands and these services are jointly conducted with the International Airlines Technical Pool. Jetworx (see Jetworx.co.za) in South Africa provides a wide spectrum of air- craft maintenance functions. Anything from minor maintenance, major main- tenance, logistical support, engineering and maintenance planning services are provided. The company possesses the approvals of various African countries but also holds FAA, EASA and SACAA approvals on various aircraft types such as the B737, B727, MD80 and L382. Jetworx support aircraft in various theatres in Africa, the Middle East, Europe and even as far as Arctic areas. It typically complies to a 98% dispatch reliability for its routine recurring cli- ents. Major clients are listed as: · 1lime airIine - 12 aircrafl - 2,2uu monthly flight hours – 1,500 sectors per month · Safair Oµeralions - 16 aircrafl - 1,000 monthly flight hours – 400 sectors per month · Aergo CaµilaI - major mainlenance · Air Zambezi - fuII suµµorl · Easlern Skyjels - fuII suµµorl The facility is geared to do around 50 major overhauls per annum. Maintenance services can be pro- vided for ad-hoc or AOG situations as well as Comprehensive Maintenance Agreements, also referred to as Power by the Hour agreements. Its comprehensive array of support shops such as wheels and brakes, com- posites, avionics, engine shop, structures and painting makes it an ideal one-stop- shop for major maintenance and AOG support. Boroscope and NDT services are also provided. The logistical and support centres provide various aerospace related ser- vices with such approvals, engineering services and comµonenl]engine reIiabiI- ity monitoring. Jetworx was born out of the merger of Safair’s technical division and Aeronexus Technical. Stafed with around 650 per- sonnel from various disciplines it is well poised to deliver a comprehensive and customised solution for its customers. AFRICA www.airlineeconomics.co Airline Economics: MRO Global 2011 107 SAA Technical Jetworx AFRICA 108 Airline Economics: MRO Global 2011 www.airlineeconomics.co HEAVY MAINTENANCE DIRECTORY - AFRICA/MIDDLE EAST COMPANY CONTACT DETAILS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES Abu Dhabi Aircraft Technologies Kirubel Tegene Manager, Commercial Sales Abu Dhabi International Airport PO Box 46450 Abu Dhabi United Arab Emirates el: +971 2 505 7530 fax: +971 2 575 7263 e-mail: [email protected] A300 (all) A310 A320/321 A330/340 747-100/-200 747-300/-400 757-200/-300 L-1011 B767 B737 (NG) Heavy Heavy Heavy Heavy A, B A Heavy Heavy Heavy Heavy 12,268m2 area 3 w/b bays 1 w/b paint: hangar 2 (4,100m2) hangar 3 (2,700m2) hangar 4 (10,000m2) 11,000m2 workshops 100,000lb 1 APU avionics upgrades, composite repairs, interiors Upgrade, full strip & repaint, ageing a/c progs, materials process, component o/haul engine test cell engine overhaul, aircraft cleaning, aircraft weighing Cockpit layouts, Corrosion prevention/ control, Engineering svcs Fuel tank report, Inventory mgmnt Line maintenance, Logistics support Machining/plating, NDT. Sheetmetal Training VIP reftting/refurbishment Air Zimbabwe G Gambiza Technical mktg manager PO Box AP.1 Harare Airport Harare Zimbabwe tel: +263 (4) 575 111 ext. 2478 fax: +263 (4) 575 058 707 737 767 BAe 146 A,B,C,D A,B,C,D A,B,C A,B, structural 1 w/b hangar 1 n/b hangar 20,000m2 250 engineers strip & paint, NDT Air Madagascar Claude Rakotoarivelo VP Maintenance and Engineering 31 Ave de l’ Independence Antananarivo 101 BP437 Madagascar tel: 261 20 22 446 85 fax:261 20 22 446 74 [email protected] 737 767-300 ATR42 DHC6-300 A,B,C,D A A,B,C,D A,B,C,D 1 hangar 2 w/b; 1 n/b modifcations Alsalam Aircraft Fawaz Sharabi Manager - business development - Commercial PO Box 8012 Riyadh 11482 Kingdom of Saudi Arabia tel: +966 1 220 3966 extn 324 fax: +966 1 220 0199 mob: +966 553031611 [email protected] www.alsalamaircraft.com.sa A300 707 727 737 747 L-1011 MD-90 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D modifcations 3 w/b hangars (each B747-400 size) Total hangar space- 15, 900 m2 Composite repairs, Avionics upgrades, CPCP, Ageing a/c inspect., IFES retroft, Full cabin refurb., VIP interior design, 747 pylon mods, 747 section 41, Strip and paint Arkia Israeli Airlines Aircraft Maintenance Nir Dagan VP, operations & maintenance Dov Airport PO Box 39301 Tel Aviv 61392 Israel tel: +972 3 690 2222 fax: +972 3 699 1390 email: [email protected] ATR 42/72 B-200 Citation XL DHC 7 BD-700 (Global 5000) A,B,C,D A,B,C,D 1 w/d 6 n/b 3,000m2 refurbishment Bedek Aviation Group Israel Aircraft Industries (IAI) Joseph Oren General Manager, Mkt. & Busin.Dev. Ben Gurion International Airport Israel 70100 tel: +972 3 935 3979 fax: +972 3 935 4262 e-mail: [email protected] 707, 727, 737 747, 757, 767 MD-11 MD-80 DC-8, DC-9, DC-10 A320/321/319 A,B,C,D A,B,C,D A,B,C A,B,C,D A,B,C,D A,B,C,DN 4 w/b hangars (5 aircraft) strip & paint 4 n/b hangars (10 aircraft) cargo conv. inc. B747 135,000m2 avionics upgrade, 747 pylon mods, 747 section 41, composite repairs, full cabin refurb., ageing a/c mods, components incl: hydraulics, landing gears, wheels & brakes CSD, IDG, transmissions Denel Aviation Martin Laubscher Business Development PO Box 11 Kempton Park 1620 tel: +27 11 927 4575 fax: +27 11 927 4411 C-130/L100 A,B,C,D 6 hangar bays Mods & upgrades, Strip & painting, NDT, Component overhaul & repairs, CPCP EgyptAir Hassan Sakr Marketing and sales director Cairo International Airport Cairo Egypt tel: +20 2 696 4842 fax: +20 2 696 4896 [email protected] A300B4 A300-600 A320/321 A330-431 A340-200 777-200 707-300 737-500 747-300 A,B,C,D A,B,C,D A,B,C,D A,B,C A,B,C A,B,C A,B,C,D A,B,C,D A,B,C,D 4 w/b bays 3 n/b bays 20,000m2 hangar space 350 airframe engineers modifcations, strip and paint, structural and comp. repairs, engine test cell, components shop, avionics shop, powerplant shop ELAL TECH/EL AL Israel Airlines Ran Ackerman Senior Marketing and Sales Mgr PO Box 41 Ben Gurion Airport, 70100 Israel tel: +972 3 971 7278/7748 fax:+972 3 971 7849 e-mail: [email protected] www.elaltech.com 747-200/400 767 757 737NG 777 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D Engine Shop Hyd. Shop Avionics Shop Structure Shop Components Shop 3 Bay, 20,000 m2 logistics support, engineer supp. Mods, avionics, engine, build up, composites, & hydraulics wkshops, line maintenance, and tailor made solns, FAR 145, EASA 145, CAAI, ISO9001:2000 MRO Directory: Africa/Middle East AFRICA www.airlineeconomics.co Airline Economics: MRO Global 2011 109 HEAVY MAINTENANCE DIRECTORY - AFRICA/MIDDLE EAST COMPANY CONTACT DETAILS AIRCRAFT CHECKS FACILITIES SPEC. CAPABILITIES Ethiopian Airlines Zemene Nega Director technical sales & mktg PO Box 1755 Addis Ababa Ethiopia tel: +251 1 615 272 fax: +251 1 611738/474 [email protected] 707 727 737 757 767 DHC-6 ATR 42 C-130 F50 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 2 bay w/b 2 bay t/prop hangar 750 licensed engineers strip & paint, avionics upgrades, composite repair, CPCP/ ageing a/c mods, engine overhaul, full cabin refurbs., component o/haul Iran Aseman Airlines Mazia Darafsh Mgr, production planning & control Mehrabad Airport Tehran IR Iran tel: +98 21 603 5310-14 ext 6330 fax: +98 21 600 1810 mobile: +98 911 258 0597 727 F28 F27 ATR 42 ATR 72 Falcon 20 Do228 A,B,C A,B,C,D A,B,C,D A,B,C A,B,C major major 5 hangars for w/b aircraft 20 bays 80 licensed engineers strip & paint, avionics upgrades, structural repair Jordan Aircraft Maintenance Co (JorAMCo) Faris Haddadeen Director, Marketing & Sales Engineering & Maintenance Division PO Box 39328 Queen Alia International Airport Amman 11104 Jordan Tel : + 962-6-445 1272 Fax : + 962-6-445 2996 Mobile : + 962-777-828811 [email protected] A310 A320,A321,A319 A340 707 727 L-1011 all lvls to 10Y all lvls to 10Y all lvls to 10Y A,B,C,D A,B,C,D A,B,C,D 3 L-1011s sim. 12,162m2 of hangars 10,440m2 of eng. bldgs 1,600m2 of support shops 800m2 of paint shops 146 A & P lic. airframe & Engine Engineers SBs, ADs, modifcations, full strip & paint Kuwait Airways Ahmad Abdulla Al Zabin dir. engineering afairs PO Box 394 Safat 13004 Kuwait tel: +965 431 fax: +965 474 7105 A300 A310 A320 A340 727 747 767 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 2 w/b; 2 n/b 13,246m2 strip & paint Dy modifcations Oman Aviation Services Khalid Bin Al Abdesalaam VP Maintenance Seeb International Airport PO Box 58 Seeb-Muscat Oman tel: +968 519 294 fax: +968 510 018 A310-300 F27 ATR 42-500 DHC-6 A A,B,C A,C A,B,C,D 2 bays 1,020m2 foor space strip & paint, modifcations, paintshop Royal Air Maroc Fouad Benbrahim Technical sales & contracts mgr Centre Industriel Aéronautique Aéroport Mohammed V Nouasser Casablanca Morocco tel: +212 2 49 9007 fax: +212 2 53 9425 [email protected] 727 737-200 737-300/400/500 737-700/800 757 ATR 42 B,C,D B,C,D B,C,D B,C B,C,D B,C,D 1 n/b hangar (4 aircraft) 38,000m2 (hngr + b/shops) 1,000 licensed engineers engine test cell training centre strip & paint, avionics upgrades, full cabin refurbs., eng. modular maint., approvals: JAR145, FAR145, Bureau Veritas, Moroccan DAC South African Airways Technical Jorge Duarte Executive mgr, tech sales & support Room 309, Hangar 8 Private Bag X12 Johannesburg International Airport 1627 South Africa tel: +27 11 978 9993 fax: +27 11 978 9994 737 747 A319 A320 A340 A,B,C,D A,B,C,D A,B,C,D A,B,C,D A,B,C,D 8 w/b 6 n/b strip & paint, 747 pylon mods, com- posite repairs, CPCP, interiors, MRO of Components, Cabin refurbish, Avionic Upgrades – FDMP, FMS, etc, 747 Section 41 110 Airline Economics: MRO Global 2011 www.airlineeconomics.co A340 MAINTENANCE T he A340 is now perceived by many as a good aircraft that was simply offered at the wrong time. The intro- duction of the Boeing 777 shortly after the launch of the A340 effectively removed the need for four engines and changed forever the yield prospects of a 295-plus seat, long-range, passenger aircraft in a world of high fuel costs. If the A340 had been launched 10 years earlier, sales figures might have been very different. Although two engines are better than four where fuel burn is concerned, the one area where four engines is a benefit is compliance with the Extended-range Twin-engine Operational Performance Standards (ETOPS). ETOPS is an Inter- national Civil Aviation Organization A340S IN SCHEDULED SERVICE AS OF SEPT 1, 2011 Aircraft type Engine type Number Airbus A340-210 CFMI CFM56-5C3/F 13 Airbus A340-210 CFMI CFM56-5C2 5 Airbus A340-310 CFMI CFM56-5C3G 5 Airbus A340-310 CFMI CFM56-5C4/P 19 Airbus A340-310 CFMI CFM56-5C4 150 Airbus A340-310 CFMI CFM56-5C3/F 12 Airbus A340-310 CFMI CFM56-5C2 20 Airbus A340-310 CFMI CFM56-5C2F 5 Airbus A340-540 RR Trent-553-61 10 Airbus A340-540 RR Trent-553A2-61 14 Airbus A340-540 RR Trent-556-61 1 Airbus A340-640 RR Trent-556-61 38 Airbus A340-640 RR Trent-556A2-61 41 Total: 333 All downhill from here? A great aircraft, but the A340 simply could not gain pace against the Boeing 777. Airline Economics examines the history of the A340, its investment curve, maintenance options and future parts potential. www.airlineeconomics.co Airline Economics: MRO Global 2011 111 A340 MAINTENANCE gained by their older siblings and the large contribution that has been made to their evolved maintenance programmes and longer check intervals. Because the A340 family did not receive the orders the manufacturer expected at the outset, the aircraft ended up being grouped, through large orders and subsequent follow-up orders of variants, with a select band of initial oper- ators of the early types. Operators that in hindsight all admit it was a mistake to order the A340 given the advent of the far superior 777 family. These operators of large A340 fleets are the same today as they have always been, due to the cut-off of orders after airlines saw the potential of the 777. This left Lufthansa, Iberia, Virgin Atlantic, South African Airlines and Air France (now Air France-KLM) as the major operators of the A340. This is reflected in the maintenance providers specialising in the A340 family and where in the world expertise is located. So the leading players in the A340 maintenance market come as no surprise: AFI-KLM Engineering & Maintenance, Lufthansa Technik/Lufthansa Technik dual-aisle aircraft, enabling a more var- ied flying experience and more flight hours for the same duty time. This is an attraction not to be underestimated in a market where carriers are vying on a global basis for quality pilots that are in very short supply. Some operators have complained in recent years that the A340-600 aircraft cannot cope with the added weight of many modern first and business class seating and technical arrangements, which on this stretched version of the type can make the nose of the aircraft too heavy and affect performance. Demand for larger aircraft and better passenger yield over the past decade has caused Airbus to stretch the A340 design to its limits, both in size and weight. Its -600 variant at 75.3 meters (one inch shy of 247 feet) was the lon- gest aircraft in the world at one point, while the ultra-long-range -500 is one of the heaviest aircraft in service, with a maximum take-off weight of 372 tonnes (820,000 lbs). There is no question that the -500 and -600 have both benefited greatly from the in-service experience (ICAO) Standard and Recommended Practice (SARP) permitting twin-engined commercial air transporters to fly routes that, at some points, are farther than 60 minutes’ flying time from an emergency or diversion airport. The A340-600’s four engines allow for operations under ETOPS that mean airlines can fly more direct routes over the poles, mountain ranges or long distances over water, or on segments far from airports, saving travel time and cutting fuel consumption – a significant benefit for many operators over many routes. Twenty-one years after the first flight of the A340, this family of aircraft is not expected to receive any further orders. The type has just four further A340-500s to be delivered. After this, production is expected to cease, and production of the A330 line will increase until the first deliv- eries of the A350. For years, Airbus’s widebody produc- tion was all about the A330/A340 line. But with the backlog of A340s down to four units, now it is all about the A330. The final nail in the coffin for the A340 was the rise in fuel prices starting in the latter half of the past decade, which led to Emirates cancelling its $4 billion order for the type in 2006. But the A340 still offers benefits to operators of other Airbus types. True to Airbus’s well thought-out family concept, the A340 offers an exceptional degree of operational commonality with all of the company’s fly-by-wire aircraft, allow- ing pilots to transition from one type to another with minimum training time. All four A340 aircraft can be flown with the same type rating, while the cross-crew qualification concept means pilots can more rapidly qualify for another aircraft type within the Airbus fly-by-wire product line, leading to significant cost savings. Adding to the advantages of com- monality is mixed fleet flying, which allows pilots to be current on more than one type of Airbus’s single-aisle and "Trua Io A|rbus`s Wa|| IhoughI- ouI Iam||y concapI, Iha A340 oIIars an axcapI|ona| dagraa oI oparaI|ona| commona||Iy W|Ih a|| oI Iha company`s I|y-by-W|ra a|rcraII" 0 50 100 150 200 250 300 A340-200 A340-300 A340-500 A340-600 777-200 777-200ER 777-200LR 777-300 777-300ER V a l u e i n U S $ m i l l i o n List 2007 2008 2009 2010 2011 777 FANILY ßE8IûüAL VALüE8 VEß8E8 ThE A340 FANILY Aircraft List 2007 2008 2009 2010 2011 A340-200 127.5 41.65 40.25 30.5 24 18 A340-300 228 98 99.35 94.25 82.25 59.75 A340-500 261.8 112 113.25 103 101 78.45 A340-600 275.4 126.8 129.8 117 103 90.4 777-200 186.5 75.2 68.35 56.25 46.75 37.05 777-200ER 232.3 120.25 123.5 116.8 115.15 117.75 777-200LR 262.4 136.65 139.9 134.3 136 135 777-300 222 111.4 95.3 80.5 74.75 64 777-300ER 284.1 143.3 149.8 137 136.2 147 112 Airline Economics: MRO Global 2011 www.airlineeconomics.co A340 MAINTENANCE are going to be fighting over an ever- decreasing slice of business for A340 maintenance over the next 10 years. The secondary market for the A340 is also looking limited. The story is a warning to investors in aircraft that new technology can diminish the prospects and the value of an aircraft very quickly. The performance of the aging A340 family as an investment over the five years since the start of the credit crisis has seen both the A340-200 and -300 perform bet- ter than their original direct competitors, the 777-200 and -300. The market lead carved out by the 777 against the A340 can be seen in table 1. Table 1 shows a direct comparison between the investment potential of the 777 against the A340 based on a five- year section of purchase values, average annual dry lease incomes and residual values at the end of the period for an aircraft around five years’ old. This chart does not consider the airline, the ease of lease or fuel burn; rather, it is a straight investment comparison. Note that a 777- 300ER approaches annual return rates of between 12–15% sought by investment vehicles such as the Nimrod fund on its A380s on lease for 10 years. A340 MAINTENANCE CONSIDERATIONS One of the features of early A340s (and A320s) was their central on-board main- tenance system. This was considered a big step forward at the time because predecessor aircraft such as the A300 and A310 had only basic test equip- ment to monitor on-board functions and no ground-desk connection to help line maintenance. The A340 Central Mainte- rapid decline over this decade as 787 and A350 deliveries filter through to operators. As a result, these maintenance providers Philippines, Iberia Maintenance and SAA Technical. The A340 global fleet is now at a plateau and will eventually turn into 0 50 100 150 200 Europe Asia/Pacific N u m b e r o f a i r c r a f t Africa Middle East Americas ûLû8AL Lû0ATIûh ûF A340 0ûNNEß0IAL FLEET 0 1 2 3 4 5 6 7 8 9 Europe N u m b e r o f a i r c r a f t Asia/Pacific Africa Middle East Americas ûLû8AL Lû0ATIûh ûF PßIVATE/NILITAßY A340 FLEET SHORT-TERM INVESTMENT POTENTIAL OF THE A340 VERSES THE 777 Type 2007 AV 2008 AV 2009 AV 2010 AV 2011 AV 777-300ER 15.24 15.60 14.88 15.00 15.48 777-200LR 12.96 13.20 12.24 12.48 12.60 777-200ER 12.36 12.72 11.64 12.00 12.00 A340-600 10.92 12.24 11.16 11.04 10.08 A340-500 11.88 11.76 10.08 9.60 9.12 A340-300 10.68 10.80 9.12 8.64 6.96 777-300 11.88 11.28 9.60 9.00 8.52 A340-200 5.76 5.52 4.92 4.08 3.84 777-200 7.80 7.80 6.36 5.64 5.16 www.airlineeconomics.co Airline Economics: MRO Global 2011 113 A340 MAINTENANCE nance System was the first step toward proactive and preventative mainte- nance. It meant line engineers could test the aircraft systems from a single point in the cockpit, while on-board data links allowed in-flight maintenance mes- sages and warnings to be transmitted to the ground in real time and compared against manuals and databases. When the A340 entered service in 1993, A-check intervals were set at 400 flight hours with C-check intervals at 15 months. A-checks were increased to 500 flight-hours in 1998 and subse- quently increased to 600 flight-hours in 2002, when C checks were moved to 18-month intervals. Airbus could technically justify that checks could be increased to 700 flight-hours, but a 40% increase was considered too great for the maintenance board. However, in April 2009 an agreement was reached to extend the A-check interval to 800 flight hours, while the heavy maintenance check interval was extended from 10 to 12 years. The improvements have been incorporated into Revision 11 of the A330 and A340 Maintenance Review Board Reports, which were approved by the EASA, the US Federal Aviation Administration (FAA) and Transport Canada. The A330 Maintenance Plan- ning Document (MPD) Revision 16 and A340 MPD Revision 17 were also updated. The A-check interval increase will result in a reduction from seven to five A-checks a year for a typical use of 4,400 flight hours per annum, increasing aircraft availability. Meanwhile, the new 12-yearly heavy-check interval will allow operators to synchronise the six-yearly intermedi- ate-check and 12-yearly heavy checks, leading to a reduction of one heavy check in the aircraft life – a large cost saving. The revised intervals can result in air- frame maintenance cost savings of up to 6%. To ease the maintenance planning burden, Airbus has created a special appendix in the MPD whereby 100% of the tasks are packaged into checks according to the type of aircraft operation. So has the A340 performed as its design intended? The answer has to be yes, because in-service experience has led to interval escalations. If it hadn’t performed as it should, interval escala- tions would not have been possible. Now the A340 is reaching the high watermark of its existence in the global fleet, the next consideration is the sup- ply of parts. With a limited A340 fleet size, parts for the aircraft type will be much harder to get hold of than for other types of aircraft and will be expensive. Parting out A340s could become a lucra- tive business in future. However, this all depends on oil prices and with oil being a finite commodity there can be no doubt prices will only go one way, even with the odd blip here and there for speculation, as is happening in today’s current vola- tile period. This means there will be few airlines willing to take on an A340. SURVEY RESULTS In a customer satisfaction survey carried out by Airline Economics A340 owners and operators were asked to rate their maintenance providers according to their performance to date. The results: 1. Lufthansa Technik/Lufthansa Technik Philippines 2. Iberia Maintenance 3. AFI-KLM E&M 4. SR Technics 5. Direct Maintenance Because the top five maintenance providers on this list were all awarded top marks by owners and operators, the split was decided by the number of replies received for each. This ranking is there- "8o has Iha A340 parIormad as |Is das|gn |nIandad? Tha ansWar has Io ba yas, bacausa |n-sarv|ca axpar|anca has |ad Io |nIarva| asca|aI|ons." Lufthansa Technik / Lufthansa Technik Philippines (33%) Iberia Maintenance (21%) AFI-KLM E&M (21%) Direct Maintenance (8%) SR Technics (17%) PEß0EhTAûE 8PLIT ûF TûP FIVE Ih 8üßVEY Potential yield Cost of aircraft at start Value of aircraft at end Potential proft margin for investor % return per annum 76.20 143.30 147.00 79.90 11.15% 63.48 136.65 135.00 61.83 9.05% 60.72 120.25 117.75 58.22 9.68% 55.44 126.80 90.40 19.04 3.00% 52.44 112.00 78.45 18.89 3.37% 46.20 98.00 59.75 7.95 1.62% 50.28 111.40 64.00 2.88 0.52% 24.12 41.65 18.00 0.47 0.23% 32.76 75.20 37.05 –5.39 –1.43% 114 Airline Economics: MRO Global 2011 www.airlineeconomics.co A340 MAINTENANCE fore an indication that the maintenance providers have the A340 market under control and is an impressive reflection on the work all five perform, be it heavy maintenance or line maintenance. Cus- tomers in all instances awarded five out of five across the board. 1. LUFTHANSA TECHNIK/LUFTHANSA TECHNIK PHILIPPINES Experience: º Launch customer of the A340 º Leadership in special specification of aircraft system and maintenance programme º First 4c/lL check on A340 Technical capabilities º Maintenance management ser- vices/engineering º Support towards aviation authorities º Pamp, line, base and heavy mainte- nance º Component, engine and airframe overhaul º Structural repairs º Avionics, cabin and cargo system modifications º Petrofit management º Trouble-shooting º Start-up support º Paintwork º Complete incident handling º AOG services º Comprehensive component pool º Part and tool inventories º Advanced logistic services Approvals: º More than 30 maintenance organi- sation approvals, including JAR 145 and FAR 145 º Approved design and production agency Advantages: º Peliable operation from the first day º Tailor-made maintenance concept with lowest downtimes º Minimum own pre-partation effort º Full, flexible support on any require- ment, individual projects and daily back-up º Lower investment in own spares º Accelerated experience develop- ment The Airbus A330/A340 customer community was created by Lufthansa Technik to facilitate communication between operators and the aircraft manufacturer. Under this initiative, numerous A330/A340 operators regu- larly meet Airbus with the goal of direct information exchange, such as cre- ating improvement processes more efficiently. To achieve this, intensive co-operation within the community is necessary, facilitated by sharing tech- nical and operational experience in areas such as operational problems, performance data/degradation, main- tenance and overhaul performance (tooling etc), the effects of modification campaign/SB implementation and SB evaluation/validation. The community also shares information concerning available capabilities and services such as overhaul, repair, special task forces and retrofit. 2. IBERIA MAINTENANCE Iberia Maintenance is increasingly exploring ways to help customers keep not just costs but also efforts to a minimum on airframe heavy mainte- nance, engine overhaul, component maintenance and field maintenance. It provides essential, sector-specific ser- vices customised to fit client needs and budget. Some 4,000 experienced tech- nicians and engineers provide a wide array of MRO solutions. In every Iberia Maintenance service, hundreds of hours are dedicated to improving processes, reducing TATs, increasing force effectiveness, and cut- ting down on logistics and engineering management expenses. In the new aviation environment and with the expanding globalisation of the MRO industry, Iberia Maintenance has updated its management and techni- cal services, gearing them towards developing solutions to help customers define maintenance plans and ensure efficiency The installation of the SAP system for complete management has been a big success. Iberia Maintenance’s 150,000m2 gives it space to perform a wide range of airframe maintenance. The facilities include the necessary back-up shops such as safety equipment, structural repair, wheels and brakes, galleys, inte- riors, painting, marking and labelling, providing services in material process- ing for wide and narrow bodies. Iberia Maintenance offers seven complete production lines for heavy maintenance checks and two dedicated hangars for painting, marking and label- ling works. It handles a wide range of temporary and permanent hole and dent repairs on wing and in shop from different com- posite and metallic parts in fuselage and flight controls. It also offers refurbishment, ageing aircraft and corrosion prevention pro- grammes. 3. AFI KLM E&M Air France and KLM operate a com- bined fleet of 19 A340s. For that reason AFI KLM E&M is a worldwide leader in A340 components support, providing such services to more than 150 aircraft around the world. AFI KLM E&M maintains A340s at three facilities. Heavy maintenance for long-haul aircraft takes place at Orly, and online as well as light maintenance at Amsterdam, CDG and Orly. The A330 and A340 families share the same design. Based on its extensive experience as an operator, AFI KLM E&M has led the field in stretching the mainte- nance intervals between checks, helping its customers to lower maintenance costs through full engineering support. 4. SR TECHNICS SR Technics (SRT) provides technical solutions for airlines on a global basis. Services are provided either directly to the airline or through other parties such as aircraft leasing companies, original equipment manufacturers or compo- nent trading companies. With headquarters at Zurich Airport, SRT offers an extensive network of maintenance facilities, logistic centres, line stations and sales offices across the globe. SRT is well positioned to cater fully for the growing demands of airlines in relation to their technical needs, no mat- ter where their networks take them. SRT has been providing mainte- nance services to customers since the early 1960s as the former maintenance division of Swissair and a founding member of the largest European main- tenance consortium. SRT covers every aspect of operation required by an airline and in line with the legal requirements, from delivery of www.airlineeconomics.co Airline Economics: MRO Global 2011 115 A340 MAINTENANCE 5. DIRECT MAINTENANCE Direct Maintenance was established in January 2001 and is a certified line maintenance service provider, holding EASA Part 145 approval and FAA Repair Station approval. In line with customer requirements, aircraft line maintenance is provided to operators of a wide range of Airbus and Boeing aircraft types. It is the only independent widebody line mainte- nance provider of the Netherlands. The addition of the Emirates A340-500, powered by RR Trent engines, resulted in Direct Maintenance being EASA Part 145 approved to perform line maintenance on an impressive number of 40 aircraft- engine combinations. The support for Emirates is being provided at Addis the aircraft, through to maintenance to ensure safe, reliable and cost-effective operation, to final decommissioning of the aircraft from the fleet. SR Technics offers: º Fleet technical management ser- vices º Aircraft maintenance, including line maintenance, base maintenance, aircraft overhaul and additional maintenance services º Aircraft AOG recovery and ad hoc services º lntegrated Airline Solutions, which delivers tailor-made solutions up to and including complete technical out- sourcing of all maintenance services for aircraft engines and components. Ababa, Ethiopia, as from January 1. The main operational line station is at Amsterdam Schiphol Airport in the Neth- erlands. It has further opened line station locations at airports where demand for its services was needed. Its EASA Part-145 approval covers a total of 39 aircraft- engine combinations, and is being extended to include additional widebody aircraft types and to provide services at other European airports as well as addi- tional locations worldwide. Direct Maintenance is part of the Direct Aviation Group, based in the Netherlands, a market leader in service provisioning to the aviation industry worldwide. It also has offices in Ireland, Kenya, Tanzania, Libya, Ethiopia, China, Japan and the US. A340-200 Many A340-200s are used by VIPs or the mili- tary, such as Royal Brunei Airlines, Qatar Amiri Flight, the Egyptian government, Saudi Arabia air force, the Hashemite Kingdom of Jordan, the French air force and the German government. Historically these aircraft were in service with Cathay Pacific, Philippine Airlines and Air Bour- bon. A340-200s were later given performance improvement packages (PIPs), which helped them achieve similar gains in capability as the A340-8000, a one-off specially configured air- craft for the Sultan of Brunei. These aircraft are labelled A340-213X. The range for this version is 8,000 nautical miles (15,000 km). Due to its large wingspan, four engines, low capacity and improvements to the A340-300, the -200 proved heavy and unpopular with mainstream airlines. Only 28 A340-200s were produced. South African Airways is the largest operator, with six aircraft. Other operators include Aerolíneas Argentinas (four), Royal Jordanian (five), Egypt Air (three) and Conviasa (one). A340-300 With a service range of more than 7,400 nautical miles, Airbus’s A340-300 is tailored to meet the needs of the 300-seat long-range market – offer- ing direct point-to-point services and increased flight frequencies at lower costs. The type thrives in many market environments, and often forms a key part of larger international operations with major carriers, operating alongside other A330 or A340 models. As a flagship with smaller airlines, the A340-300 provides vital long-range links to less populous cities, while it serves as the most cost-effective 300-seat long-range complement for operators of A320 family aircraft. A340-500 The A340-500 offered highly efficient, ultra- long-haul operations upon introduction. In a typical three-class cabin arrangement, this ver- sion seats a maximum of 313 passengers, and its cabin flexibility enables seat pitch to be adapted in units of one inch – while galleys, lavatories and stowage can be located in different numbers, groupings and locations. With a range of up to 9,000 nautical miles, the A340-500 is operating on some of the world’s longest non-stop routes, including direct Singa- pore-Los Angeles flights of almost 19 hours. This aircraft’s optimised 222-inch fuselage cross-section gives airlines the cabin versatility to match market requirements, from high-comfort premium seating to economy class layouts in seven-, eight- and nine-abreast layouts. Below the main deck, the A340-500’s large cargo holds accept a full range of freight, including industry- standard LD3 containers in side-by-side loading. The forward hold accommodates 18 LD3s or six 96-inch pallets, while the aft hold takes 12 LD3s or four 96-inch pallets. A340-600 The A340-600 is the longest-fuselage jetliner ever built by Airbus, and the largest-capacity member of the A340 family. With an overall length of 75.3 metres, it has a seating capacity for 360 passen- gers in a three-class layout, or 419 in a two-class configuration. The A340-600 has a range of 7,900 nautical miles. Power plants are Rolls-Royce Trent 500 engines. On this type they typically use only 56,000 lbs of their certified 60,000 lbs of thrust, which should result in reduced engine wear. In addition, Airbus claims the use of four engines, as opposed to two larger power plants as with the 777, allows for a 13% reduction in maintenance costs for operators. However, as operators have found out, this does not make-up for the losses on fuel costs when com- pared with the 777 burn rates. The latest version of the long range A340-600 was the last throw of the dice for Airbus on the A340 family. The new aircraft brought extended range, greater passenger capacity and overall substantially enhanced productivity for airlines. Qatar Airways was the first customer to take deliv- ery of this new, higher gross weight A340-600. A340-200/300, JUNE 2011 Total orders 246 Total deliveries 246 In operation 239 A340-500, JUNE 2011 Total orders 36 Total deliveries 32 In operation 32 A340-600, JUNE 2011 Total orders 97 Total deliveries 97 In operation 96 A340 MAINTENANCE ORDERS, DELIVERIES AND OPERATORS OF THE AIRBUS A340 AS OF JUNE 30 A340-200 A340-300 A340-500 A340-600 Total Ord Del Opr Ord Del Opr Ord Del Opr Ord Del Opr Ord Del Opr Airbus Executive and Private Aviation 6 6 9 1 1 3 7 5 5 2 2 2 16 14 19 Aerolíneas Argentinas 4 3 7 Afriqiyah Airways 1 1 Air Canada 8 8 2 2 10 10 Air China 3 3 6 3 3 6 Air China Southwest Company 3 3 3 3 Air France 3 3 11 11 16 14 14 16 Air Mauritius 5 5 6 5 5 6 Air Namibia 2 2 Air Tahiti Nui 4 4 5 4 4 5 AirAsia X 2 2 Arik Air 2 2 2 2 Austrian Airlines 2 2 2 2 4 4 Cathay Pacifc 4 4 7 7 14 11 11 14 China Airlines 6 6 6 6 6 6 China Eastern Airlines 5 5 5 5 5 5 10 10 10 Conviasa 1 1 Egyptair 3 3 3 3 3 3 Emirates Airlines 8 10 10 10 10 10 18 Etihad Airways 4 4 4 7 7 7 11 11 11 Finnair 4 4 7 4 4 7 Flightlease 2 2 2 2 Gulf Air 6 6 4 6 6 4 Hainan Airlines 3 3 HiFly 3 2 5 Iberia 18 18 19 16 16 17 34 34 36 ILFC 16 16 13 13 29 29 Kingfsher Airlines 2 2 Kuwait Airways 4 4 4 4 4 4 LAN Airlines 4 4 5 4 4 5 Lufthansa 7 7 28 28 26 24 24 24 59 59 50 Olympic Airlines 4 4 4 4 4 4 Philippine Airlines 8 8 4 8 8 4 Qatar Airways 4 4 4 4 4 4 Royal Jordanian 4 4 Sabena 3 3 2 2 5 5 Scandinavian Airlines System 7 7 6 7 7 6 Singapore Airlines 17 17 5 5 5 22 22 5 South African Airways 6 6 6 8 6 6 9 12 12 23 SriLankan Airlines 3 3 6 3 3 6 Surinam Airways 1 1 Swiss International Air Lines 9 9 15 9 9 15 TAM Linhas Aéreas 2 2 TAP Portugal 4 4 4 4 4 4 Thai Airways International 4 4 4 6 6 6 10 10 10 Turkish Airlines 7 7 9 7 7 9 Union des Transports Aériens 7 7 7 7 Virgin Atlantic Airways 7 7 6 14 14 19 21 21 25 Undisclosed 4 4 A340-200 A340-300 A340-500 A340-600 Total Ord Del Opr Ord Del Opr Ord Del Opr Ord Del Opr Ord Del Opr Totals 28 28 27 218 218 212 36 32 32 97 97 96 379 375 367 Backlog 4 4 116 Airline Economics: MRO Global 2011 www.airlineeconomics.co www.airlineeconomics.co Airline Economics: MRO Global 2011 117 ASIA-PACIFIC A s a result of the stronger economic outlook, Asia’s fleet and MRO growth outlook is positive. Asia- Pacific’s fleet and MRO growth outstrips that of other regions as a mad rush to be ready to service the huge fleets on order takes place. China’s growth over the next 10 years makes it formidable in terms of fleet size, but the MRO market is still muted in the APAC region by the newer aircraft that will enjoy a mainte- nance honeymoon. This taken together with the fact that most of the fleets on order are under OEM aftermarket con- tracts means there is not at this time or within the next five years a great deal of business to be had in the area outside of OEM joint ventures or existing fleet ser- vice requirements. Also note that India combined with China has a fleet that will match that of the rest of APAC put together by 2021. The APAC region presents a tale of two sides when considering MRO. There are the long-established MRO players such as ST Aerospace, Ameco Beijing and HAECO, which are very busy, and then there is the substantial investment going into India and China, mainly being led by the OEMs. The former group also includes successful outposts of European and US MROs that are generally perform- ing well. Monarch Aircraft Engineering (MAEL) has outposts in the Maldives and Goa. The Maldives facility is proving to be a real winner for MAEL, with numer- ous deals signed during 2011, including a line maintenance technical handling agreement with Alitalia to support A330 aircraft operating out of Male airport. In the China/India, Southeast Asia region, the fleet on order is mainly newly delivered next-generation aircraft. As such, the money to be made in MRO is in the engine game. Of all the MROs in the APAC region, the most active in the engine market expansion is ST Aerospace (Singapore Technologies Aerospace). In 2011, ST Aerospace entered into a joint venture with Xiamen Aviation Industry (Xaico). The new company: ST Aero- space Technologies Company (Statco) has unveiled a new engine MRO facility in Xiamen, China. The US$78 million (about S$101 million) facility has a capac- ity to support up to 300 engines annually. It will initially provide MRO and total support for the CFM56-7B and CFM5- 6-5B series of engines. Statco has received the Part 145 certification from China Avi- ation Administration of China (CAAC) and has also received approvals from the US Federal Aviation Administration and Korea’s Ministry of Land, Transport and Maritime Afairs for the maintenance of the CFM56-7B series of engines. The COMPOUND ANNUAL GROWTH RATES Fleet AP CH IN Total 2011 4.7% 8.6% 9.0% 6.4% 2016 5.2% 7.2% 8.7% 6.3% 2021 5.0% 7.9% 8.8% 6.3% Total MRO AP CH IN Total 2011 4.6% 9.7% 9.8% 6.3% 2016 4.3% 8.5% 9.3% 6.0% 2021 4.4% 9.1% 9.6% 6.2% ASIA-PACIFIC ASIA-PACIFIC MRO ASIA-PACIFIC 118 Airline Economics: MRO Global 2011 www.airlineeconomics.co programme for Tiger Airways. The pro- gramme’s six cadet pilots are now under the employment of Tiger Airways and have received their MPL from the Civil Aviation Authority of Singapore. On capability development, ST Aerospace’s afliate, Vision Technologies Aerospace, has entered into an agreement to acquire 100% of the shares of DRB Aviation Con- sultants to enhance its aircraft interior engineering design capabilities, while ST Aerospace secured a cabin reconfigura- tion project for Jet Airways’ Airbus A330. Singapore has long enjoyed its posi- tion as the APAC aviation hub, challenged only by Hong Kong. The largest MRO players in the region have their head- quarters in these two locations. But government investment agencies acting for Malaysia and Thailand have been encouraging inward investment. Thai- land has over the past year been hindered by political unrest and is now sufering severe flooding but it has constructed the world’s largest maintenance hangar for three A380 aircraft and has world-class infrastructure in place for repair service investment. The country is currently widely recognized as one of the foremost aircraft maintenance centres in Asia. The location is central, and Boeing and Airbus will need to provide their services through bases in the country. Beyond that the out- look remains firmly focused on China and India. MAS- GMR Aerospace Engi- neering (MGAE), a 50/50 joint venture between Malaysian Aerospace Engi- neering (MAE) and GMR Hyderabad International Airport is now launching. MAE is a subsidiary of Malaysia Airlines (MAS) while GMR Hyderabad Inter- national is a subsidiary of India-based GMR Infrastructure. This joint venture is a third-party airframe MRO facil- ity, the first of its kind for its scale and is located in the Special Economic Zone at the Rajiv Gandhi International Airport in Hyderabad. The MGAE facility has one widebody hangar, one narrowbody hangar with three bays, and another painting/narrowbody hangar with asso- ciated workshops. It has the capability to provide base maintenance services, start- ing with Airbus A320, ATR 42/72 and Boeing 737NG, and subsequently A330 and Boeing 777 aircraft. MGAE currently has close to 350 employees and the bulk of the manpower is made up of a local Finance. It is possible Team will cause a round of rate decreases in the engine leas- ing market, but the impact on the market will not be clear until next year at least. Of all the APAC MROs, it is ST Aero- space that is the true global player in the region. It is the aerospace arm of ST Engineering, and operates a global MRO network with facilities in the Americas, Asia-Pacific and Europe. It is the world’s largest aircraft MRO provider, employing over 8,000 engineers, with a global cus- tomer base that includes leading airlines, airfreight and military operators. The key for ST Aerospace is that it is in efect an integrated service provider that ofers a spectrum of maintenance and engineer- ing services covering all areas, including airframe, engine and component mainte- nance, repair and overhaul; engineering design and technical services; and avia- tion materials and management services such as Total Aviation Support. ST Aerospace has had a bumper year, with over S$1.033 billion worth of avia- tion maintenance contracts signed so far in 2011. ST Aerospace secured new maintenance contracts worth a total of S$453 million in the third quarter of 2011 alone. Besides airframe redeliver- ies, ST Aerospace serviced 70 engines and 13,775 components for both commercial and military customers during the third quarter of 2011. In another develop- ment, its commercial pilot training arm successfully completed Singapore’s first Multi-crew Pilot Licence (MPL) newly completed facility is located on a 415,702 sq ft plot of land, near Xiamen Gaoqi International Airport. At the Paris Air Show 2011 it was announced that ST Aerospace and Maru- beni Corporation had entered into a joint venture to form an engine leasing com- pany in Singapore. The new JV company, Total Engine Asset Management (Team), will be equally owned and jointly man- aged by ST Aerospace and Marubeni. Team’s initial engine leasing portfolio will include the CFM56-3, CFM56-5B and CFM56-7B engines, which mainly power narrowbody aircraft such as the Airbus A320 and Boeing 737. The JV plans to invest approximately US$100 million in new assets within the first two years, with equity injection of up to US$40 million. The new JV will leverage ST Aerospace’s expertise in total engine support, includ- ing engine technical management and engine maintenance-by-the-hour, along- side Marubeni’s extensive experience in financing and marketing knowledge. Gentaro Toya, senior operating ofcer, transportation machinery division, at Marubeni Corporation, commented on the deal: “By entering into the aircraft engine leasing business and strengthen- ing our comprehensive range of services to airlines around the world, Marubeni intends to make a further material contri- bution to the aviation industry.” It is hard to see as yet how this JV will afect the engine leasing businesses of firms such as Engine Lease Finance and Willis Lease 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Asia-Pacific China India 2011 2016 2021 Total 2,749 1,566 4,672 357 3,457 2,364 6,371 550 4,460 3,342 8,635 833 ASIA-PACIFIC FLEET FORECASTS ASIA-PACIFIC www.airlineeconomics.co Airline Economics: MRO Global 2011 119 Indian skilled workforce, while retired MAS engineers and technicians are also employed at competitive remuneration packages to kick-start operations. In preparation for MGAE’s operations in Hyderabad this year, MAE has trained 72 Indian engineers hired by MGAE. As mentioned previously, it is the OEMs that are leading the incursion into India and China. One of the most recent announcements from Airbus was also one of the most interesting: Pipavav Shipyard, India’s biggest shipbuilder by market value, has confirmed it is to form a joint venture with EADS/Airbus and SKIL Infrastructure to set up an aircraft main- tenance facility. EADS will acquire a 26% stake in the Indian venture. EADS retains an option to further increase the holding to 49%. Pipavav, based in Gujarat, will hold a 51% stake in the venture that will be used for both civilian and military applications. In the first phase, the facil- ity and related infrastructure looks set to cost the JV over US$100 million. Airbus has openly said it is target- ing the aftermarket to ofset peaks and troughs in the manufacturing cycle, and that it is seeking a takeover target that already has the customer base and indus- try experience to combine with Airbus’s technological knowledge. Airbus doesn’t want to get into the traditional MRO market, and would rather focus on com- ponent repair and traditional airframe maintenance. Meanwhile, Boeing has opened a new service centre in Beijing to provide enhanced product support to China’s commercial aviation industry. The facil- ity comprises pilots and experts in flight operations, spare parts and maintenance engineering who are dedicated full-time to serving airlines in China. The main third-party maintenance provider in China is Ameco Beijing. The venture, set-up by Lufthansa and Air China some years ago, has been quietly building its portfolio during 2011 and, as international trafc expands out of Bei- jing, this MRO provider will benefit. It is not hard to see that Ameco will need to further expand its Beijing facilities before long to cope with the levels of work that are sure to come over the next decade. During 2011, Ameco Beijing’s Guang- zhou station added Turkish Airlines as a new line maintenance customer. The Guangzhou station provides line main- tenance and releasing for the carrier’s Boeing 777. This was after a previous 2011 agreement with Turkish Airlines to pro- vide line maintenance in Beijing and Shanghai. In June, Ameco Beijing com- pleted Air China’s first A330 aircraft IPTE project that involved the cabin and entertainment system. As planned, Ameco Beijing will perform IPTE for a total of 16 Air China A330 aircraft by the end of this year. In recent years, Ameco Beijing has been successful in market development in North America, providing services includ- ing airframe overhauls, cabin upgrade and modifications, engine overhauls and line maintenance for a number of fleets of the major airlines in the region, with an increasing number of customers. Ameco Beijing has also been providing line maintenance services including aircraft releasing to Singapore Airlines in Beijing. It is not all rosy and good in the APAC region though. Generally the pressures for the MRO companies in this region are the same as for those in the US or Europe. Indeed, Qantas has lost a third- party maintenance contract. Jetstar will now send fleets ofshore for mainte- nance after the ongoing Qantas conflict with the unions caused too much dis- ruption. Qantas chief executive Alan Joyce criticised unions represent- ing its pilots, maintenance engineers and ground handlers for holding the company to ransom. He revealed that New Caledonia’s international airline, Aircalin, has cancelled its aircraft main- tenance contract with Qantas, while Qantas’s low-cost subsidiary, Jetstar, has been forced to service some of its aircraft overseas. In fact Aircalin can- celled its contract for line maintenance on A320s and A330s. It is unlikely that Qantas’s MRO arm will see third-party maintenance business for a while, after this recent disruption. The future remains fairly secure for MROs in the Southeast Asian region, but the rush to get a slice of the action by just about every major MRO and OEM could lead to overcapacity before the end of this decade, especially with regard to India. India represents a perfect target for MROs, and they are building infra- structure at pace. With MROs securing sites at the initial planning stage for air- field expansion, it remains to be seen if all of this investment will pay dividends. 0 5 10 15 20 25 Asia-Pacific China India Total $7.8 $3.0 $0.7 $11.5 $9.8 $4.7 $1.1 $15.7 $12.1 $7.1 $1.8 $21.0 2011 2016 2021 ASIA-PACIFIC MRO FORECASTS (US$MILLION) "II |s Iha ûENs IhaI ara |aad|ng Iha |ncurs|on |nIo Ind|a and 0h|na. For axamp|a, P|pavav 8h|pyard, Ind|a`s b|ggasI sh|pbu||dar by mar|aI va|ua, has conI|rmad |I |s Io Iorm a |o|nI vanIura W|Ih EAû8/ A|rbus and 8kIL InIrasIrucIura Io saI up an a|rcraII ma|nIananca Iac|||Iy." 120 Airline Economics: MRO Global 2011 www.airlineeconomics.co With more than three decades of experi- ence providing quality engine services and managing over 500 engines for a diverse customer base comprising over 80 opera- tors worldwide, ST Aerospace consistently invests in new capabilities and expands technical resources to better deliver inno- vative and integrated solutions. Aircraft maintenance · ScheduIed Iighl and heavy maintenance · Transil]lurnaround servicing and checks · Aircrafl servicing, insµeclions, reµairs · SB]AD comµIiance and modiñcalions · Non-deslruclive insµeclions · Aircrafl µainling Aircraft modifications · Passenger-lo-freighler conversions · IIeel slandardisalions · Cabin inleriors uµgrades · In-ßighl enlerlainmenl · Avionics uµgrades and inslaIIalions · Olher modiñcalions, incIuding winglet installation Off-site/aircraft-on-ground (AOG) recovery services · AOG suµµorl · Aircrafl recovery and reµairs Engineering design and development · Design organisalion aµµrovaI - EASA-21 and SAR-21 · SuµµIemenlaI lyµe cerliñcale (STC) development and certification · Liaison engineering Engines ST Aerospace ofers customised integrated solutions for fleets of engines, helping cli- ents achieve the longest on-wing time at the lowest lifecycle costs for operations. The full-service spectrum includes: · TechnicaI managemenl · On-wing mainlenance · Oß-wing mainlenance · Assel managemenl Technical management · Engine condilion moniloring · Performance lrending and diagnoslics · Mainlenance µIanning Work scoping · Lease relurn µIanning · IaiIure anaIysis · Conñguralion managemenl · ReIiabiIily imµrovemenl µrogramme · Warranly and insurance management On-wing maintenance · Engine defecl]damage assessmenl and rectification · Borescoµe insµeclion · In-silu airfoiI bIending · Toµ case removaI · ModuIar reµairs · Engine lroubIeshooling · Engine]LRU removaI and installation · Engine wash Asset management · Sµare engine suµµorl · Engine Ieasing and µooI access · Invenlory managemenl · Logislics · Iinancing, such as saIe and Iease-back Off-wing maintenance · Engine mainlenance, reµair, overhauI · Parls and accessories reµair]overhauI · AD]SB comµIiance · Modiñcalions and uµgrades · Posl-Iease cerliñcalion ASIA-PACIFIC ST Aerospace AIRCRAFT SERVICED - Alrbus A300, A3l0, A320, A330, A340 - 8oelng 727, 737, 747, 757, 767, 777 - McDonnell-Douglas MDl0, MDll, MD80, MD90 and DC9, DCl0 - Lear[et 35, 45, 60 - Lmbraer LP1l35, LP1l45, Ll90 Ameco Beijing Aircraft Maintenance and Engineering Corporation (Ameco Beijing), located at Beijing Capital International Airport, is a joint venture between Air China and Lufthansa. Ameco was established in 1989, with Air China holding 60% and Lufthansa 40% of the registered capital. The registered capital is US$187.53 mil- lion and the joint-venture agreement was signed for 40 years. Ameco Beijing adjoins No. 2 terminal of Beijing Capital International Airport in the north and No. 3 terminal in the east, covering an area of more than 600,000 sqm. The maintenance facilities include: · A four-bay hangar wilh õ3,8uu-sqm floor space, including a 35,000-sqm maintenance hall and shop. · A fuIIy encIosed and lemµeralure- controlled painting hangar covers an area of 10,000 sqm, which can meet the requirements of stripping, washing and painting of any types of aircraft. · The engine reµair]overhauI workshoµ and an engine test cell cover an area of 26,000 sqm. · Comµonenl workshoµs cover an area of 20,000 sqm including tempera- ture-controlled avionics and electric workshops, landing gear overhaul shop, and mechanic, pneumatic and hydraulic workshops. · An A38u hangar wilh a 41,uuu-sqm maintenance hall that can accom- modate six widebody and four narrowbody aircraft at the same time, including the A380 super-jumbo. · A new B,4, hangar wilh lhe funclion of painting and heavy maintenance can host either one Boeing 747 for painting or one Boeing 747, 767 and 737 for heavy maintenance Ameco Beijing is not only the first joint venture in the Chinese aviation sector but also the most powerful main- tenance, repair and overhaul provider in China. Ameco Beijing has more than 5,000 employees and holds 14 certifi- cates issued by airworthiness authorities including the FAA, EASA and CAAC. In aircraft maintenance, the company services almost all modern Boeing and Airbus aircraft while Ameco provides engine overhaul on Rolls Royce and Pratt & Whitney products, and ofers repair and overhaul services for almost 10,000 com- ponents. Aircraft painting, engineering, technical training and logistics services, as well as equipment calibration and repair, complete the product portfolio. ASIA-PACIFIC www.airlineeconomics.co Airline Economics: MRO Global 2011 121 HEAVY MAINTENANCE DIRECTORY - ASIA PACIFIC REGION COMPAN¥ CONTACT DLTA|LS A|PCPAPT CHLCKS PAC|L|T|LS SPLC. CAPA8|L|T|LS Alr Asla S.T.Chuang vlce presldent Alrcraft Malntenance Talnan Alrñeld Talnan 702, Talwan tel: +886 6 267 04l6 fax: +886 6 267 3424 stchuangQmall.alrasla.com.tw 707 727 737 DC-9, DC-l0 MD-80 Pokker -50 8l900 A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D l w/b bay 2 n/b bay 2 commuter bays lnterlor upgrade, strlp & palnt, modlñcatlons, structural repalr, com- poslte repalrs Alr |ndla 1 G Ghanekar Dlrector, englneerlng Lnglneerlng department Old Alrport Santa Cruz (L) Mumbal tel: +9l 22 6l5 7777 fax: +9l 22 6l5 7l72 A30084 A3l0-300 747-200 747-300 Combl 747-400 avlonlcs & |ndla 400 029 A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D bays: 4 w/b hangar & bay area: 24,784m2 l79 llcensed alrframe englneers strlp & palnt (not separate hangar), modlñcatlons, structural & compos- lte repalrs, accessorles Alr Maurltlus Poshan 8aguant Senlor manager, malntenance plannlng and control Malntenance and englneerlng dept. SSP |nt'l Alrport Plalne Magnlen Maurltlus tel: +230 603 3352 fax:+230 202 3262 emall: rbaguantQalrmaurltlus.com A340 ATP42 767 Do228 A,8,C A,8,C A,8,C A,8,C 2 hangars: 6,078m2 l w/b, 2 n/b, 6 commuter A340 hangar Alr New Zealand 1ohn 8yers Marketlng manager PO 8ox 53098 Auckland |nternatlonal Alrport New Zealand tel: +64 9 256 3824 fax: +64 9 256 3786 ATP 42/72 767 737 727 747 A320 C-l30/P3 Orlon A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D SDLM 4 w/b, 3 n/b (Auckland) l w/b, 6 n/b (Chrlstchurch) l,200 llcensed englneers strlp & palnt Lnglneerlng, avlonlcs upgrades Servlces, hushklttlng, full cabln, refurblshment, SATCOM lnstallatlons, 767/747 pylon mod Alr Paclñc Lnglneerlng & Malntenance 1lmmy Samson General Manager, Lnglneerlng Prlvate mall bag Nadl Alrport Pl[l |slands tel: +679 720 777 fax: +679 720 5l0 e-mall: [lmmyQalrpaclñc.com.[ 737 (lnc. -NG) 747 767 Saab 2000 HS748 A A A A,8,C A,8,C l hangar 3,384m2 6 avlonlcs englneers 30 A&P strlp & palnt, full cabln refurb. All Nlppon Alrways Ken[l Nagashlma Technlcal sales & contracts 3-5-4 Haneda Alrport Ota-ku l44-004l Tokyo, 1apan tel: +8l 3 5756 5390 fax: +8l 3 5756 5407 747-l00 747-300 747-400 777-200/-300 767-200 767-300 A320/32l A,8,C, /ma[. mods A,8,C, /ma[. Mods A,8,C, /ma[. Mods A,8,C, /ma[. mods A,8,C, /ma[. mods A,8,C, /ma[. mods A,8,C, /ma[. mods l0 w/b bays 3 n/b l,560 llcensed englneers 747 pylon mods Ameco 8el[lng (l) Zhu Xlao Senlor dlrector, mktg & sales (2) 1an 8utzmann Senlor dlrector, mktg & sales PO 8ox 563, Capltal Alrport 8el[lng l0062l, PP Chlna tel: +86 l0 6456 ll22 ext. 4l00/4l0l fax: +86 l0 6456 l823 emall: salesQameco.com.cn 747 (all) 767-200LP /-300 737 (all) 777 A,8,C,D A,C, & full overhaul A,8,C,D C lncl. struct. checks 82,000m2 hangar space 7 w/b l4 n/b dedlcated palntlng hangar CPCP, strlp & palnt, avlonlcs up- grades, hushklttlng, 747, 767 pylon mods, 747 sectlon 4l, full cabln refurb, v|P cabln mods, comprehen- slve, component & englne shops Chlna Alrllnes |nternatlonal ¥ L Lln vP, englneerlng & malntenance dlv CKS |nternatlonal Alrport Taoyuan Talwan 339 tel: +886 3 398 7250 fax: +886 3 398 7396 727-l00/-200 737-400 747 (all) MD-ll A300-600 A320/A32l A340 A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C A,C 3 hangars 6 bays l42,000m2 hangar capaclty: 5 w/b or l0 n/b 590 llcensed englneers strlp & palnt, 747 pylon upgrade, 747 sectlon 4l, full cabln refurb., CPCP, PL| system lnstall Lvergreen Avlatlon Technolo- gles (LvA Alrways Corporatlon) Kln Chong 1unlor vlce presldent 8uslness coordlnatlon dlvlslon Lvergreen Avlatlon Technologles 6 Harng-1ann South Poad Tayuan, Taoyuan Hslen 338 Talwan, POC tel: +886 3 35l 9469 fax: +886 3 393 l039 747-400 767-200/-300 MD-ll DC-l0 MD-90 A330 A32l A320 A3l9 A,8,C,D A,8,C A,8,C A,8,C A, 8, C A,8,C A,8,C A,8,C A,8,C No l hangar: 3 w/b bays for 3 alrcraft noorspace: l2,900m2 No 2 hangar: l w/b bay 2 n/b bays noorspace: ll,000m2 avlonlcs upgrades Alrframe mods, 767/747 pylon mods, full cabln refurbs., lnsulatlon blanket, replacement, CPCP, strlp & palnt GMP AeroAsla (Garuda |ndonesla Group) 8lmo Agus Dlrector of 8ase Operatlon & vP 8uslness Cooperatlon & Dev. Marketlng bulldlng, Soekarno Hatta Cengkareng l9l30, |ndonesla Tel: +62 2l 5508609 Pax: +62 2l 5502489 blmoQgmf-aeroasla.co.ld A3l0 A330 737 747-400 747-l00/-200/-300 P28 PO 8ox l303 MD-80/82 A,8,C,D A,8,C A,8,C,D A,8,C,D A,8,C,D A,8,C,D DC-l0 A,8,C,D 8 w/b l6 n/b hangar space: (l) 2l,450m2, (2) 22,500m2, and (3) 22,500m2 A,8,C,D 747 sectlon 4l, 747 pylon mods, Lnglneerlng svcs, Strlp & palnt, Pull cabln refurbs., Cargo Convers., CPM 56-3 o/haul, PP Spey 555 o/haul, APU o/haul, component o/haul, Llne malntenance MRO Directory: Asia Pacific ASIA-PACIFIC 122 Airline Economics: MRO Global 2011 www.airlineeconomics.co HEAVY MAINTENANCE DIRECTORY - ASIA PACIFIC REGION COMPAN¥ CONTACT DLTA|LS A|PCPAPT CHLCKS PAC|L|T|LS SPLC. CAPA8|L|T|LS Guangzhou Alrcraft Malntenance Lnglneerlng Company (GAMLCO) 1oey Lo Dlrector, buslness development dept. 8alyun |nternatlonal Guangzhou 5l0470 PP Chlna Tel: +86 20 86l2 444l Pax: +86 20 8664 l529 e-mall: [oeyloQgameco.com.cn 737 747-400P 757 767 777 A3l9/A320/A32l LM8l45 A,8,C,D A,8,C A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C l Hangar 96,000m2 4 w/b bays l dedlcated palntlng bay avlonlcs upgrades, composlte repalrs, CPCP, lnterlor refurbs., S8s, ADs and mods, structural repalr Hong Kong Alrcraft Lnglneerlng Company (HALCO) Ashok Sathlanathan Lxecutlve GM Commerclal 80 South Perlmeter Pd Hong Kong |nternatlonal Alrport Lantau Hong Kong tel: +852 2767 6383 fax: +852 2333 45l4 emall: sathlQhaeco.com A300 A320 A330 A340 747 757 767 777 8Ae l46 A,8,C A,8,C A,8,C A,8,C A,8,C,D A,8,C A,8,C A,8,C A,8,C l hangar l7,500m2 3 w/b (fully ln) 2 w/b (tall out) 747 pylon mods, 747 sectlon 4l, cargo converslons, composlte repalrs, CPCP, strlp & palnt, avlonlcs lnstallatlon, 737 wlnglet mod, PTM/|TM 1apan Alr System ¥asushl Asaka General Manager, Lnglneerlng 3-5-l Hanedakuko Ota-ku Tokyo 1apan tel: +8l 3 5756 8220 fax: +8l 3 5756 8336 A300 (all) MD-8l MD-87 MD-90 777 A,C A,C A,C A,C A,C 45,738m2 hangar space 5 w/b 9 n/b modlñcatlons, 75l llcensed alrframe, englneers 1et Care Gary Poud,Lnglneerlng Manager PO 8ox l526 Lagle Parm 75-79 Pandanus Ave 8rlsbane Queensland 4009 Australla tel: +6l 7 3860 4477 fax: +6l 7 3860 4470 LM8l20 DHC-6 SA 227 LM8-ll0 P50 & P27 8200 Pl00 737-300/-400 737-700/800 A,8,C,D All All Phases A,8,C,D A,8,C, All Phases A,8,C,D A,8,C,D All up to Heavy 3 commuter 2 narrowbody (l hangar) 3,000m2 strlp & palnt, modlñcatlons, lnterlors Korean Alr Malntenance & Lnglneerlng ¥oung Soo Lee General manager, Malntenance, Plannlng & MPO 8uslness Team l370, Gonghang-Dong Gangseo-Gu Seoul, Korea tel: +82 2 2656 3705 fax:+82 2 2656 3l20 e-mall:mphQkoreanalr.co.kr A300-600 A330-200/-300 747-200/-400 777-200/-300 737-800/-900 Pl00 MD-ll MD-80 A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D |ncheon:2w/b & l/n/b (l h) Seoul:2 w/b and l n/b (l h) Pusan: lw/b (l palnt h), lw/b(l hangar), 2 w/b(l hangar) strlp & palnt, composlte shop, com- ponents, avlonlcs & access., HMv, CPCP, NDT, mods structural repalr, full cabln refurbs, englne o/haul, APU o/haul, Approvals: Heavy and/ or llne malnt.- KCASA, LASA, PAA, CAAS, THA|-DCA, MCAA, DGAC,DCA Lufthansa Technlk Phlllpplnes Plchard Haas vP, marketlng & sales Lufthansa Technlk Phlllpplnes vlllamor Alr 8ase Manlla, Phlllpplnes tel: +632 855 93l0 fax: +632 855 9309 e-mall: rlchard_haasQltp.com.ph A330 A340 A3l9/A320/A32l 737-300/400 747-400 A,8,C,D A,8,C,D A,8,C,D A,8,C A,8,C 4 w/b bays l8, 000sq. mts ded. docklng system, support shops, modlñcatlons, structural repalrs, strlp & palnt/CPCP, cabln refurblsh- ment, |PL, llne malntenance MAS Lnglneerlng and Malntenance (Malaysla Alrllnes) Tan wee Llam Manager Admln and 8us. Analrs MAS Lnglneerlng and Malntenance 4th Ploor, Hangar 3 MAS complex A-AAl204 Sultan Abdul Azlz Shah Alrport 47200 Malaysla tel: +60 3 7840 4268 fax: +60 3 7846 3797 emall: tanwlQmas.com.my A330 737 (all) 747 (all) DHC6 8777 P50 A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D 5 hangars 8 wldebody bays 7 Narrowbody bays 8747 Pylon Mods, Cabln |ny. refurbs/ upgr., v|P Cabln refurbs, Charter refurbs/mods, a/c '8outlque' Palnt- lng, 8lended wlnglet, |nstallatlon, 8737 cargo convers, Monogram Pepalr, Statlon: tollet assy 8737, Lap 1olnt Mod |PL, Avlonlcs Upgrade, Component Pepalr and Overhaul, P8H Malntenance Paklstan |nternatlonal Alrllnes Dlrector, englneerlng & malntenance P|A Quald-e-Azam |nternatlonal Alrport Karachl 75200 Paklstan tel: +92 2l 457 95302 fax: +92 2l 457 0l27 emall: devenggQplac.com.pk A30084 A3l0-300 737-300 747-200 747-300 P27-200/-400 DHC-6 A,8,C,D A,8,D A,8,C,D A,C,D A,8,C,D A,8,C,D 48LMMA packages 2 w/b & 6 n/b cabln refurblshment, accessorles, englne, avlonlcs lnstallatlon, modlñ- catlons & o/haul & repalr, strlp/palnt QANTAS Alrways |an wolfe Manager, heavy malntenance QANTAS 1et base., 203 Coward St Mascot, NSw, 2020 Australla tel: +6l 2 969l 7364 fax: +6l 2 969l 9754 737 747 767 A330 A,8,C,D A,8,C,D A,8,C,D A,8 l0 w/b hangars (Sydney) wlth dedlcated docklng Comm. bus. 58, 896m2, 7 n/b hangars (Melbourne) wlth dedlcated docklng 29, 850m2, 3 w/b hangars(Avalon vlctorla) wlth dedlcated docklng 35,335 m2, l w/b hangar(8rlsbane) wlth dedlc. Docklng 38, l50 m2 767/8747 pylon mods, 747 sectlon 4l, full cabln refurbs. Poyal 8runel Alrllnes Hassan Tengah Dlrector, englneerlng PO 8ox 737 8andar Serl 8egawan 8S867l 8runel Darussalam tel: +673 2 330 737 fax: +673 2 330 845 e-mall: ebhasantQrba.com.bn 767-200/-300 757-200LP A3l9/A320/A32l A,8,C,D A,8,C,D A,8,C,D 2 grs wlth full docklng sys l - 8737/8757/8767 l- 8757/8767/A3l9/A320 450 englneers, ll6 llc. englneers LASA Part l45 ma[. repalrs & mods, wheels & brakes, structural repalrs, 757/767 pylon mod, avlonlcs upgrades, full cabln refurbs., composlte repalrs, NDT lnspectlon to lvl 3, strlp & palnt, LASA Part l47, Tralnlng ASIA-PACIFIC www.airlineeconomics.co Airline Economics: MRO Global 2011 123 HEAVY MAINTENANCE DIRECTORY - ASIA PACIFIC REGION COMPAN¥ CONTACT DLTA|LS A|PCPAPT CHLCKS PAC|L|T|LS SPLC. CAPA8|L|T|LS Shanghal Technologles Aerospace Llmlted Chew Sln Chor vlce Presldent / General Manager Hongqlao |nternatlonal Alrport Hong Qlao Poad 2550 Alrport Poad 3 Shanghal 200335, Chlna tel: +86 2l 5ll8 8293 fax: +86 2l 5ll8 8266 emall: chewscQstengg.com www.staero.aero A300 A3l0 A3l9/A320/A32l A340 MD-ll MD-80 MD-90 A,C,D A,C,D A,C,D A,C,D A,C,D A,C,D A,C,D 2 w/b + 2 n/b l8,900m2 hangar space agelng alrcraft & struct. lnspec- tlons, lnterlor retroñt & Company, reconñguratlon (STAPCO), corroslon preventlon, & control programme, neet standardlsatlon, alrframe con- verslons, avlonlcs systems, upgrades & mods, N Testlng, on-slte fabrlc. parts ext., strlp & palnt structural, repalrs (lnclud. composltes) Slngapore Technologles Aerospace Ltd (ST Aerospace) Chlang woon Seng vlce Presldent, Marketlng 540 Alrport Poad Paya Lebar Slngapore 539938 tel: +65 6287 llll fax: +65 6280 82l3 emall: mktg.aeroQstengg.com www.staero.aero A300, A3l0 A3l9/A320/A32l A330, A340 737 747 767 777 DC-l0 MD-ll MD-80 MD-90 Lear[et 35, Lear[et 45 Cessna DHC-6 A4 C-l30 L-382 PA-28 AS-330/ AS-332 LC-l20, S-76 A,8,C,D A,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,C,D A,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D 24 w/b + 33 n/b 3l0,788.03m2 hangar space avlonlcs u/gs lnc., (lncludlng satcom, GPS, TCAS & wlndshear systems), 747 eng. pylon mods, 747 sectlon 4l, cargo converslons, 757-200 PTP STC, v|P a/c converslons, corroslon preventlon & contrl programme, NDT, lnsulatlon, blanket replace- ment, cabln lnt. refurbs, upgr., three-to-two man, nlght deck convers, 737 lap [olnt & statlon bulkhd mods, stage 3 hushklt, lnstallns & re-englne, englne nacelle & strut, neet standardlsatlon, strlp & palnt, alrframe struct mods, agelng a/c mods, component mgmnt, Maln- tenance-8y- the-Hour (M8HTM) S|A Lnglneerlng Company Llm Lln Lng vlce presldent, mktg & sales 06-M Alrllne House 3l Alrllne Pd Slngapore 8l983l tel: +65 654l 5390 fax: +65 6565 l257 emall: slaecQslngapore.com.sg A300-600 A3l0 A330/A340 A3l9/A320/A32l 747-serles 777 A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D 5 hangars (43, 200 sq m) capaclty up to 8 w/b Alrframe malnt & o/haul, Pleet mgmnt progr, lncludlng lnventory, tech. mgmnt, Component malnt & overhaul, Lnglne and englne, components repalr & overhaul, Llne malntenance & Technlcal Handllng servlces, Cabln lnterlor mods, 747- 400 frelghter converslon (2006) SrlLankan Alrllnes |an Dunnlng Senlor mgr, alrcraft malntenance Lnglneerlng & malnt complex 8.|. Alrport Katunayke Srl Lanka tel: +94 l 9733 20l2 fax: +94 l 9733 5255 emall: landmamQsrllankan.aero A320 A330 A340 A,8,C,D A,8,C A,8,C 2-bay hangar l w/b & l n/b strlp & palnt, avlonlcs upgrades ST Aerospace Lnglneerlng Pte Ltd wong Kong Lln vlce Presldent / General Manager 540 Alrport Poad Paya Lebar Slngapore 539938 tel: +65 6287 llll fax: +65 6284 8575 emall: konglln_wongQstengg.com www.staero.aero A3l9/A320/A32l 737 CG/NG A4 Lear[et 35 Lear[et 45 Cessna PA-28, DHC-6 C-l30 L-382 AS-330, LC-l20 AS-332, S-76 A,C A,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D l0 n/b 7l,7l9m2 hangar space a/c mods & upgrades, llne & hvy malnt., ma[or structural, repalrs &upgrades, corroslon preventlon, & control programme, NDT, complete, strlp & palnt, composlte & alrcraft, lnterlor malnt., avlonlcs mods & lnstallatlons ST Avlatlon Servlces Co. Pte Ltd Stephen Low vlce Presldent / General Manager 8 Changl North way Slngapore 4996ll tel: +65 6540 56l3 fax: +65 6545 6757 emall: stephenlQstengg.com www.staero.aero A300 A3l0 A330 A340 737 747 767 777 DC-l0 MD-ll A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D 6 w/b + 2 n/b 92,2l0.40m2 hangar space avlonlcs upgrades, (lncludlng satcom, (SASCO), GPS, TCAS & wlndshear systems), 747 eng. pylon mods, 747 sectlon 4l, cargo converslons, corroslon preventlon, & control programme, NDT, lnsulatlon blanket, replace. mod full cabln lnt., refurbs neet standardlsatlon, strlp & palnt alrframe struct., mods agelng a/c mods Talkoo (Xlamen) Lnglneerlng Company Llmlted P K Chan Chalrman & CLO 20 Dalllao Pd Last Gaoql |nternatlonal Alrport Xlamen 36l006 P.P. Chlna tel: +86 592 573 7888 fax: +86 592 573 02l5 737 747 757 A300-600 A3l0 A3l9 A320 A32l A330 A340 767, 777 MD-ll A,8,C,D A,8,C,D A,8,C,D A A A A A A,8,C,D A,8,C,D A,8,C,D A,8,C,D 3 hangars 6 w/b bays + 3 n/b bays 2 more hangars worklng ln progress strlp & repalnt Alrcraft, cargo conv. 737-300, 747-200/300/400 (TALCO) alrcraft and MD ll, 747 pylon mods, 747 sectlon 4l, a/c lnterlor cabln refurbs, Avlonlc u/g and, system ln- tegratlon cabln, reconñg. Tramc cntrl and alarmlng, system & wlndshear lnstallns agelng , a/c mods Thal Alrways |nternatlonal Pakaslt Chanvlnl[ Technlcal mktg department mgr Thal technlcal department 8angkok |nternatlonal Alrport Donmuang 8angkok l02l0, Thalland tel: +662 563 8l27 fax: +662 504 3392 moblle: +66l 802 6807 A300 A3l0 A330 ATP 72 737 747 777 MD-ll DC-l0 A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C,D A,8,C A,8,C A,8,C (8KK) 5 hangars l70,000m2 500 llcensed englneers 6 w/b bays (UTP - nr Pattaya 8each) l hangar: 240,000m2 2 w/b, l n/b strlp & palnt, 747 pylon mods, 747 sectlon 4l, full cabln refurbs., A300 frame 47, lnsp. & repalr, agelng a/c progr., avlonlcs upgrade STG Aerospace unveils the latest innovation in photoluminescent (PL) floorpath marking; a unique pattern-matching service. SafTG|o |s the wor|d`s |ead|ng photo|um|nescent emergency foorpath mark|ng system and has been at the forefront of a|| the major |nnovat|ons |n P| for the aerospace sector. STG has now extended |ts market-|ead|ng SafTG|o range w|th a un|que pattern-match|ng offer. SafTG|o PatternMatch |s ta||or-made to match the actua| pattern of even the most |ntr|cate carpet des|gn. A trans|ucent over|ay, spec|a||y pr|nted to match the surround|ng carpet`s co|or and des|gn, s|ts over the P| str|p mean|ng the system |s comp|ete|y d|screet when cab|n ||ght|ng |s on but just as effect|ve as other SafTG|o var|ants |f the ||ghts go out. PatternMatch has been deve|oped |n response to demands from customers for whom |nter|or des|gn |s a key feature. ||ke a|| SafTG|o Oo|orMatch systems the new des|gn |s a comp|ete|y sea|ed system that |s both hard-wear|ng and |ow ma|ntenance; mak|ng |t the perfect, easy-to-ft |ow cost a|ternat|ve to e|ectr|ca| foorpath mark|ng systems. W|th |ts |nherent ab|||ty to dr|ve down the cost of operat|ng a|rcraft SafTG|o |s the preferred cho|ce for Boe|ng, Embraer and |s fy|ng h|gh |n over 6000 a|rcraft wor|dw|de. For more |nformat|on on how your a|r||ne cou|d beneft from new SafTG|o PatternMatch, v|s|t us on||ne at: stgaerospace.com or come and v|s|t us at booth 146. (\UPX\L\S[YHZSPTWYVÄSLHUKHULHZ`JSPW[VÄ[PUZ[HSSH[PVUTHRLZ :HM[.SV[OLSLHKPUNJOVPJLPUWYLTP\TJHIPUKLZPNUZJOLTLZ Make significant savings with SafTGlo. º Return on |nvestment - poss|b|e pay-back w|th|n 3 months º Üsed by hundreds of a|r||nes on thousands of a|rcraft to dr|ve down cost base º Save up to 25% versus |nsta||at|on costs of e|ectr|ca| systems º Many SafTG|o systems have notched up over 10 years of troub|e-free serv|ce º Huge sav|ngs |n through-||fe costs º Ma|ntenance free techno|ogy - no cost|y serv|c|ng º SafTG|o |s the |ow-cost a|ternat|ve to e|ectr|ca| emergency foorpath systems. ÜK +44(0}1760 723232 ÜSA +1(305} 828 98 11 stgaerospace.com Emergency Floorpath Evacuation System v|s|t us at booth 146 TeamSAI provi des consul ti ng and techni cal ser vi ces to avi ati on i ndustr y cl i ent s i ncl udi ng ai rl i nes, MRO’s, corporate/ fracti onal operators, OEM’s, ai rpor t authori ti es, and i nvestment banks around the worl d wi th a focus on strategy, operati ons i mprovement, cost reducti on, safet y, cer ti fi cati on, and suppl y chai n. www.teamsai.com www.teamsai.com TeamSAI provides consulting and technical ser vices to aviation industr y clients including airlines, MRO’s, corporate /fractional operators, OEM’s, airpor t authorities, and investment banks around the world with a focus on strategy, operations improvement, cost reduction, safety, cer tification, and supply chain. CONTENTS 4 THE MRO MARKET IN 2011 A review of the past 12 months in the MRO market and a look at what’s ahead for 2012 16 Who combines the data? Amalgamating two or more data systems is a costly and time consuming affair Swiss Aviation Software has the solution 22 More MRO for your money MRO Global looks into the maintenance providers market.com Philip Tozer-Pennington philipt@aviationnews-online. Lower Ground Floor.com PRODUCTION AND ONLINE Dino D’Amore [email protected] ADVERTISING SALES John Pennington john@aviationnews-online. No part of this publication may be reproduced by any means whatsoever without express permission of the Publisher. 145-157 St John Street.co . 2 Airline Economics: MRO Global 2011 www.com SUBSCRIPTIONS 47 More than an afterthought Inventory management planning from Inform 50 Pulled apart Kellstrom shares how it intends to retain its share of the fragmenting parts market. London. Although great care has been taken in the compilation of Airline Economics. low maintenance Boeing designed the 737NG with a reduced scheduled maintenance in mind philipt@aviationnews-online. 54 MRO Americas 62 MRO Americas Directory 66 A320-family maintenance MRO Global surveys the best maintenance providers for A320-family aircraft Annual subscription: £250 / €250 / $300 Subscription enquiries to: victoria@aviationnews-online. EC1V 4PW Registered in England & Wales Company number: 7351543 Copyright 2011 Aviation News Ltd Airline economics (Print) ISSN 2045-7154 Airline economics (Online) ISSN 2045-7162 Printed in England through Ben Chater Printing 98 MRO Middle East 105 MRO Africa 108 MRO Middle East/Africa Directory 110 A340 maintenance MRO Global examines the history of the A340 117 MRO Asia-Pacific 121 MRO Asia-Pacific Directory All rights reserved. 32 Smoke and mirrors The PMA parts market has enormous potential for growth if it can fight back against the OEMs.com Kaleyesus Bekele [email protected] Philip Tozer 78 MRO Europe 90 MRO Europe Directory 94 High-tech.airlineeconomics.com Kathy Alys. subeditor DIGITAL ISSUE Digital version production by Symbian Print Intelligence PUBLISHER Aviation News Ltd Suite 16745. Aviation News Ltd does not take any responsibility for the views expressed herein. 44 Solving lessor issues Ideas about how to handle third-party maintenance contracts MRO GLOBAL 2011 EDITORIAL TEAM Victoria Tozer-Pennington victoria@aviationnews-online. elfc.Engine Leasing Asset Management All Manufacturer Types Long.com . Medium & Short Term KEEPING YOU IN THE AIR dium & Short Term Leases Medium & Short Term anagement rer Types Leases ement ases erm www. For third party MROs to expand. Some 30% to 50% of MRO work is estimated to be completed by third parties. In some cases an engineer will be servicing a number of air- 4 4 Airline Economics: MRO Global 2011 www. 60% of the world’s carriers outsource heavy work in an effort to lower costs. MROs also need to reduce costs: This can be done by suppliers working together to purchase parts.MRO GUIDE MAINTENANCE REPAIR AND OVERHAUL M aintenance repair and overhaul (MRO) is big business. in many cases they must adapt to be more than just a maintenance and parts supply partner. Some major firms have cut jobs at certain bases because they are using employees from a competitor to keep contracts running. others believe they can find economies of scale by bulking up the amount of work they do and keeping MRO in house.airlineeconomics. but more cooperation is needed than is currently taking place. They must become more involved in the day to day running of an airline so they know what is going on at any given time and recommend solutions. at least in the European market. for the 40% who keep line maintenance in-house huge investments in infrastructure.co . facilities and parts are required it is no wonder then that many airlines have been unable to make it work on a cost effective basis. Some major MROs are cooperating on staffing at various locations so that they in effect establish a joint partnership.9 billion and represents 12-15% of an airline’s cost base. worth some $46. Airlines with their own in house MRO argue that it is an integral part of their overall business plan and that a third party provider would not be able to understand the complete operational environment. Although many airlines carry out their own line maintenance. While some airlines are getting out of MRO. 4 $56. The MRO industry outlook currently shows that in 2011. fitting services with client needs or perceived needs. or potential client when the client has no clue whatsoever as to what tomorrow may bring? At the close of 2011 and into early 2012. Another problem for the sector has always been over regulation. Nobody really understands what direction the Mubadala group wishes to go.0 $12.2% increase.4% increase And last. going forward they are now also being judged on the strength of their finances and financial backing. That said opportunities are bound to present themselves. but for the big MROs the current market and 2012 outlook is a challenge at best.203 QUICK VIEW FACTS: MRO in 2011 Global MRO spend will be up 10. Heavy maintenance out of Switzerland with a cost base in Swiss francs (CHF) has been crippling for the MRO. Audits are hurting the industry and.co Airline Economics: MRO Global 201155 .Stored Fleet 2011 Source: TeamSAI Consulting 19. is now a thing of the past at least for the next fifteen months and maybe more depending on the possibility and nature of any sovereign defaults within the Eurozone during the same period.675 + 1.9 billion.3 2016 Engines Compenent 2021 Line MRO in 2011 Fleet 2010 + Deliveries . Source: TeamSAI Consulting www. Previously an MRO was judged on the service it provided and its client/orderbook. SR Technics is not alone but simply an example.9 $46.1% $32. however the latter months of 2011 are seeing dramatic cuts to schedules across the globe as airlines react to yet another sharp slowdown and plot a course for winter 2011/2012 that forecasts passenger numbers below that of 2009.396 . on the cards. The smaller MROs have their market niche and they have a stable customer base. Although unemployment within most geographical zones is holding flat or even reducing. This would be a good move for SRT but everyone is a little bit afraid of what is happening in Zurich at the moment. business are having problems raising capital and politicians seem willing to continue kicking the can down what is left of the road to fiscal collapse.1 craft in a day under contracts with two or more separate MRO providers. within these figures the engine repair market is the segment with the highest growth rate.6 $8.5 $9. Fleet change alone drives a 3.9% CAGR through 2021 seeing the current $46.airlineeconomics. in part this is due to new aircraft requiring less maintenance as per design specifications. What to watch out for in 2012 The acquisition of TIMCO by SR Technics was.9billion industry grow to one worth some $69 billion.9 $8. especially within the European sphere. to $46. It would be a challenge for Mubadala to look for new business opportunities in the near future with SR Technics under pressure. Source: TeamSAI Consulting $69. as seen in 2010. During 2011 airlines increased capacity once again and MROs have forecast a much improved picture for this year. is drying up. even the mighty Lufthansa Technic is feeling the pressure of late.1 $11.6 CAGR 3. with the FAA trying its best to introduce new draconian measures. The MRO sector is reactionary. to $46.152 20.6 $12.5% for the year driving 0. Only timely and decisive Swiss government intervention saved the day. Any company at this point wishing to refinance will have to look to investment which may also lead to MRO market consolidation. it can only get worse before it gets better.0% Engine MRO drives a significant 6. So as financial services executives $21.7 CAGR 4. It remains to be seen if this will be the case.8% over 2010. something that would indeed be welcome at this time. Global growth is expected to maintain a 3.4 $9.4% for market) Component increases outpace declines to airframe and line for a small net increase of 1. the only thing that is certain is that liquidity. Everyone is very cautious. and maybe still is. The drivers of the year-over-year change are important to understand. although even the latter has signs of weakness.5 $8.Retirements . The problem is how do you perceive the needs of a client. but the pressure is still on.8% $27.0 2011 HMV&Mod $10.9B. due to fleet renewal Utilization increase drives market up a small amount (utilization up 1.MRO GUIDE either cease to fly or take a one-way trip to Hong Kong or Mumbai. banks are laying off staff. this silver lining does not mean that business travel is secure – it is not. Unemployment within the all-important financial services sector is increasing rapidly throughout just about every region other than South East Asia and Australasia. global MRO spend will be up 10. However it should be noted that the efforts of the Air Transport Association to highlight and deal with the problems may yet bear fruit. over capacity on major routes is at this time a real and present danger.076 . It can also therefore be assumed that re-fit orders for aircraft to have revamped or extended premium seating.8% in 2011. labor rates have eased down ever so slightly. The sharing of staff has resulted in a large number of engineers flooding the jobs market but it has subsequently drastically cut the cost base of many MRO firms and relieved some pricing pressures for MROs. They recognise the potential of consolidation. That is the key. but the economic health of the globe of late has lead to a return to fleet contraction whilst at the same time 4.000 MRO costs per aircraft continue to fall rapidly.500.0 2.000 $45.000 $10. 2010 marked a notable leveling of capacity.airlineeconomics.0 $35.0 Source: TeamSAI Consulting service just about anything in the air and has serious exposure to South East Asia.000 $5. less maintenance intensive aircraft will show their influence.” he says.0 1. equalled the entire 2009 – four times the transaction volume.500. In this marketplace. So is the MRO sector ripe for investment or is it a bit of a minefield? Overcapacity and OEMs are marching into the aftermarket very heavily and there is the ongoing war between the PMA.500.000 $15. Airline Economics asked Chris Doan.0 2.” Unfortunately this very encouraging trend has been stifled by the Eurozone crisis and the global economic melee currently playing out on the world stage. In fact in the first quarter of 2011.0 1. stated: “I would say there has been a serious acceleration in the past 12 months.000.000 $20. And even then the get-in point has to be a good one as the continued investment would need to be dramatic to secure market share.0 0 2005 2006 2007 ASM (M) 2008 2009 Total MRO ($B) 2010 2011 $0. ASMs declined 1% in 2010 (mostly long-haul traffic). With airlines now able to adjust very quickly to global events and economic changes. the appetite for this sort of investment intervention is weak. Most 6 Airline Economics: MRO Global 2011 www. Meanwhile. lower retirement ages and of course they have taken note of the amount of new aircraft on order and the lower maintenance requirements of the same and they are worried for MRO and aftermarket suppliers. 2010 should have been a tipping point as fleet size and utilization increased to meet demand.000 $25. but as MRO providers move into leasing and other new areas. a pattern mirroring that of 2009 will emerge with the world fleet continuing to grow but with aircraft being parked. when asked about the interest from private equity (PE) firms.0 500. newer. what his experience was in trying to secure investment into the maintenance market. younger vintage aircraft have significantly lower unit costs and in just under two years there has been a significant shift in the share of the younger vintage fleets which in turn has resulted in the average MRO cost per aircraft per year falling by some US$300. in terms of transactions. It is a worrying time indeed for the MROs.000 $30.0 3.000. with the contribution of the older vintages in decline as retirements accelerate. SR Technics managed to pull in some very heavy weight investors to help them in the form of Mubadala Development Company.MRO GUIDE The global business cycle has a strong influence on MRO activity as it does with most areas of aviation and the last few months of this year could change the 2011 outlook sharply.000. DER and OEM strategies. Aircraft maintenance will always be required. Investors are looking $50. “The playing field is somewhat interesting. At the same time many have clamoured to invest in new aircraft through funds such as Doric Air Nimrod 1 and 2. But the 1% decline in capacity has taken a dramatic toll on the associated MRO business with 2010’s MRO market down 7.0 at the plans around the world to lower fleet ages. We are starting to see a little bit of that play out.000 $40. the question is whether there will be very serious overcapacity in the market in the short-to-medium-term making the investment a prolonged affair? One large private equity investor of note told Airline Economics under condition of anonymity that an MRO can only be a serious prospect in the long term if it is global with strategic hubs that can 4. When asked if he thought PE firms were looking at the maintenance market because they were hoping for buyouts. “It is cautious but private equity seems to have a fair amount of interest in the sector. it is time that MROs acted in the same manner. It is an interesting play. It is not vying to make it grow because there are a lot of minefields that have to be navigated today but to bring appropriate businesses together into a bigger platform that has a very purposeful end. the fragmentation that exists. Even so Chris Doan.000.co . Doan replied: “Probably not in the short term.000. CEO of Team SAI.500.” Investors do worry that the long-term future for the MRO industry will require mergers but this is also one of the attractions.5%. For the remainder of 2011 and into 2012.0 3. barriers start to remove themselves. which is expected to drive a level of parity when combining the Americas. Europe is about 256% and Asia is below that. their overall size represents just a fraction of the total market. there was a huge downturn in airline business and it is going to have an impact in due course on the MRO business. I think that there is more likelihood of world events causing quick adjustments on airlines to maintain their own profitability. it is likely that Turkey will benefit hugely from being at the centre of global trading routes. Nevertheless. Over the next ten years. Today the Americas commands 35% of the market. Even with the earthquake in Japan. Europe (Western & Eastern) and Asia. Turkish Technic’s new HABOM facility is built with this thought in mind. after they have had the company for four or five years…” Some of those PE firms that invested in MRO before the crash are now in difficulty and wanting to get out of the market but they are now.” STATES AIR ASIA READ MORE ABOUT THE WORLD-CLASS M&E SOFTWARE SYSTEM AT SWISS-AS. the conduit for travel between the APAC region and Europe is seen as the perfect location and Turkey seems to hold many aces for the future of third party MRO. This facility is enough to cause regional overcapacity in the short term. due to falling values. but you do have a number of MROs that are owned by PE today that would be interested in that play. and with the EU preoccupied with the survival of current members. the fleet forecast clearly indicates a shift to the east. the APAC. The facility is so very large and the MRO growth rate in the Gulf region so prolific that one wonders if Turkish Technic will be able to fill it at any given time. which is a staggering statistic. including China & India: As a result. While North America and Western Europe have the largest fleets and MRO markets.” The future for third party MRO market share lies in geography. As it is. Then the question becomes where are we in the business cycle – at the bottom and starting to grow and how stable is it? Of course the stability question is an interesting one today because we do see airlines and therefore the MRO business being quite a bit more sensitive to events in the world. The growth has definitely shifted East and from an investment standpoint that is where the excitement is going to be over AMOS – A STORY OF SUCCESS “WE ASSESS AMOS AS A TOP LINE PRODUCT WHICH IS ENDEARED AND ACCEPTED AS A FINE TOOL BY OUR USERS. There are a couple of PE firms that own some of the big MRO firms that would typically be interested. So there is that factor of sensitivity that we have never seen before. While these emerging regions are growing fast. more or less stranded. European and the Americas MRO markets are estimated to reach parity within 10 years.MRO GUIDE PE firms are going to be buying into a business for three to five years before a turnover. provided that Turkish Technic is prepared to hire the colossal numbers of engineers that will be required to man the entire facility. Doan says: “Timing into the market is very critical and those that came in five. however it could all come to grief if Turkey were ever to join the European Union (EU) and be subjected to Emissions Trading Scheme (ETS) charges. the Asian MRO market will come into parity with Europe and the Americas. due to the population and fleet growth in the APAC region. the growth areas lie in emerging regions such as Eastern Europe. India and China. Global fleet growth projections show wide variations and give some cause for concern. this will level out. The Middle East.COM . six or seven years ago with the intention of having a three to five year turnaround got hit pretty dramatically in the world economic downturn. 0 $20.4% 29% NOTE: Americas = North America and Latin America & the Caribbean Europe = Western and Eastern Europe Asia = Asia Pacific.7% 30% Asia $11.1 $0.4% CAGR through 2015 and 4.4% CAGR through 2020.0 $2.8 $1.5 $3.0 $15. have shifted from in-house to outsourced maintenance as the dominant model.9 $3.5 $0. The airline MRO industry has been in a state of rapid transition for many years as airlines. Preliminary estimates for the 2011 global MRO forecast indicate a return to positive.3% 7% Africa $1. Meanwhile. albeit small. seeking cost and service improvements. This pace of change then sped-up dramatically over the past five years as the OEMs entered the market in what could be described as a forceful manner.8 $2. But total global MRO is just starting a new growth cycle with large numbers of narrow and wide body Millions $0.0 36% 2.1%) with growth expected to increase slowly at 3.MRO GUIDE the next ten years. turmoil in the broader aviation industry is creating significant pressure as airlines seek to cut costs. The emergence of MRO competitors in low-labour-cost regions has also radically changed the competitive dynamics of the industry.1 7% 5.airlineeconomics. MROs are now also unlocking unrealized value through mergers.7 29% 4. bundled ‘full-service’ offerings.4 $0.9 $1.4 $2.1 Source: TeamSAI Consulting - Average MRO Cost per Aircraft $0. 2011 has seen a sharp falling away of business over the past six weeks to October 20 and the preliminary growth figure could well fall.0 Americas Europe 2011 Source: TeamSAI Consulting Asia Middle East 2021 Africa MRO SPEND ($M) PER AIRCRAFT Vintage 1970’s 1980’s 1990’s 2000’s Grand Total Jan-08 Jan-09 Dec-10 $2.1 $2.5 3% 3.0 $5.0 $2.5% 3% $17.2 $2. and accelerated retirement of old-generation fleets is reducing forecast demand. forcing traditional MRO competitors to adapt to offer more sophisticated services in order to remain relevant.6 25% 6. global footprints and relentless efficiency improvements.co .8% 30% Middle East $3. growth (2.6 more responsive competitors seeking significant opportunities for growth and profitability. alliances and the sale of non-strategic assets.0 $0.0 $0.8 $2.4 $2.0 $10. acquisitions. China and India $25. That said. This OEM intervention lead to increasingly sophisticated support services being offered.3 2006 2007 2008 HMV 2009 Line 2010 2011 Source: TeamSAI Consulting 777 UPWARDS OF 50% LESS THAN 767 HMV FREQUENCIES MOVING FROM 4-6 TO 8-12 YEARS A350 AND 787 PROMISING FURTHER IMPROVEMENT 8 Airline Economics: MRO Global 2011 www. The rapid growth and evolution of the MRO industry is offering smarter and Americas Market ($B) Market Share (2011) CAGR (2011-21) Market Share (2011) Europe $13. MRO GUIDE Source: TeamSAI Consulting 20000 18000 16000 Number of Aircraft 14000 12000 10000 8000 6000 4000 2000 0 2007 2008 2009 2010 2011 Year Africa APAC Europe Middle East North America Central/South America AMOS – A STORY OF SUCCESS “IMPACTING OUR BUSINESS POSITIVELY IN TERMS OF PROCESS OPTIMISATION AND INCREASE OF LABOUR PRODUCTIVITY.COM .” SAYS AUSTRIAN AIRLINES READ MORE ABOUT THE WORLD-CLASS M&E SOFTWARE SYSTEM AT SWISS-AS. 7 North America 1.3 $38.203 2021 28.675 2011 20. are all relying on one thing: Population growth and the growing middle class.7% $20.330 19.591 in 10 years with ASM growth set to increase at 5. The MROs are in effect doing more for less with less and thus many have been cutting their cost base and redesigning their facilities to cut turnaround times.0 Eastern Europe 8.0 MRO Market ($USB) 16. up 2.030 17.0 India 9.000 $45. As of August 2011. Most long-term forecasts.000 China 9.206 17. 2011-2021 Regional CAGRs $50.591 aircraft requiring heavy maintenance checks in the months and years to come.8 $36. MRO or consultant forecasts.0 2001 2002 2003 2004 2005 2006 Fleet 2007 2008 2009 2010 0 MRO Market Source: TeamSAI Consulting 10 Airline Economics: MRO Global 2011 www.1 $37. This is something that to an out- side investor would seem worrying as market pressures are so extensive in the aerospace aftermarket that MROs are being forced to enhance their services while also reduce the cost to the client on what seems to be an ongoing basis.7% CAGR Regional Jets 17% Widebody 24% 3.0 5.627 Africa $35.675 20.0 $37.0 5.8 18.0 $42.MRO GUIDE Source: TeamSAI Consulting Widebody 23% Regional Jets 17% Widebody 23% 2.2% $40.0 15. It is these factors which drive long term aviation forecasts across the board with MRO and the aftermarket being no exception. MROs find themselves having to re-design the way they do business.9% $25.0 Historic MRO Market and Fleet Size 25.617.2 $41.3% CAGR over the same period with aircraft utilization rates going into October 2011 remaining high.3 $38.816 19. fleet growth was on pace for the year with the global fleet standing at 20.0 17.000 $15.000 Middle East Latin America & Caribbean 4.5% CAGR Regional Jets 19% Narrowbody 60% Narrowbody 60% Narrowbody 57% 2010 19.0 10.000 $45. So taking overcapacity in the market to one side. from how they handle and agree a contract with a client to how they maintain aircraft.1 $45.airlineeconomics. engines and parts and flow them through on a shop visit – All in the name of cutting turnaround times while also cutting cost to the operator at the same time.903 3.5% CAGR (compound annual growth rate) to 28.6% $0. this in part is due to the continued expansion of the North American fleet.0% in Jan 2011. be they OEM.0% Western Europe 3.5% Asia Pacific 4.co Fleet Size .4% $10.1% $5. there should be a steady growth in the number of aircraft being maintained during this decade.4% $30. Fleet growth forecast at 3.0 $42.0% for the year thus far from a 2011-21 CAGR forecast of 3. monarchaircraftengineering. we continue to provide valued solutions to the aviation industry.Part 21j Engineering Services . please contact:email: engineering@monarch. Today. Heavy.the height of excellence since 1967 For over forty years Monarch Aircraft Engineering has gone about its business providing first class service to major airlines around the world.com or call us on: +44 (0)1582 398644 . Light & Line Maintenance Monarch Design Services .Part M Technical Training .uk web: www.co.Part 147 Technical & Safety Consultancy Component Repair Spares Trading To discuss any of your maintenance and engineering needs. this will continue to expand for the foreseeable future providing increasing amounts of business over the long term: Or at least that is the overriding message from the MROs. Thus it is hard to see the aftermarket remaining independent of the OEMs and this will lead to lack of data and choice for the operators on a scale not imaginable just ten years ago. Once they are removed from the market and the new aircraft come online the MRO will lose business. in the US especially where there are many MD and 757 aircraft. This provides a cost Source: TeamSAI Consulting 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% HMV (Check) Engines Components Line Tech Support Note: Outsourced MRO includes work outsourced to independent MROs or to OEMs but not work done by operator-affiliated MROs 12 Airline Economics: MRO Global 2011 www. are on the whole being captured by the OEMs by design with the same scenario applying to components also. is going to be monumental. larger carriers are recognizing the leverage of outsourcing these services THE BENEFITS Provides total cost advantage Offers more flexibility to operators Shift risks and costs away from airline Gives independent MROs opportunity to form credible network with extensive capabilities Regulation could temper outsourcing growth somewhat. which has served to accelerate the whole process. If an MRO is able to service a mixed fleet at any time in any zone with one service provider. but large players will adapt The most successful MROs will be those able to offer a full array of services across all aircraft types offering total maintenance through a long term partnership. Aircraft age ranges and the effect on the maintenance market over the next five to 10 years. This is the key for MROs independent from OEMs. Airlines are going to ask in ten years’ time just how this has happened. The real benefit of opting for an independent third-party or in-house provider is data share. The key for the future will be the control of price escalation.MRO GUIDE The bottom line for the MRO sector The operator will continue to: manage core operations (flying) outsource maintenance as it chooses. The truth of the matter is that MRO business will not increase over the next five to ten years on anything other than the current expanding narrowbody fleet. which will cost more to maintain. TECHNICAL SUPPORT SERVICES Includes all “back office” functions such as engineering. The phenomenon of new aircraft taking less maintenance requirement leads to a very black market for the Americas especially over the next ten years with very low growth.co . Once the OEMs control the data then there is no going back. the airlines will not be in a position to do a great deal other than pay. basing outsourcing decision on key guidelines MROs therefore must: identify new market needs and value added services that support airline requirements reinvent the business model to position itself to meet needs develop business processes to optimize service Key decisions guidelines for choosing maintenance services/outsourcing Labour Material Terntime Performance Quality The mainstay for MROs remains the global narrowbody fleet. just as the lessors are today asking many questions about their future handling of aircraft and maintenance reserves on the same. DER or whatever is needed. but without viable alternatives to the OEM programs. planning and supply chain Early stages of the emergence of Tech Services outsourcing Lately. that will be a significant benefit as the provider will share data at all times over all types that will also embrace the latest cost saving technologies be they PMA.airlineeconomics. What can be said for global MRO as a whole is that new airframes in production will require less maintenance while the new engines. This is why there has been a scramble for maintenance providers to be a part of the OEM programs. This is the blunt truth of MRO moving into 2012 and it is a truth that for many will require either expansion. this is the silver lining for the independent MROs. Four basic strategies for MRO growth LABOUR Capitalize on outsourcing needs of airlines Develop expertise in core activity areas and outsource non-core activity With upward wage pressures. The operators and OEMs alike will in the end need them. An operator cannot afford to fly an aircraft across the globe for maintenance checks in the future. then they are operating on borrowed time as globalisation of the aviation aftermarket speeds. including India and China. acquisition or investment.airlineeconomics.co Airline Economics: MRO Global 2011 13 . of airline operators 78 130 23 103 210 64 65 No.MRO GUIDE Comparison of popular Narrowbody and Widebody aircraft order books Manufacturer Aircraft type Model Aircraft in service 1138 2037 247 1217 2302 528 377 Backlog No. smart aircraft systems Manage and showcase efforts with appropriate metrics DIVERSIFICATION Expand market offerings Expand geographical reach Pursue full-service capabilities Create strategic OEM alignments Balance portfolio with countercyclical businesses MERGER AND ACQUISITION Identify value-oriented innovations that contribute to airline customer’s cost focus Focus on the supply chain & distribution channels for components & material Leverage JVs and alliances Relationship Based Performance Based Inventory Tolerant Inventory Tolerant Asset Utilization Not a Focus Turn-Around Time Prioritized Little Accountability Accountability for Results Limited Competitive Threat Global Competition Metal & Mechanical Composites & Electronic Western Focused Source: TeamSAI Consulting Eastern Focused www. An MRO provider must be global particularly with carbon taxes arriving in many corners of the globe and fuel prices continuing to rise on a long term basis. There is no middle ground and although an MRO may inform you that they are secure in their sphere of influence. As Chris Doan states: “It is more about firms setting up partnerships within existing MROs in the growth regions. That is the way it is heading as it really brings experience in with local interest and creates a very robust business model for the MRO. if they do not meet the aforementioned criteria. of aircraft on operating lease (approx) 380 957 114 520 1193 214 191 Production years (to date) 14 14 8 16 23 15 13 Boeing 737NG 777 A320 Airbus A330 -700 -800 300ER A319-100 A320-200 A321-200 -200 501 1445 198 254 1756 214 256 efficient service that an operator will be at pains to refuse. You are not seeing opportunity for a LHT or SRT to go in and set up. but there is an interest in joining forces in joint venture with MRO shops in the Middle East. focus on efficiency and productivity Actively develop new talent as a hedge against a labor shortage VALUE CREATION Implement cost reductions and new efficiencies Adopt supply chain innovations Focus on reliability & dependability Embrace new. I have just come back from a customer that was asking me if Amos could connect to a particular system from Airbus. the documents delivered with the aircraft – including the component list of the aircraft – are completely different from those Boeing delivers. One side of the airline was using one legacy system and the other side was using a different system. and for component control they were using Oracle and so on. Just imagine the implications of using so many systems. Lufthansa too operates different systems and is actually running with SAP/ point solution. but Amos cannot and it is obvious that this is not an Amosunique problem. The two airlines which merged. Ronald Schaeuffele. This cost over the medium-to-long term will erase all gains made through reduced aircraft/ engine prices at point of sale. it became clear that there might be a need to become increasingly nervous about their future maintenance abilities. the shop floor was using another system. The Boeing toolbox is open to grab information from and can be linked with Amos to some extent. and would not be engaged in entering the market of providing IT systems. CEO of Swiss Aviation Software. If the two systems don’t look exactly the same. It would be much easier if the OEMs concentrated on building hi-tech aircraft and provided hi-tech structured information. which for mixed fleet airlines. Thus the operators have in effect helped speed the process of the OEMs controlling their fleets. They are now adding 787s to their fleet with all the loadable software components and with all of the headaches that new generation aircraft can have. the operator will not be able to compare aircraft data at all and will not have the in-house skills to deal with aftermarket problems in a cost effective manner. begs the questions what the future will be like for the airline when it comes to maintaining and tracking the needs of these aircraft when comparable data between the two fleet types will not be easy to come by. In fact it is reasonable to assume that such a large airline would not be in a position to move forward with an integrated fleet management approach for at least a decade. which consisted of huge numbers of Boeing 737 Max and Airbus A320neo aircraft. Lufthansa is an example to American Airlines but if AA in the future wants to be able to manage its mixed fleet more efficiently. For smaller customers with mixed fleets the financial implications might be too tough to choose this way. they provide additional services. One business on the frontline with a headache on the subject of OEM incursion is Swiss Aviation Software. The problem for us as a software vendor is that some of these solutions are open to connectivity while others are not. If you are a customer with the right market power. but it has everything under control and information flows between MRO shops freely. Apart from that. it seems that unless there is a change of policy at the OEMs. But this is a system that requires a huge amount of investment both in time and resources with many people staffing the same. 14 Airline Economics: MRO Guide 2011 www.” The American Airlines order of September 2011. which subsequently merged. That said. The US is one of the largest potential markets for fleet management systems but many still use Maxi Merlin’s outdated legacy systems. They produce hi-tech aircraft and do not focus too much on data format standards. for example. the question needs to be asked: What will happen to operators who are currently ordering mixed fleets of aircraft virtually free of charge on the back of signing aftermarket contracts? For now.airlineeconomics. When asked about the effect on his business of OEM additional services.MRO GUIDE At this point. The two manufacturers don’t seem to communicate on this issue. Our heartfelt thanks goes to Team SAI for the provision of data and intelligence used within this feature and throughout this publication. might profit from an IT management system delivered with the aircraft type. they don’t seem to be preoccupied with the data format of information they provide. When Airline Economics looked into the fleet management systems of a large US airline.co . loses all the benefits of having an integrated system. maintaining these fleets will be a challenge. Sometimes they provide IT systems bundled with a new aircraft. you can go to Boeing and ask for all the manuals out of the toolbox and load it into Amos. Airlines with 787s on order. stated: “The OEMs produce aircraft and that is their core business.” He adds: “When Airbus delivers a new aircraft. would need to merge the acquiring airline’s data into the other airline’s older systems or vice versa even before they can even think about an integrated approach for future cost savings. however. then it will have to invest very heavily in bespoke systems that can create an in-house crossover of data all running on one platform. which owns industry leading IT product AMOS. such as systems for point solutions. ie/aviation © 2011 KPMG. To find out more about how we can help you. a Swiss [email protected] KPMG is a leading provider of cross-border advisory services to the international aviation finance and leasing sector.kpmg. please contact Tom Woods on +353 1 410 2589 or tom.ie . All rights reserved. an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”). www. It is also not a high volume market. This often results in reducing manpower because we can prove that use of our system will be of benefit for new customers. “We are open for any additional fine tuning and reshaping of functionality and have a real relationship with our customers – it is not just a black box. such as the ability to have information at your fingertips – for example when users see with one right click what logistics is doing and thereby prevent that something in the planning is going wrong. Each of these companies has a reputation for products that are based upon best practice built up over a number of years and with clients on a case-by-case basis. and can provide mixed results in the first instance until staff training and troubleshooting processes start to take hold. Swiss-AS has gained substantial knowledge over a number of years in perfecting the best possible data migration procedure and the firm uses that same knowledge to assist customers in making the right decisions when it comes to planning a data-transfer project. The task of data migration can be high in both cost and labour hours. One company that has been able to get around this is Swiss Aviation Software (Swiss-AS) which uses an innovative and advanced migration tool that eases the data transfer from the legacy systems to their system. which is probably why ERP system providers have not successfully expanded into it. Many mainstream Enterprise Resource Planning (ERP) system providers have not entered the aviation maintenance and engineering sector primarily because the system optimises all the processes in an engineering environment. we speak to each other. which means it has to be highly bespoke due to the complex nature of the business.DATA SYSTEMS Who combines the data? Amalgamating two or more data systems is a costly and time consuming affair – even though a company may save time and effort in the long run. It brings the departments closer to each other. Some companies will concentrate on necessity while others will be looking to increase margins. installation and training processes. There are also minor functionalities where customers can send messages within the company – much like an integrated email system – where you can look at one document to see all queries everybody has raised over a set period.” he says.” The decision driver for system integration for an airline. When asked the question of how a system provider is able to measure the benefit to a customer 16 Airline Economics: MRO Global 2011 www. it’s a community. “We optimise and adapt to new technologies to help move the customer’s business forward.co . This leaves the market open for targeted operators such as Swiss Aviation Software. Swiss-AS chief executive Ronald Schäuffele says the business of providing data management products is one that goes well beyond the initial agreement. operator and/ or maintenance company is never the same. They see the value that the integration of the systems brings. So how have Swiss Aviation Software got round this thorny problem? M any airlines and maintenance companies within the aviation sector know all too well from past mergers and acquisitions and/or internal revamps that data migration is a huge task and one that cannot be undertaken lightly. Trax and Lufthansa Systems.airlineeconomics. airlineeconomics.co Airline Economics: MRO Global 2011 17 .DATA SYSTEMS www. this is not always possible with some OEM aftermarket agreements. OEM’s incursion in the aftermarket has been highly successful in the extreme with most agreements coming at the point of sale for an airframe or engine. “We have benchmarking figures from various business cases of customers who have been reviewing what they have achieved due to implementing a new system. “It is very difficult to quantify the benefit. OEM agreements are providing a headache because of the lack of data share that the OEMs will allow. Apart from that. This against a backdrop of airlines parking aircraft again as passenger numbers fall and increased competition from Original Equipment Manufacturer (OEM) aftermarket services. The OEMs produce aircraft and that is their core business.DATA SYSTEMS in time and money only. reduce costs and at the same time provide an enhanced level of all-round service to the customer. they provide 18 Airline Economics: MRO Global 2011 www. However. Schäuffele is unable to give an accurate response in terms of figures.co . For data management firms.” he says. Under a usual data management and integration agreement.” Schäuffele added that it is very hard to quantify the benefits in a general way because a customer’s increase of efficiency heavily depends on the its productivity prior to the software implementation project. Schäuffele said: “Yes. When asked if the OEM incursion has had an effect on his business. customers are provided with a wide spectrum of generic interfaces which promote an easy integration of the system into the customers’ existing system environments. Because the environment will have changed so much over the years. I have a headache. But of course our customers are doing more business with less cost. UNDER PRESSURE The maintenance sector is under terrible pressure today to lower turnaround times. The final comment reflects the reality of the situation for maintenance and engineering firms – it is a matter of doing more business at less cost. but we are in such a dynamic environment that it is not always possible to compare what firms can save after two or three years with what they initially formulated in their business case.airlineeconomics. airlineeconomics. Airlines with 787s on order. while Trax concentrated on the Americas. but Amos cannot and it is obvious that this is not an Amos-unique problem. Sometimes they provide IT systems bundled with a new aircraft.co Airline Economics: MRO Global 2011 19 . This will be a real challenge for them. Swiss-AS was looking for a partner and found in Lufthansa Systems Americas the ideal set-up for its strategic expansion plans. and for component control they were using an ERP system and so on. for example. “I was speaking to the technical staff from a big airline. Many airlines in the US currently use outdated MRO software and will sooner or later screen the market for best-of-breed. Swiss-AS now intends to intensify its presence in the US market. The problem for us as a software vendor is that some of these solutions are open to connectivity while others are not. however. cost-saving systems. the documents delivered with the aircraft – including the component list of the aircraft – are completely different from those Boeing delivers.” The problem of OEM data share will be compounded where an airline orders a mixed fleet with aftermarket agreements attached. Let’s further develop this worst case scenario: The airline then needs to merge with another airline with a similar scattered system landscape and the acquiring airline’s data needs to be transferred into the other airline’s older systems or vice versa. fully integrated MRO software solutions. For smaller customers with mixed fleets the financial implications might be too tough to choose this way. “Miami seems an excellent choice to Swiss-AS since the city is the link between South and North America and at the same time a gateway destination to the rest of the world.” says Schäuffele. you need to have a separate legal entity over there and you need to have people working there that speak and think like they do. it presents a problem.” In the past data management companies have concentrated on their own regional sphere of influence. we mainly focused on Europe. where one side of the airline was using one legacy system and the other side was using a different solution. they don’t seem to care about the data format of information they provide. and would not be engaged in entering the market of providing IT systems. The potential of the US market is well-known to the MRO software industry. Swiss-AS has had particular focus on Europe. Airline Economics asked Schäuffele what has www. with the two fiercely competing in the Middle East and the Asia Pacific regions. If you are a customer with the right market power. Florida. you can go to Boeing and ask for all the manuals out of the toolbox and load it into Amos. The two manufacturers don’t seem to communicate on this issue. which is why Swiss-AS has taken the decision to launch a joint venture with Lufthansa Systems Americas. I have just come back from a customer that was asking me if Amos could connect to a particular system from Airbus. changed: “In the past. It would be much easier if the OEMs concentrated on building hi-tech aircraft and provided hi-tech structured information. If you want to expand your business into the US.” says Schäuffele. such as systems for point solutions. The Boeing toolbox is open to grab information from and can be linked with Amos to some extent. This factor is however a very serious matter when one considers airline mergers and acquisitions and the lack of cash that carriers have to complete a merger.” He adds: “When Airbus delivers a new aircraft. some parts of Africa and the Middle East and previously we were not really prepared to go beyond in markets like Asia or Asia-Pacific or in the US. While being the market leader in Europe and having a substantial market share in other parts of the world. the competition between the Airbus Neo and the Boeing Max – for airlines such as American Airlines that have ordered a large mix of Boeing and Airbus aircraft – may have trouble in five or sixyears when they need to have comparable data between the two fleet types.DATA SYSTEMS additional services. Imagine they are now adding 787s to their fleet with all the loadable software components and with all of the headaches that a new generation aircraft will produce. Swiss-AS is moving in on the American market in a big way. It is difficult to believe in an integrated approach in such an environment. the shop floors were using a third system. However. which in turn affects the long-term bottom line. They produce hi-tech aircraft and do not focus too much on data format standards. Schäuffele says: “Swiss-AS found in Lufthansa Systems Americas the ideal partner for its strategic expansion plans to market Amos in the Americas. which for mixed fleet airlines. Just imagine the implications of using so many systems. loses all the benefits of having an integrated system. Swiss-AS is now represented in Miami. We want to have this project finished in such a way that we can send a prospective customer to Southern Air to see what we have achieved there. We have signed a deal with Southern Air and we hope to sign in a couple of weeks with a second one and a third is in the pipeline. Another factor suppressing the growth of the data management sector currently is the lack of cash at many airlines across the globe which prevents the implementation of modern. “So we spread our wings to the US in September/October last year [2010] and have immediately generated a number of leads. We want to make sure that Southern Air is happy with the system and exploits the full potential of Amos and can therefore be used as a good reference site. The American subsidiary of Lufthansa Systems has been based in the US for more than 15 years and has long-standing relationships and experience with CONFUSON IN THE RANKS “The US is one of our biggest potential markets but they still use outdated legacy systems.” Getting into the US market is no easy task however. “If the two systems to maintain these fleets don’t look exactly the same. might profit from an IT management system delivered with the aircraft type. as a business unit within Lufthansa Systems Americas. clients will be able to do visual programming in Amos via drag and drop. Now we go one step back and consolidate the existing business functions prior to adding new ones. This approach enabled the US Amos team to start its business right away while profiting from the infrastructure. Thanks to this new feature. Swiss-AS just wants to keep the optimum balance between acquiring new customers versus maintaining what we have already achieved. Currently we have more than 100 customers and we still sign Swiss franc contracts. Currently we have an approval rule system in place for THE BIG SQUEEZE The business in the pipeline for Swiss-AS is impressive and is telling. We would like to charge everyone in Swiss francs. Many airlines were really pushing to sign franc contracts. They will have a tool at hand that allows them to visualise contractual rules. airlines and MROs alike are desperate to reduce costs and gain what business is out there. the aviation IT provider complemented its portfolio for the American market. Also for MROs have we introduced the possibility that third-party maintenance providers can work with mixed authority/certification set-ups while the system will always produce the right type of certificate dependent on the ownership of the component/aircraft. At the same time. sales distribution channels and good reputation of Lufthansa Systems Americas. This is not good for the customers and it is also not good for the supplier. SwissAS is definitely pushing Amos into the MRO arena – being a high-yield market. We are developing this workflow together with our latest customer. In such uncertain times. We are now optimising and reorganising the planning of maintenance events in Amos. The Amos business unit will focus not only on sales but also on project management and consulting. Since approval workflows are so different between countries and cultures. The same logic rules shall be applied to all functions of the maintenance planning module. which we have worked on for months. Amos has been positioned within Lufthansa Systems Americas as a business unit that will be fully dedicated to Amosrelated activities. that is to say we are closing the deals now. while adding complexity and diversity.” orders. Since the very beginning we were very cautious not to have the currency risk on our shoulders and customers were more than happy to have Swiss franc contracts because they expected this currency to be more stable with lower inflation rate risk. The ones we sign in US dollars at the moment don’t have a real big negative impact on us. It would be folly for the aviation data management system providers such as Trax and Swiss-AS to devalue what is currently a highly investable arena that looks set for strong and rapid growth. This need arose because we have environments in our community where MRO providers work for different companies under different certification rules. The movements between store and aircraft are not really monitored. He adds: “Another big step forward will be the introduction of a rule engine in Amos. “We have grown over the past couple of years with a growth rate of 20–25%. One of these developments is devoted to the subject ‘material flow tracking’. as we try to have the cost basis of those contracts in US dollars. sometimes even years. Times have changed and we always have to invest in keeping the system state-ofthe-art. Our cost base is mainly in francs. we are committed to continuously investing in the product in terms of technology and functionality. In future. Fortunately.DATA SYSTEMS have been adding functions to the maintenance planning module.airlineeconomics. “We went through a period where we were pushing ahead with 30 potential customers. most of our income is still in Swiss francs. Currently material is properly tracked when it is inside the customer’s store or installed/ removed from an aircraft. We continuously screen trends in the industry and add/enhance the functional scope. we have agreed that the approval workflow system needs to be completely generic and that it must be adjustable to the customers’ needs. In future you can define per part number tracking points. which indicate in the system where the part number is moving through your organisation.” But this is only one side of the coin. the other is the needs of customers to drill even more out of existing contracts with Swiss-AS. Nine have signed so far.” IN THE PIPELINE “We have a huge amount of development in the pipeline for pure MROs. but we had to recognise that some customers want to sign US dollar or euro contracts only. The client will have the possibility to define an unlimited number of flows per component that they want to control. Schäuffele sums up his thoughts in a manner that would impress any investor.” says Schäuffele.” says Schäuffele. “At the same time we have large-scale developments in process.co . All of this will be released between now and the end of next year. Lufthansa Systems Americas has many years of experience in implementing software solutions in the aviation business.” UP FOR THE FIGHT As companies such as Swiss-AS concentrate more on pure MRO and compete more heavily against one another. I just want to refer to one other project in this context.” airlines in North and South America. they involve themselves more heavily in a market under great pressures. such as the hierarchy of contractual terms in the program Contract Management. Over years we 20 Airline Economics: MRO Global 2011 www. The only disadvantage is our connection to the Swiss franc. Swiss-AS is in the process of introducing this rule engine in all areas where the system deals with very complex behaviours. You see. which is a graphical way to define complex behaviours of programmes in the system. but we do not want to become the biggest. “We have signed a considerable number of contracts this year. “Many more projects could be mentioned here. By co-operating with Swiss-AS. We think it can turn sour if we start selling more aggressively and sell at too high a premium. all Amos users can define at whatever place in the system which kind of approval workflow they want to implement. including management consulting. Swiss-AS helps its customers to get the most out of their Amos investment by providing reliable consultancy services not only during the implementation project. there are fewer names left in the market today acting on a global level. www. more than 100 customers in four continents run Amos applications – and as customers actively participate in the further development of software. Combining 20 years of innovation and excellence in the area of IT/ MRO. MRO providers. Swiss is also becoming one of the biggest customers because it is migrating its data into Amos for its entire fleet. Today. which is the biggest difference from five or 10 years ago. Amos lists GOL in Brazil. Ryanair has been a customer since 1997/98. In its fully integrated software package Amos delivers all the required tools to meet the demanding requirements in the fields of maintenance. from user training to consulting and continuous support.DATA SYSTEMS Swiss Aviation Software and its Amos product For over 20 years Swiss Aviation Software (Swiss-AS) has been providing a range of bespoke management support services to the aviation sector. and AirAsia in Kuala Lumpur. Amos completely fulfils the airworthiness standards of EASA and FAA and is continuously updated accordingly. the scope of functions in Amos is increased with every new customer. Swiss-AS has become a fixture in the MRO software market and the industry-leading maintenance management system in Europe and beyond. regional and flag carriers to large airline groups and MRO providers. In order to be able to give customers the most benefit from the implementation of Amos.airlineeconomics. and it has just signed with South African Airways. while fulfilling the customers’ expectations.co Airline Economics: MRO Global 2011 21 . major low-cost. Over the past years. process analysis and system audits. a service offered by Swiss-AS. Swiss-AS provides strong leadership throughout the project to ensure the implementation stays on time and on budget. Swiss-AS offers a full package of services covering the whole range of services and thereby guarantee a successful and reliable product performance. Swiss-AS helps customers to successfully manage the complex requirements of a modern aircraft fleet whether in the context of airlines. with 130 aircraft. Alitalia is a big customer. Since the late 1980s the maintenance and engineering system Amos has been setting the standards in a highly specialised market segment and has attracted more than 100 customers from all over the world. Amos Operation Services (AOS). covers a predefined set of tasks related to the administration of the application Amos and the underlying database. Growth is being driven by reputation and word of mouth. pure operators or flight schools. Lauda-air being one operator of the Austrian Airlines group joined the AMOS community in 1994 while the entire Austrian Airlines group came on board in 2002. Swiss-AS has gained a high reputation around the world. Ranging from initial requirement studies to system installation. engineering and logistics. but also for the complete life cycle of Amos. Its solid customer base ranges from pure operators of all sizes. Needless to say. This process includes a comprehensive support package through an Amos Online Support tool and Amos Online Documentation. It has often been said that the only real low-cost shop visit is the one you don’t have.co . E ngine original equipment manufacturers (OEMs) and maintenance repair and overhaul firms (MROs) are together responsible for the performance of an asset.000 at the start of this decade to some 16. as well as asking pilots not to use full throttle unless strictly necessary due to load.000 engines to support and maintain. customer support and logistics strategies for the Asia region now risk losing out on global market share by some margin. Engine MRO suppliers and others in the related supply chain who have not already developed corporate. which is a prerequisite to airline reliability. But airlines are getting smarter at stretching time on-wing by investing in a variety of techniques and activities to enhance engine life. It also represents the largest share of maintenance spend.airlineeconomics.ENGINES More MRO for your money MRO Global looks into the maintenance providers market and outlines some of the options available certain engine types. According to engine manufacturer CFM International (CFMI) all these techniques can increase time onwing by 10% to 20%. This is said to be larger than the absolute engine fleet growth in North America and Europe combined during the same period. aircraft availability and fuel burn – the bulk of an airline’s cost base. The active jet engine fleet in Asia-Pacific (including China and India) will grow from under 10. Asia-Pacific accounts for almost 50% of the absolute growth in engine MRO spend and the region will be a larger engine MRO market than North 22 Airline Economics: MRO Global 2011 www. Growth rates in Asia (especially China and India) will be high over this decade.000 in 2020 – that’s an additional 6. capacity. These include regular engine washes to ensure the working parts inside the engine are as clean and contaminationfree as possible. airfield altitude or atmospheric conditions. co Airline Economics: MRO Global 2011 23 . and airlines have sought many ways to reduce their engine MRO spend. one just has to observe the market penetration of America and Europe by 2020. have seen revenues decline on average by 10–15%.ENGINES availability from OEMs. reduced airline resources available to the PMA approval process. PMA remains a strategic tool for airlines to use in the face of increasing prices or poor parts The proposition they made to the airlines was logical: the-hour deals). ing over a larger base. documentation and many parts. last but not least. but now in the latter half of 2011 schedules are being cut once more and the general global market slowdown will once again see less aircraft in the air for the next six to 12 months. engine OEMs embarked on a strategy to capture the total maintenance value as part of their product lifecycle. easily maintain on their own. such as the 737 Classic and MD aircraft. All these changes in behaviour have meant engine overhaul suppliers. especially in the airframe components and interior parts of the aircraft. Despite this. This latter point can be illustrated by GE/CFMI’s agreements with potential adopters/users of PMA. the recession has seen the use of PMA parts decline by 17% since the 2007 peak. coming down when considering the improvement in fuel consumption on newer engine types. seeking renegotiation of MRO contracts. the independent suppliers such as Aveos and ST Aerospace. and reduced overall aircraft use to better match capacity with demand. This is driven not just by the fleet growth. OEMs are able to sell long-term MRO support deals at the point of aircraft purchase and they control access to technical data. There are many reasons for rather than buying inventory. nance needs. In 2010 aircraft were moved back into service at pace.airlineeconomics. where possible. engine OEMs have a competitive advantage over other third-party suppliers. The OEM approach was simple: significant portion of maintenance costs. deferment of the replacement of expensive life-limited parts and use of short-stub engines. ENGINE OEMS LEAD THE AFTERMARKET In the mid-1990s. Red ink is again flowing across the balance sheets of airlines across the globe and so cost reductions are at the vanguard of thinking. So it is expected adoption of PMA will recover and increase. more repairs and less replacement of expensive parts. which they control closely third-party/airline MROs The result: If you aren’t an OEM MRO. climb with each passing year. On newer engine models. MRO. but also by the age demographics of the fleet already in operation. They can also be more flexible on material they choose to do so. The recent recession and global slowdown www. The effect on third-party/airline MROs: adopted similar models developed less maintenance-intensive equipment. As evidence of the market strength of OEMs. Ironically. This has successfully given GE/CFMI greater influence over the parts/ material supply chain. Examples include: a reduction in work scope for shop visits. OEM defensive measures. depending on their engine and customer portfolio. and. parking and cannibalisation of the mature aircraft fleets where PMA had a higher penetration of material content. Between 2007 and 2009 airlines parked many old maintenance-intensive aircraft. more repairs rather than replacement of parts. parts. helped to curtail average total spend per engine. of course. and. greater leverage of spare or surplus engines in lieu of an overhaul. you need a strategy to align yourself to deliver maximum value and stable costs to the customer over the long term. signed a contract with GE Aviation for the maintenance. stated at the time: “Flydubai is ments due immediately. The OnPoint portfolio includes the ClearCore engine wash and effluent-collection system. This concern will grow as we move towards 2020. Generally speaking. especially the Trent family. repair and overhaul of 109 engines over the next decade. the world’s fastest-growing start-up airline.co . and engine maintenance to most airlines is non-core.ENGINES own engine models. MTU’s Total Engine Care package can include several MRO services besides core engine MRO. At the Paris Air Show 2011. reflected in their flexible solutions such as powerfleets and customised work-scoping. technology upgrades. with payany risks. Ghaith Al Ghaith. As a result of this change in purchasing behaviour by airlines. so airlines can and should leverage this opportunity. Indeed. some of the event (PPE). The ability of the engine OEMs to raise/escalate their prices even in the middle of the current recession remains an open and regular complaint of many airlines. to more than $12 billion in 2011. and this is an option many operators have taken up in the current climate. and integrated systems with support and diagnostics. We have one of the newest fleets in the industry and signing this agreement will ensure our engines continue to perform at peak levels. As well as addressing environmental. flydubai. e. First. Since 1995. This makea the business case for in-house capability difficult to justify. engine leasing. Second. and operators might find out later they have been overpaying. it might be better not to sign a long-term fly-by-hour contract now as component repair options continue to increase. a viable supply base exists for many engine types. chief executive of Flydubai. the arrangement means engines can be washed in many more locations within airports or maintenance facilities. Advice to operators who have yet to select an engine MRO provider: Rely on a strong engine MRO provider with significant experience. This model allows the operator to conserve cash until the visit is due and could be favourable in times of limited cashflow. Engine washing is an established technique for helping reduce fuel consumption and carbon footprint. no matter its background.pool. will operate on a philosophy to repair engine parts wherever possible. with a positive connection to capture almost all the wash effluent while eliminating overspray and dripping. Component repair capabilities should in this day and age range from standard manual repairs and OEM licensed repairs to the company’s independent bespoke repair solutions. OEMs have increased their share of the market by 30 percentage points. The OnPoint solution agreement represents an investment of $2 million per CFM56-7B engine. Arrange for shop-visit staggering and/ or spare engine solutions a long time ahead or select an MRO provider that 24 Airline Economics: MRO Global 2011 www. and the aftermarket agreements As the OEMs take greater control of the aftermarket. A good MRO provider. Especially for the newer engines. Under a PPE agreement the customer pays the rate per engine hour flown only when the shop visit is being performed. one that can best assess the optimum time for a costconstantly looking for the best services and partners to ensure our fleet remains in the best condition to safeguard our operational obligations and safety of our passengers and crew. the associated new engines are becoming increasingly reliable and the cost to establish overhaul capability is getting higher. so as not to fall for the expensive ‘quick fix’. airlines today are focusing more on their core business of flying passengers. engineering support such as fleet management. line replaceable customer training. As which the customer pays a monthly flat rate per engine hour flown. it might be worthwhile sending engines to a few providers on a time and material basis to get a feeling for which provider and turnaround time. putting the total value of the contract at more than $300 million. Many independent MROs benefit from a strong customer focus. the ‘available’ or outsourced market has grown at just over 10% per annum over this period. Additional services provided by those such as MTU include spare engine support. compare cost carefully. Interestingly. Their success can be attributed to agreements made at the time of selling an engine and pricing benefits at that time that erase much of the aftermarket cost or the initial purchase cost. dedicated spare engine services. There are three reasons for this. This outsourcing trend will probably continue. In general. on-wing support. operators should pay careful attention to contractual inclusions/exclusions to avoid cost surprises down the road. primarily by taking work from in-house supply. new and used serviceable parts. airlines need to remember to develop strategies that enhance competition and/or help protect/reduce costs. GE has stated that ClearCore is distinguished by its effluent-collection system. Third. which power flydubai’s Some engines will have more than one shop visit. newer engines where OEMs tend to have a stronger market position. engine condition monitoring.” This agreement is just one recent example of prolific OEM incursion into the engine aftermarket. whichever way you look at it. GE Aviation’s OnPoint long-term maintenance and material solutions include overhaul. especially on the larger. the proportion of which has dropped by 31 percentage points. as airlines receive new aircraft.airlineeconomics. albeit not at such a fast rate. component repair. the combined share held by airline third parties and independents remains almost unchanged at 33–34%. health and worker safety concerns. www.airlineeconomics.co Airline Economics: MRO Global 2011 25 . and has several CFM56-7 customers with mature fleets under exclusive agreements. Both facila flow-line for inducting engines. CFM says it developed the TRUEngine programme in response to industry demand for better ways to determine the value of engines as they are redistributed in aircraft fleets. designated engineering representative repairs developed by the company and approved and certified by the airworthiness authorities. along with higher thrust and improved efficiency. There is also only a handful of providers with significant experience on the CFM56-7. and at the same time there is a limited number of large airlines and a plethora of small. CFM’s engine support is built upon technical expertise for genuine CFM56 parts and configurations. now used exclusively on 737NGs. When CFM was designing the -7B engine. CFM launched the programme to help the industry more accurately appraise used CFM56 engines and to enhance the resale value of the same. meaning any engine type can be inducted at any time. Targets included maintenance costs lower than those for the CFM56-3. either directly with the MRO shop or from an engine lease company.000 CFM56 engines in service with more than 40 operators around the globe have been granted TRUEngine status. supplemental type certificate holders and the PMA holders to support the continued operational safety of their product or part design. not to mention the possibility the asset might realise considerably less financial return when it is eventually sold. depending on customer demand. received by customers worldwide. Moreover. the company points out. the engine configuration. The TRUEngine designation is available to all CFM56 engines meeting the criteria. and the revenue generated from servicing them through their 30+year operating life can approach seven times the revenue from the original engine sale. and a strong customer focus. and more specifically the CFM56-7. turnaround time. making it the first engine to be developed using a full digital mock-up at all engine and installation levels. Commercial jet engines typically are in service for more than 25 years and change ownership at least once in their operational life. more than 5. which powers the 737 Classics. MTU is the largest independent provider of commercial engine MRO services both overall and for the CFM56 product range. material content.co . CFM’s TRUEngine programme. and several fleets of engines are being evaluated. beyond the type-certified configuration. spare parts and repairs used to service the engine must be consistent with CFM requirements for that engine model. Further. future maintenance was one of the major contributing factors considered by the engineers. specifically Catia. no matter which type. There are 21 providers serving the market with as many as 34 MRO shops. To qualify for TRUEngine status.ENGINES CFM56-7B engine support CFM International’s parent companies GE and Snecma used digital product tools. and it is critical operators without their own spares find an adequate source for spares during their shop visits. The result of optimising accessibility and removal and installation envelopes is a claimed reducreplacement times. so it is not surprising that all quarters are fighting hard for this business. engine overhaul practices. The company added the CFM56 to its MRO portfolio in 1999 and has accumulated extensive experience. maintenance history and supportability impact overall value as it changes ownership. there are not as many CFM56-7 spare engines available as there were in the past for other engine types. In addition. The qualification data is obtained through a combination of fleet operational and maintenance records. reduces their ability to provide technical support.to medium-sized operators with no dedicated engine MRO provider. The original manufacturers argue that by changing one or more parts manufacturer approval (PMA) parts in the engine for cheaper versions – at least when initially purchased – might result in reliability issues. To date. The TRUEngine designation also facilitates CFM’s ability to provide technical support. Service activity on CFM56-7B engines is growing at an annual rate of about 15%. and an online engine replacement time of less than four hours. quality and final cost. Of the independent engine service providers perhaps the best known is MTU Maintenance. Support for the CFM56 is a major contributor to revenues at GE Aviation Services. And new additional test cells have become operational over the past few years. to develop the CFM56-7B engine. only 40% of the combined GE and CFM installed fleet have had their first shop visit. These concerns resulted in the FAA’s Aircraft Certification Service issuing a Special Airworthiness Information ers. particularly on the CFM56-3 and -7. Overhauls of the -7 are carried out at MTU Maintenance Zhuhai in China as and the company has sufficient capacity to absorb short-term demand for engine MRO as well as increased demand for CFM56-7 in the years to come. The programme allows companies to more easily evaluate used CFM56 engines by serial number. The CFM56’s massive global popularity has fostered a correspondingly large number of maintenance facilities and a highly competitive market. and certificated repair and maintenance providers of the responsibilities of type and production certificate holders.airlineeconomics. and only such providers can guarantee no surprises in terms of slot availability. as well as data gained from the vast operational history of the global CFM56 engine population. based on data not widely accessible. operators. In recent years its market share on the CFM56-7 has fluctuated around 10%. Use of the latest digital product definition tools at all stages of the engine’s design helped to reduce definition cycle time and the first -7B engines came to production faster than had been done in the 26 Airline Economics: MRO Global 2011 www. The engine’s configuration. This has been an area of intense competition lately. They are also concerned that the modification of engines they design and build. all maintenance must comply with CFM-issued engine manuals and other maintenance recommendations. Its expertise covers nonOEM parts repair solutions. The airline pays for the engine regardless of whether it is installed and typically takes maintenance responsibility during the lease term. In April 2009. which included a gruelling 150-hour block test and an almost 60-hour flight test programme on GE Aviation’s modified flying testbed. In 2010. and a lower overall parts count in the high. and the high. As the CFM56 in-service fleet continues to grow. There is an agreed delivery and redelivery condition and the lease term is fixed. It also gives 5–15% lower maintenance costs (depending on the thrust rating) through enhanced durability. Operating lease: This is a more widely available product generally running over a longer term of three+ years. This lower cost is achieved through a combination of longer time on-wing. upgrade. which will provide up to 4% lower maintenance costs. SES is the world’s largest CFM56 engine lessor. depending on the thrust rating. In addition. Operating leases utilisation is high over a given period and where an airline is not in a position to buy its own spares. In addition to the compressor kit. CFM56 Tech Insertion. The engine meets the International Civil Aviation Organisation (ICAO) Committee of Aviation Environmental Protection’s standards (CAEP 6) are achieved through improvements to the high-pressure compressor.SES is positioned to deliver flexible solutions to CFM56 operators around the globe. it is improving engine cooling techniques and reducing parts count to achieve lower maintenance costs. Boeing and CFM together launched the new CFM567BE engine enhancement programme. Over the engine’s lifecycle.and low-pressure turbines. SES continues to adapt the size and mix of its engine pool to ensure that its customers have access to a comprehensive range of CFM56 spare engine CFM56 engine lease options including: Short-term lease where customers pay for the number of days they need and redeliver when finished. had a highly successful entry into service in 2007 on both the 737NG and A320 families. With a portfolio of more than 250 CFM56 engines and with offices and pool locations wide .and low-pressure turbines. the engine completed an extensive ground test programme. CFM56 Tech Insertion could provide operators with up to 1% better specific fuel consumption. Its high-tech Catia-aided design resulted in improved accessibility as well as optimised removal and installation envelopes – with remarkable results.co Airline Economics: MRO Global 2011 27 . improved durability. CFM used advanced computer codes and three-dimensional design techniques to improve airfoils in the high. and with longer time on-wing through an equivalent 15–20°C additional exhaust gas temperature (EGT) margin. It is an insurance type product devised to protect airlines against the risk of an aircraft on ground. When an airline needs a replacement engine fast CFM-subsidiary SES and the engine lessors come into the frame. Engines are made available for lease within 24 hours of request.and low-pressure turbines to improve engine performance. which translates to better fuel burn. Engine sales and exchange a wide range of CFM56 assets for sale at an engine exchange programme whereby an asset owner/operator may elect to swap out its unserviceable or older generation CFM56 engines with similar asset types that have greater on-wing life remaining with packages to suit specific customer requirements.250 CFM56-5B and CFM56-7B engines that were delivered before the production shift in 2007.and low-pressure turbine hardware.airlineeconomics. which is the production configuration for CFM56-7B and CFM56-5B engines. for the more than 7. the combustor. with the CFM56-3 engine) while an entire engine replacement can now be achieved within four hours. as well as high. Guaranteed availability is another service: this service is unique to SES and more commonly known as ‘GAF’.ENGINES industry before. www. Tailored to the customer’s individual needs. It provides a single-source solution for the lifetime of the engine. The line-support service provides specialist. new unit. non-routine engine line maintenance 28 Airline Economics: MRO Global 2011 www.ENGINES Rolls Royce TotalCare The Rolls-Royce Total Care package is at the vanguard of OEMs’ march into the aftermarket. line main base and engine overhaul facility for scheduled and unscheduled shop visits. removing the supply chain management burden from the airline. Against an agreed cost per flying remove uncertainties from engine management and provides greater financial confidence from managing predictable engine-support services including: proactive in-service engine management. line maintenance parts and tooling. engine accessories. TotalCare is a total support programme aligned to each customer’s operation and paid against hours flown.airlineeconomics. from the time the engine is delivered to the customer until it goes out of service. asset management optimises inventory requirements. and the collection and management of engine data.co . It has been prolific in its aftermarket agreements to such an extent that it almost completely controls the aftermarket for its engines. lines requirement: in case of aircraft on ground (AOG) due to engine reliability. Rolls-Royce can provide and manage all required engine support equipment. TotalCare is a flexible approach to achieving an engine support service that has the correct fit and scope of services to meet the operator’s specific needs. This programme has been highly successful for airlines but at the same time has been a burden for lessors. Rolls Royce remains at the vanguard of original equipment manufacturer aftermarket programmes. Asset management delivers: repair station from line station and/or overhaul base. and tion of stock levels. including spare engines. overhaul shop maintenance. and for standard spare engine provision. operations centre. the unexpected is centrally managed. nance to increase time on-wing. this fully operational service is available activities. Maintenance is controlled through jointly derived engine management plans and component management plans. and management of the repair loop. The planned shop visit service provides all restorative/refurbishment (planned) shop visits throughout the TotalCare term. Qualified and equipped maintenance engineers available at key airports for operators to use in the field (that is. engine overhaul scheduling. Access to line maintenance facilities (hospital shops) at key airports. Replenishment material is supplied in the case of no available repair. Also included are the non-insurable costs associated with shop visits caused by nonnegligent foreign object damage (FOD). including: 24/7 coverage by on-wing care airport service including service bulletin/airworthiness directive incorporation resulting in reduced engine turnaround time.ENGINES limited parts requiring repair/replacement when the initial life prediction is not met within the agreed term.airlineeconomics.co Airline Economics: MRO Global 2011 29 . this service includes: ing and overhaul work. Accessory repair and overhaul service is about the repair of specific accessories both in the shop and on-wing. Dallas and Newark fully operational. At present. Co-ordinated through the the service is provided by an established Rolls-Royce line maintenance support Royce is looking to enhance its on-wing care global locations and will soon have Frankfurt. This is over and above the data handling and interpretation of service to help save time. More specifically. A TotalCare agreement also covers any life www. Singapore. Optimised System & Solutions (OSyS) service. workscoping and overhaul work in the case of unscheduled engine-caused events. providing trend monitoring of a state-of-the-art predictive health service designed to minimise operational disruptions and simplify data reporting practices translating data into valuable information. and engine margin forecasting to maximise on-wing life. helps to optimise operating costs and predictive support can highlight a maintenance requirement before a potential event and can assist with maintenance shop load planning and spares scheduling. including: advance failure prediction to avoid the cost of operational disruption and engine repair. enabling minimum operational disruption and maximum time on-wing. providing a fast response with optimised solutions. ommended service bulletins and airworthiness directives throughout the term. fly-away teams to support in the event of an AOG situation). which means the aircraft has increased thrust available in hot day conditions and the GP7270E provides the GP7277. Emirates continues to be the biggest GP7200 operator. The 70.500 lb rated GP7200 is identified as GP7277.000 lb. The average flight duration for the GP7200 engines is about seven flight hours.airlineeconomics. The GP7270 and the GP7270E have exactly the same thrust rating of 70. The first run of the GP7200 was in April 2004 and the first flight with a GP7200Although the GP7200 is certified for up to 77. All versions have cancelled. flight hours and flight cycles are accruing rapidly – in June this year the fleet of GP7200 engines passed 500.000 30 Airline Economics: MRO Global 2011 www. followed by smaller fleets. Engine Alliance. but Engine Alliance was then selected to design and develop an engine engine is built around the designs of the core of the GE90 and the fan and lowpressure system of the PW4000: GP7200.500 flight cycles and about 12.co . On the aircraft side. only the 70.000 lb thrust.ENGINES A promising start Maurick Groeneveld. It can be estimated that the milestone of 1 million flight hours will be reached in the second half of 2012. to produce and sell large engines for Boeing’s proposed 100 engines.000 flight hours. which are is the result of Emirates using a number of The ‘high-time’ engines have about 1. director of aircraft management at Doric Asset Finance. lb rated GP7200 engine is identified as GP7270 or the GP7270E (‘E’ stands for extended) and the 76.000 flight hours and 70. the With a growing fleet of presently about the number of installed GP7200s is about THRUST RATINGS There are three thrust versions for the GP7200 engines available.000 lb thrust. The GP7277 was aimed at the freighter verAnother thrust rating to be added soon a slightly higher MTOW of the passenwith 72.000 lb thrust thrust rating plug. but the GP7270E has a higher flat rating temperature at GP7277E versus ISA + 15°C for the GP7270). Pratt & Whitney and General Electric officially announced their joint venture. The average flight duration of the GP7200 engines is shorter than for the Rolls Royce Trent 900 engines. takes a look at the Engine Alliance engine developed for the Airbus A380.000 flight cycles. I FLEET n 1996. As with any growing fleet. this requires additional tracking of the fan modules and propulsors. The engine’s first refurbishment is likely to feature light maintenance of all modules. the GP7200 engines have shown a smooth entry into service any other engine. Engine Alliance initiated a replacement programme part that has a life limit of 4. the GP7200’s performance retention (up to now) looks very satisfactory and the exhaust gas temperature (EGT) deterioration is presently not a contributor to engine removals. which results in a loss of oil through the seal. due to the lower EGT margins of the GP7270E engines compared with the ‘standard’ GP7270 engines. it features some issues. GP7200 ENGINE CHARACTERISTICS Fan Low-pressure compressor High-pressure compressor Combustor High-pressure turbine Low-pressure turbine Fan diameter (inches) Length (inches) Dry weight (lb) Single stage with 24 swept wide-chord hollow titanium blades Five stages Nine stages Annular combustion chamber Two stages (cooled) Six stages (uncooled) 116.1 14. a second run of about 2. and the extent of the work was light.000 cycles.500 engine cycles is likely to follow. from an engine management perspective. typically involved repairs and modifications. in the propulsor and the fan module to ease transportation for shop visits. A product improvement plan is in place. the low-pressure turbine and the turbine exit case. all GP7200 engine shop visits are performed in GE Wales. which is the only MRO shop Industries is gearing up its extensive engine maintenance facilities to perform GP7200 shop visits.000 to 2. life-limited parts has certified life limits removals as. the number of GP7200 shop visits has been limited and only 20 shop visits have occurred since the GP7200 engines commenced their commercial www. to make general remarks and draw conclusions. but Engine Alliance either has a solution in place or is working on it.7 187. Obviously. This engine’s first refurbishment is not causing a premature first refurbishment of the engine. At the moment.ENGINES GP7270E requires the thrust enhancement kit modification to be embodied. As a result.airlineeconomics. As the EGT margin of new GP7200 engines is significant and the deterioration not very high. which will undergo heavy maintenance. except for the combustor and the high-pressure turbine. Another MRO shop preparing for GP7200 shop visits is Abu Dhabi Aircraft Technologies.100 cycles. The performance demonstrated by the GP7200 engine also suggests this engine will live up to its promise. Simultaneously. Engine Alliance is working on extending the life limits of those parts that have a lower limit.800 OPERATIONAL EXPERIENCE Based on information available to Doric. it can be expected that removals for EGT margin – if being a removal reason – will only start to occur around 2. Doric has come across the following more significant issues: been some premature engine removals due to excessive oil consumption. All the MROs are part of the Engine Alliance MRO network.co Airline Economics: MRO Global 2011 31 . due to higher-thannormal seal rub (as a result of the manufacturing process). Emirates Engineering is also gearing up its engine maintenance facilities from changing modules on the GP7200s as of today and it plans to perform GP7200 shop visits from late 2014.200 cycles) and other life-limited parts have limits at various levels in between.200 cycles. spool upgrade: engines with a par- for around 3. the life limit of these parts was reduced to 2.000 ever. due to the youth of the GP7200 engines. the GP7270E engines will reach their removals for EGT margin slightly earlier. but in managing the GP7200 engines. This replacement and upgrade programme has been completed on spool has the lowest life limit (4. It expects to perform the first GP7200 shop visit during winter 2013/2014 and have full overhaul and repair capability for the GP7200 by winter Air France and other operators.000 engine cycles (for first-run engines). Based on the number of GP7200-powered number of GP7200 shop visits is expected to increase significantly from about 10 a year now to about 100 a year towards the end of this decade. SUPPORT SHOP VISITS It seems possible the GP7200 engines would be able to remain on-wing Up to now. It is somewhat difficult.500 to 3. LIFE-LIMITED PARTS MANAGEMENT The life-limited parts in the GP7200 engines have a target life of 15. TECHNICAL ISSUES There have not been any Airworthiness Directives issued against the GP7200 engines. The root cause seems to be linked with premature and increased wear of the #5 carbon seal. The engine’s second refurbishment would be more extensive than the first and also feature heavy centre frame. Thereafter. which plans to be able to handle GP7200s by 2013. SMOOTH ENTRY Although the experience with the GP7200 is limited. can make all the difference. [DER stands for parts that are approved by a US Federal Aviation Administration (FAA) Designated Engineering Representative but for the purpose of this article “DER” repairs also relates to European Aviation Safety Agency (EASA) approved repairs. or DER. lost warranties.airlineeconomics.SMOKE AND MIRRORS Smoke & Mirrors s owners and operators of commercial aircraft struggle to stay competitive in today’s global economic environment. repairs. and alterations to be accepted globally because they are marketing their products and services to a global customer base. The parts market is split into three main sections: OEM. explores the current state of the PMA market and the threats to its survival. FAA Parts Manufacturer Approval (PMA) parts and approved repairs. Similarly DER repair and alteration approval A holders and PMA holders need to have their parts. yet safe. aircraft parts. erosion of public confidence. there is fierce competition between the OEMs (including their 32 Airline Economics: MRO Global 2011 www. liability concerns. using cheaper.com . But there are consequences to such a strategy: significantly the doubt that has been cast on the integrity of parts and services no provider by the original equipment manufacturer (OEM). lower aircraft resale values. Owners and operators of commercial aircraft need PMA developed parts and DER repairs accepted globally as readily as OEM parts and repairs. a possible future legal battle. and contracting out maintenance to both domestic and overseas providers. Those consequences include higher insurance costs. The PMA market has a small slice of the overall parts market but enormous potential for growth yet doors are closing. However. misleading quotes and credit barriers – the PMA debate has it all. and an A bitter feud. concern was expressed over the potential stifling of competition. or for which they offer warranties and maintenance services. The guidelines are particularly relevant for dominant firms or firms with market power. PMA parts offer savings of up to 40% revenue/risk-sharing suppliers) and the independent aftermarket parts providers of repairs. the issue is not at this time seen as a problem. after some consideration. Once an OEM acquires an aftermarket company. And have been backed in their campaign by the various national Export Credit Agencies (ECAs) that support the OEMs in their respective countries. The OEMs have been fighting to curb the growth of the PMA market. for some areas of the aircraft and engine www. against parts from OEMs. and leasing. aftermarket parts supply. are putting pressure on owners/ operators not to use non-OEM parts or unapproved repairs through placing restrictions on customer support services. As a consequence of all of these factors. The PMA market has continued to grow even though the aircraft lessors. It has been reported that OEMs are cutting back or eliminating customer product support if the owner/operator incorporates non-OEM developed repairs.SMOKE AND MIRRORS For example. If current trends continue. Some engine OEMs also lease engines on a power-by-the-hour basis. Consequently. Also many owners and operators that provide maintenance services. Once that choice has gone. Nevertheless. The market for PMA showed a 7% growth rate in 2010 and is expected to top that in 2011 as airlines scramble to cut costs. This represents both the success of the OEMs growth strategies in a tough market but also an erosion of choice for the airlines and aircraft and engine lessors in the longer term. That said.airlineeconomics. repairs and alterations go into either aircraft they own. account for over 40% of all commercial aircraft in operation. the OEM s will control more than 60% by the end of this decade and around 75% of the engine specific aftermarket. etc. they are also vying for a share of the very market that they are criticizing. mirroring the automobile market in many ways. a major OEM that owns over 25 repair stations worldwide is repairing and fabricating parts and applying for supplemental type certificates (STCs) and PMAs. while at the same time lobbying for policy changes in their favour. with the exception of Lufthansa and British Airways. that don’t accept non-OEM parts for the most part on their aircraft. although PMA penetration in the Americas is prolific. The OEMs have formed a loop around the aftermarket and are cornering the same at alarming speed. which is set to increase above 50% at any time. the repairs and parts which they had previously complained about suddenly became acceptable. the market is more restrained. owners and operators do have the power to force an investigation in the state of the aviaition aftermarket. GE for example owns an estimated 20 repair stations worldwide and also owns a major aircraft leasing company (GECAS).com Airline Economics: MRO Global 2011 33 . as they expand so too they increase the risk of catching the eye of the regulators. or have entered into partnerships with non-Type certificate/production certificate holders to develop repairs and fabricate replacement parts. warranties. When Airline Economics looked at the guidelines it was clear that the OEMs are sailing very close to the wind and. On current form it is only a matter of time. because the OEMs are not proven to be acting in collaboration. did point to new vertical restraints rules and guidelines that were adopted and published in Spring 2010 that cover all kinds of supply. in Europe. alterations or replacement parts in their aircraft. the OEMs and the leasing companies and repair stations they own. Given such dominance. As the major OEMs diversify into maintenance. The Directorate General for Competition. however. Just a few years ago the OEMs controlled 15% of the aftermarket but they now control around 45%. one would expect the market for PMA to be shrinking but it has not. the OEMs are increasingly gaining full control over what parts. OEMs have also acquired independent companies that held PMAs or had developed their own repairs and alterations. are further crowding the market. However. the use of Instructions for Continued Airworthiness. alterations and fabricated replacement parts and other maintenance services. purchase or distribution agreements in all sectors. When Airline Economics spoke to the Directorate General for Competition at the European Commission. to name but a few. in fact in some recent cases all of the profit is tied-up in the aftermarket. which they then sell at a loss and only make money from spare parts sales over the years. British Airways has been using PMA parts as standard since 2006 when a total of 28 new PMA parts were approved.” Fear of any potential reputational damage has never stopped British Airways. PMA parts manufacturers have entered the market on the other forcing the OEMs to react to the erosion of their now essential aftermarket revenue stream. it will be gone forever. The problem for the OEMs was that they did not have the expertise to maintain aircraft. use PMA parts and approved repairs on the aircraft they own. “One well-known airline CEO said to me: “If one of my airplanes crashed and people died and the cause of the accident was traced back to PMA or DER. But the real clincher for putting airlines off the use of non-OEM parts is the reputational risk impact should one of their aircraft or engines to fail and cause fatalities. That situation presents a lot of problems for those of us in the leasing business. However.” says Jon Sharp. In 1999 around 15% of the engine MRO market went to the OEMs. by 2009 that had grown to 45%.” says Sharp. if not better. United and ANA. Once installed. Now is the time to sit up and take notice of how the OEMs are extending their market share and examine the impact this will have on the aftermarket landscape. president and chief executive of engine lessor ELFC. from using PMA parts. The engine OEMs have. however. often used by financiers.” There is an argument. In 2007. while also being much cheaper: why has the PMA sector not achieved total market dominance over the past three decades? The answer lies in a clever smoke and mirrors campaign waged by the OEMs in the way PMA and repaired parts are perceived by the market.SMOKE AND MIRRORS market. from the beginning of the PMA threat to aftermarket sales. Today. especially within the EU and Asia-Pacific regions. there are many aircraft and engine manufacturers in the market and as purchase prices fall through increased competition on one side. 100% of the fleets are on OEM care packages. In 2011 an aircraft or engine manufacturer cannot make a return on an aircraft program without aftermarket sales/agreements. For some of the new engines types. the monopoly was broken by engineering companies in the 1980s that answered the need for airlines to save money. “The OEMs spend a huge amount of money on developing new engines. the parts are monitored for any defect trends and we note failure “It is because of the growth of PMA and DER that the OEMs have adopted strategies to try to exclude PMA and DER. when BA entered into a deal with HEICO after watching Lufthansa take the lead.people would stop flying with us tomorrow. are not making more use of PMA and approved repairs. that the aviation aftermarket is running at least a decade behind the automobile market. slow to see the benefits of aftermarket sales. leading to rapid PMA infiltration into most areas of an aircraft and/or engine.airlineeconomics. “The reason many airlines don’t use PMA or DER parts is not because they are seen as inherently unsafe or unreliable. than the original OEM part thanks to reverse engineering. All of this is good competition. can you imagine what sport the tabloids would have? ‘Airline X uses dodgy parts’ . who is under the spotlight of the most vicious domestic press on the planet. They say their OEM made parts are superior because they have gone through a rigorous R&D and testing processes. and that failure were traced back to non-OEM parts. What the OEMs did not expect was the infiltration of the PMA market into essential areas of the aircraft/engine. It is the very success of PMA parts manufacturers and approved repaired parts (DER) that has led to the OEMs adopting such aggressive strategies to protect and increase their share of the aftermarket. And for that reason I will not accept PMA/DER. In fact some senior airline board members spoken to by Airline Economics have expressed dismay that more airlines. This is not the whole story however. It is not that aircraft and engine manufacturers were 34 Airline Economics: MRO Global 2011 www. while the OEMs benefited from up-selling these extra services at the point of sale as standard. The benefit for the maintenance shop was guaranteed business. But if PMA parts are as good as. During the 1990s and the last decade the OEMs moved to change this by copying the automobile market template of approved repair shops. BA reviews all applicable PMA parts and approves each one on a case-by-case basis. been talking up the fact that a PMA part is a cheap copy of their original parts. until the 1980s there was little competition for their aircraft/engines and parts so they had no need to get involved with maintenance or did not need to lock in customers at the point of sale. therefore it is often used as a means to predict the future of the aviation aftermarket. BA. The OEMs believed that there was always a line that would not be crossed and also believed they could get away with 5% per annum price increases. The intervention of PMA and DER impacts their aftermarket profit opportunities so they are developing ways to curtail this including developing strategies to attract MRO business to their own workshops. They have been spectacularly successful at doing so. This has led to the generally-held perception that PMA or DER parts devalue the value of an aircraft or engine. which has directly improved their bottom line with no adverse affects whatsoever. a spokesperson for the airline stated: “We will no longer be the cash machine for OEMs… These are not bogus parts but approved by the very same regulatory authorities that approve OEM aircraft parts. as well as Lufthansa. but for the concern over reputational risk.com . . The fundamental argument is that if dually authorised and approved. It has been widely reported that OEMs tell operators they are on their own when they call in with a problem on an engine that has any PMA/approved repairs parts. I have to say that in fact it is equally as authorised. however. that BA only uses non-critical PMA parts. When an OEM part fails they will take responsibility for those parts and would investigate but if a PMA part has been fitted anywhere they shouldn’t have to spend time and resource dealing with the issue. United and ANA use PMA parts to their fullest extent and achieve significant bottom line benefits without downside. This action has been open and widely publicised so it is a wonder that no one has been in court over this issue to date. a PMA part is considered to be equally as airworthy as the OEM part. “The parts that are approved under PMA are considered by the FAA to be equally as airworthy as those that are made by the OEM. although cheaper. an FAA registered DER representative. It should be noted. certainly within the gas path. both Pratt & Whitney and GE make one another’s PMA parts. benefit from improvements on the original OEM design through reverse engineering.” He adds: “We have between 50 and 60 remarketing events a year and if 50% of those potential customers won’t accept PMA or DER that reduces my market by 50%. only three have included PMA parts. then they shouldn’t be held responsible. it probably doesn’t matter because those are likely going to get ripped out and reconfigured for the next airline lessee.” says Aldo Prario. there will be no PMA or DER parts in there. [being fitted with PMA or DER parts] really matter? Probably not. Does having certain non-critical components exterior to the engine. The view from the OEMs is that if a failed part was a PMA part. Ultimately though. as their OEM equivalent”.com . Even so. because those PMA parts are not tested within a whole engine. “As a matter of fact there is a history of parts that have been AD’d that are OEM parts and I don’t know of any PMA parts that have been deemed to be independently identified as a non-air worthy part. In one particular engine failure that is being investigated by the National Transport Safety Board (NTSB). ELFC’s Sharp says: “Every lease 36 Airline Economics: MRO Global 2011 www.” The reaction of the OEMs to the use of PMA/DER parts has been to shockingly abuse their dominant market position. parts that at the time so closely matched the OEM original that they carried over the same problems that caused the ADs. it could have had a mate- modes of PMA parts to check that they are similar.” says Aldo Prario. But since then. P&W does PMAs for replacing GE parts and GE returns the favour. driven by economic considerations I am sure.” Alas the “what if ” argument remains a primary reason for airlines refusing to use PMA parts. This argument was helped along eventually by the OEMs themselves. which in turn causes the lessor to say they cannot accept PMA or DER. if not the same. if there were any PMA parts in the engine. That does not mean to say that on return of an aircraft or engine. the OEM concerned is claiming that it shouldn’t be held responsible and that the authorities should be speaking to the PMA manufacturer. indeed it is often the case. They are supposed to be.airlineeconomics. it is not the lessor who originally says they are not having PMA or DER. However. which I cannot accept. if the PMA or DER parts concerns things like seats or cabin interiors. airlines blame lessors for holding them back from using PMA more freely. and herein lies the rub. “There has strong objection by the OEM for obvious reason to consider PMA parts to be inferior. out of 290 directives. it is their customers. the UK flag carrier still achieved between 30-40% savings over OEM list prices after focusing on high-cost items.” Moreover of all the airworthiness directives (ADs) issued since the early 1990s.SMOKE AND MIRRORS agreement and every lessor I have ever heard of excludes PMA and DER in their leases. The OEM takes it even further to say that even if it was an OEM part that failed. “Back in the days when I was confronted with the argument that a PMA part or an independently developed repair that was not the OEMs was an inferior part. The argument that OEM parts are somehow better has long since been defunct and the majority of the market realises that many PMA parts. In the case of an aircraft. the airline will simply ask the lessor to be excused. SMOKE AND MIRRORS The FAA on liability concerns and the OEM argument The type certificate holders and the production certificate holders [classified here together as the OEMs for ease] and owners/operators are concerned about the liability that a failure of an aftermarket part may affect their credibility and incur substantial costs. and Boeing will not provide production oversight to a licensee except to the extent that the licensee is also a supplier subject to Boeing’s normal supplier oversight protocols.airlineeconomics. Also. who is ultimately responsible for ensuring the aircraft’s airworthiness. identifies them as the manufacturer when in fact there are replacement parts in the product that were produced by other entities. The OEMs are claiming that with non-TC/ PC holder approved parts (PMAs) and repairs (DERs) in the product that their ability to fulfil their Continued Operational Safety (COS) responsibility is compromised. Another aspect to this argument is that the OEMs want parts that are fabricated during maintenance and parts with extensive repairs and alterations to not be marked [or re-marked] with the original OEM part numbers. airworthiness. the owners/operators need to become more active in leading investigations and engaging the responsible PMA companies (non-TC/PC holders) / repair shops when aftermarket repairs and parts are involved. but the PMA holder remains responsible for their own manufacturing quality. “Until such time that changes are made to that contractual language and the stance www. then it is that part which is to blame and therefore the burden of responsibility will fall upon that particular manufacturer. Under the licensing agreements Boeing is at an arms-length relationship in which Boeing licenses approved data. At this point it should be mentioned that some OEMs such as Boeing have been actively partnering with PMA companies to deliver safe and effective replacement parts to market.14). PMA parts (14 CFR 45. The FAA concluded this is likely to be true in most cases. “This is something else in the industry which is plain wrong and I think it has to be changed. The FAA says that they are aware of and are sensitive to the OEM’s liability concerns. alterations and replacement parts that were not developed by the OEM. The FAA disagrees with that proposal for both practical and regulatory reasons. The OEMs forget that the product is not “their product. ADs are accomplished. as has always been the case. The fact that the OEMs support the owners/operators in fulfilling some of those responsibilities is often misrepresented as the OEM being responsible. There is a subtle point to remember that the OEM owns the original type “design” but not the “product” once it is produced and leaves their quality control system. in the liability section. The OEM is only responsible for the parts they design and manufacture just as any aftermarket maintenance or replacement part provider is responsible only for the work they perform (including repairs) and the design and fabrication of parts they provide. is rarely involved except for major accidents. It states that if one of the parts it repaired fails. repairs and owner produced parts in an aircraft only means. Not only is the cost of repairing any collateral damage not covered in most cases. and maintenance provider stakeholders.” It belongs to the owner/operator who is ultimately responsible for the airworthiness of the aircraft. maintenance records are kept per the CFR. It could be argued that the OEMs are in some cases being deliberately belligerent and are scaring operators away from PMA parts through non cooperation in the event of a problem. Thus it is currently the case that if an engine fails and the failure is traced to a single part.com Airline Economics: MRO Global 2011 37 . In a standard MRO contract. Once in service. This is of course a very poor show on the part of some OEMs. The fact that there are aftermarket parts. operations. It is also noteworthy to point out that in most investigations. The owner/operator is responsible for their aircraft configuration management.15) and TSO parts or articles (14 CFR 21 Subpart O). In today’s environment when owners/operators are using a higher percentage of repairs. Identification and Registration Marking. and the aircraft configuration conforms to its approved design. the MRO agencywill replace it. “their product” and cite the fact the data plate required by 14 CFR 45. In the past owners/operators and the FAA have expected the OEMs to investigate service events and accidents. The liability language in MRO contracts is also a big obstacle for the expansion of the use of PMA and DER parts. although an ongoing internal debate has temporarily halted the issue of new license agreements. They also noted that the traceability of PMA parts is often questionable because aftermarket companies do not have tracking systems that are as comprehensive as theirs. OEMs continue to call the product. rial affect on the OEM parts and cause a failure. As a result some OEMs have recommended that the product data plate listing them as the manufacturer should be removed from aircraft and engines that include a substantial number of non-TC/PC holder repairs. the owner/operator. Boeing issues technical assistance letters and enters into license agreements with PMA companies to support acquisition of PMAs. and that’s it. It is in the process in getting to the point of knowing which part is to blame that is currently a grey area and might just end in court action at some point if a resolution is not found. There is no regulatory basis that requires marking of any parts other than parts subject to an Airworthiness Limitation (14 CFR 45. aircraft configurations very quickly diverge from the pure OEM/Type Certificate holder’s type design configuration due to maintenance and alterations that are performed. it will he liability language in MRO contracts is also a big obstacle for the acceptability of PMA and DER parts. production. In a standard MRO contract. If an airline has any PMA parts in the critical areas of the engine. In today’s highly litigious world. there is no requirement for manufacturers and fabricators of parts to track them or to have a tracking system. that any accident/incident investigations must be a cooperative effort of all the affected design. but the MRO agency wants the airline to indemnify it against claims from third parties. the airline agrees to pay a sum of money to the MRO shop to repair their engines. conformity. alterations and replacement parts because they claim that the product no longer conforms to their type certificate design. it states that if one of the parts fails. That has been the situation for decades but now OEMs are contesting that long standing reality. and records management to ensure that airworthiness limitations are adhered to. they are on their own in the view of OEMs. Boeing has issued many licensing agreements. anyone associated with an aircraft involved in an accident/incident regardless of their culpability could be forced to share in a legal settlement.” says Sharp. Those do not mean the aircraft cannot be transferred to another operator.” says Seymour. then airlines are not going to accept PMA or DER. we take a very theoretical view and assume there are no PMA parts or DER repairs on the aircraft or the engines. But the FAA approval process for PMA equipment and approved DER repairs requires rigorous development. says: “We don’t like PMA parts and we don’t like DER parts because they tend to have an effect on the valuation of the asset.airlineeconomics. But a key issue for us given the movement of aircraft around the world and the market and supply and demand. Phil Seynour. I think more and more that will get traction as time goes on but at this juncture we prefer not to have them in our aircraft for valuation reasons. When it comes down to the specific inspection of an aircraft and the redeliver of it to a lessor… the reason we have to make assumptions is because people just want a quick and dirty valuation and they don’t want to pay much for it.SMOKE AND MIRRORS regarding exclusion of liability. “The expensive parts within the engine that had fairly minor discrepancies. A DER modification can be something relatively minor such as the installation of a soap dispenser in a toilet cubicle. and indemnity.” However the appraisers have a different view. says: “As appraisers we like to think that in the perfect world everything in an aircraft is approved by the manufacturer. the airline will ask them to reduce their prices. It is only when we are asked to do a more detailed valuation and inspection of the aircraft. We try to do everything we can to prevent PMA or DER parts from going into our airplane. However. PMA equipment and DER repairs developed by authorized manufacturers are FAAcertified and perform equal to or better than original equipment. PMA parts and DER repairs are not approved by the manufacturer even though they have been approved by the regulatory authority. And the insurance companies behind them aren’t either. IMPACT ON VALUES Another reason for airlines and lessors to dislike PMA and DER is because of the widely held perception that their presence will devalue the aircraft or engine.” But appraisers can see both sides to the argument. the chances are that the aircraft will have those parts on it. reporting and test processes. is it going to be ok. Stephen Hannahs. airlines wanted to repair them and get a DER sign off. If a lessor comes to us with an aircraft that has been used by United for the past 20 years and they want to operate it in Europe. we have to make a whole load of assumptions.com . president and chief operating officer of IBA Group. There is a bit of that going on. that we are fairly comfortable with PMA parts being fitted to the aircraft so long as they are not engine parts. “We take the view when we are deal- ing with lessors and negotiating lease contracts. CEO and group managing director of Aviation Capital Group.” It has been widely put out into the market that insurance on parts and engines that are fitted in is compromised by the use of PMA parts. that is not a very practical stance to take because it is more likely that many aircraft have PMA parts and DER parts in them. “I can see why the market developed because there is a lack of response from the OEMs in terms of pricing parts – engine parts in particular were always increased by 5-6% per annum. If an OEM was to say to an airline it did not want it to use PMA parts. Airline Economics has not been able to find any evidence of this at the time of going to press. The simple rule there is that is it could affect the airworthiness then it is a critical part. They are not all engine related or critical parts. Installed PMA parts and repairs are fully insured to cover operator equipment. they can be very minor. some airlines 38 Airline Economics: MRO Global 2011 www. The chances are the aircraft would have DER approved repairs on it so might not be allowed to be used in Europe. I think though unfortunately they are a thing of the future. There has to be a change to make these parts more acceptable and I think that change needs to be in the liability language. When we are providing our aircraft values book and our lease rate digest. The publicity states that Boeing provides GoldCare customers with 24/7 operations support using the latest www. Simplified maintenance operations and logistics allow GoldCare customers to focus on their passengers while their airplanes are maintained to the highest standards of excellence by Boeing. OEMs have shown themselves to be adept at putting together repair networks that work for an airline’s entire fleet. giving the A350 program the commercial boost it needs to come close to breaking even. Its costper-hour support program has matured substantially over the past two years as new aircraft have been delivered.”. This strategy has proved both a success and highly popular to the extent that Airbus is now able to up-sell onto other aircraft as they are delivered. therefore they cannot back any sale that involves an asset riddled with competing parts. but we have learned that Airbus is surprisingly flexible and does indeed tailor contracts to a point to save airlines money over five year periods. planning and execution and material services with a predictable cost based on airplane flight hours. Although the SPC was an Airbus company. MORE PROBLEMS FOR PMA IN ITS CORE MARKET PMA proliferation in the USA is due to the fact that the fleet there is older. GoldCare is available to 787 Dreamliner operators and Boeing is expanding the service in response to airline customer demand. This usage and ownership cycle represents the core market for PMA parts but what happens when these old US fleets are renewed under OEM aftermarket agreements? The aircraft owner will still have the balance of power but in the future this will not be the airline. But a lot of airline purchasing people are very sceptical – they just don’t like monopolies and even if the prices were reduced say they just want to have a choice. The aircraft have no need to be financed.” The ECA angle is now very important and should be noted by all in the PMA argument. which will reduce cost and improve efficiency throughout the airplane’s lifecycle. As Airbus sought to save the A330 program and with it a great many A350 orders that were delayed. Airbus in particular has become a very active player. A spokesperson from the UK Export Credits Guarantee Department says: “The European ECAs have a stated policy not to allow the use of PMA parts on aircraft which benefit from their sup- OEM CARE PROGRAMS OEMs offer care programs to airlines at the point of sale alongside joint venture agreements with the MRO market.” Aircraft bought using ECA-guarantees are also often contain restrictions on the use of PMA parts. has signed up to cover all support for its A380 and A330 aircraft. Singapore Airlines. ECAs have been literally propping-up the aviation finance sector now since the start of the credit crisis and this is likely to continue for the near future as banks continue recover and build reserves. “Everyone else they said no. The recent spat of A330 orders has been a catalyst. The company is currently in advanced discussions with multiple customers regarding the tailoring of GoldCare solutions for their 737 fleets. Manufacturers of airframes are offering support for all non-engine parts and repairs. In the past OEMs have been thought of as having critical design knowledge and strong cash reserves but a distinct lack of on the ground specialist engineers able to perform and adapt.SMOKE AND MIRRORS do get big discounts from the list price.” Under GoldCare. supported by GoldCare partners. The ECAs are there to support OEM sales. these deals are extremely ambitious. the financing was done by Gecas – I think you know what the answer was after asking Gecas to put a PMA part into a GE engine. it decided to sell the A330 stop gap aircraft at rock bottom prices with the proviso that customers bought into aftermarket service programs. they are owned and used by the airlines to fulfil a role right up to the end of the aircraft’s useful life. At Boeing the GoldCare program has been growing rapidly.com Airline Economics: MRO Global 2011 39 . We can see both sides of the story. for example. vice president. The clincher for Boeing came when they extended the program to cover the 737 Next Generation product line. fleet management for Boeing Commercial Airplanes. This is here where the specialist MROs come in. we just have to be very careful in the appraisals as we can’t say PMA parts are fine. it will be the financers – either banks or ECAs – and the OEMs and it is this which should worry the PMA market and investors in the same. The engine manufacturers have been controlling much of the aftermarket through JV agreements for quite some time but the speed at which the airframe manufacturers are rolling out networks is astonishing.” said Jay Maloney. In one case this was because their aircraft were mostly owned by Special Purpose Companies (SPC) through various financing structures. Some have gone on record stating that the Airbus programs are more expensive compared to other options in the market today. “We’ve designed GoldCare to bring value to our Next-Generation 737 customers by boosting airplane reliability. extending to most aircraft types in service.airlineeconomics. Boeing leads and integrates a global team to deliver maintenance engineering. This does not bode well for continued PMA proliferation as the bulk of aircraft coming into service will either be financed by and ECA backed loan or on an OEM aftermarket agreement to cut the original purchase cost in the first instance.” port. One non ECA example of where financing is all important to the use of PMAS was highlighted by a senior MRO figure recently when he stated to Airline Economics: “I have had many meetings with leasing companies and found just one that said ‘we don’t care. you can put in whatever you want’ and this is with the airline’s support. “The airline will be able to focus on what it does best – flying its airplanes and serving its passengers. “Most importantly. That means that some airline credits simply become unacceptable without reserves and so a lease cannot be concluded. Secondly even if the fund is transferable. the reserves are held as security. In addition. they will be in say a half-life condition. Sharp explains: “So the OEM has all this money from airline A. A new operator. For lessors the programs are a bit of a game changer.com . or indeed the lessor. All leasing companies – engine and aircraft lessors – collect maintenance reserves in what is universally thought of as being the fairest system possible. Overhauls of this engine doubled for P&W in 2010 and P&W hopes to post another doubling during 2011. That is the first problem.SMOKE AND MIRRORS technology to turn airplane operating data into diagnostic information that enhances efficiency and maximizes aircraft availability. the OEMs refuse. Pratt also has invested in repair of CFM56 components to control the supply chain. so in the event of a default. This is turn means that maintenance reserves will slowly become a thing of P&W states that all four aftermarket segments are growing well. when receiving a leased aircraft covered by GoldCare. It has seven engine-overhaul shops and 15 component-repair shops and offers material solutions for its own and CFM56 engines as well as line service. When we ask for the fund money for the hours and cycles burned off to be returned to us. which we then lease out to airline B. Fleet management can cover non-P&W engines. including the much publicised and highly successful “Ecopower”. Care packages therefore reduce competition and the airlines’ options. has to foot the bills while others enjoy maintenance free periods. the lessor loses the security that it (and where applicable. even for line maintenance. Of the engine OEMs. and the company has opened two CFM56 shops in the past 18 months alone. the lessor can repossess the aircraft/ Moreover. and maybe more importantly. When airline A returns the engine to us. it is often insufficient given that the deal was probably struck at the time of selection of the engine where the manufacturer may have granted a concessionary rate. the fund OEMs collect in respect to certain engines may not be fully transferable at the end of a lease.airlineeconomics. All lessees during the course of an aircraft/engine’s life will pay the same per-hour costs levelling the maintenance costs across the life of the product so that no one lessee.” Strategic Airlines signed an exclusive five-year maintenance services and expanded engine management program agreements with Pratt & Whitney in 2010 the past if current take-up continues. lessors will have a number of headaches to deal with not least when clients come to them wanting to add the aircraft or indeed engine onto their own care program. P&W is of the mind that airlines will increasingly rely on third-party maintenance engine and use that money for its repair or overhaul. its lender) desires from holding maintenance reserves which under a care package are paid to the OEM rather than the lessor. it is perhaps Pratt & Whitney that has focused even more intently on the aftermarket than most. This echoes Jon Sharp’s concerns over the non-transferability of care package reserves and the fact that even though they may be transferable there is often a shortfall. A side effect to this OEM incursion into the aftermarket has been the unbalancing of maintenance reserves for lessors on both existing contracts and potential new business. But during the transitional period. For example they could have asked for $100 per flying hour to be paid into the fund even though the real cost of maintaining the engine is $150 40 Airline Economics: MRO Global 2011 www. is assured that the aircraft’s maintenance adheres to the requirements established by the manufacturer. “That’s my experience. engine maintenance at SR Technics in Zurich. and the MRO shop then is no technical reason why we cannot do a repair.” DER repairs make sound financial sense for aircraft operators and they often improve on flaws in the original parts. but the OEM could say no that they are not going to come up with this specific repair because sales of their new part are down and they would rather make more money on that than devise a repair service.com Airline Economics: MRO Global 2011 41 . Furlan explains: “The old world was about getting licences and negotiation with the OEMs. and the aftermarket could have a demand. not because the OEM doesn’t care about a mature engine any more. The approved repair market is growing rapidly and the OEMs are fully aware of the significance that this could have. says Furlan. The proper implementation of DER repairs is one method permitted under the CFRs. technology is being developed that will result in the OEMs controlling even more of the aftermarket.” However this approach doesn’t always work. just that their priorities are different. goes back to the OEM and said ‘ok you didn’t have the time to do it for me. Engines will be sold from the DER REPAIRS THE FUTURE SOLUTION? Amid all of this OEM expansion. In some cases the OEM puts themselves as the source but you share the market. Consequently. And that is not something we should be doing. we did on our own authority. maintaining or supporting the needs and desires of an airline with a mature engine is less likely to be at the forefront.airlineeconomics. If you can do that and work with the OEM and develop a good relationship. somebody will have to stump up the difference for the next overhaul. then you can get the OEM to approve the repair unless it would be a major hit to their bottom line. we say we are going to be back tomorrow with the operator. agrees that partnership with OEMs for repairs is important. they will decide they need your idea and will include the repair in their manual. short of 100% fabrication. What is the OEM going to say? If they don’t say yes now. There are things that happen in the mature aircraft world that are not very responsive to the operators needs but they are understood to be so.” Dr Robert Furlan. One senior engine MRO figure who declined to be named stated: “What is important for us is that we have the ability in our organisation to design a repair in partnership with the OEMs and get their approval. VP part repair. There are a variety of means permitted under the CFRs for owners/ operators to maintain their aircraft and restore or replace parts and components. We often present a case to the OEM with all of the facts for a repair and that there www. But in most cases today. We have done all of the work for you but we would like you to put it in your manual so the world can use it’. With most OEMs expending much of their time and resources in the development of brand new engines. all of my talent and most resources are portioned to the people doing the new product. owners and operators are continuously searching for ways to reduce costs while maintaining safety. lessor and lessee. it is important to note the growth in DER repairs. or something the next airline should be doing. I have seen circumstances where airlines under their own 121 authority develop a repair because the OEM hasn’t reacted quickly enough for them. You can the approach the OEM and present a business case for the repairs. This is fast becoming the norm and for some independent MROs this is a core part of their business going forward.SMOKE AND MIRRORS an hour. This is just the way the OEMs make money – selling new parts. the product support of a mature engine takes a back seat. provided they are in strict compliance with all applicable regulatory and airworthiness requirements. although we say it much more politely that that. If I am developing a new engine.” he says. MROs upon arriving at a solution or improvement for a repair will revert back to the OEM to arrange a joint venture on specific repair going forward. “A topic is raised and has a good idea. when the applicant has determined that repair is more economical than purchasing or fabricating a complete new part. Occasionally we tie in the customer. as the repair councils of the OEMs make purely commercial decisions on whether it is worthwhile coming up with a repair or not.” For independent MRO shops. but not intentionally. They must either double-up the cost to the airline per hour and risk losing the business or work out some other way to move forward through agreement with the OEM. However the repair on the aircraft has been documented in hours and cycles.” Although partnerships and joint ventures in the DER market provide a way for independent MRO shops to remain competitive. are permitted. now put it in your book.” As more and more airlines ask lessors to include aircraft under their OEM aftermarket programs so there begins a problem for the lessors. He says: “You can develop repairs on your own like DER and PMA. forming these kinds of partnership on the DER side is essential to their near-term survival. In the future and the next generation of engines there will be major changes in the game. that restore them to an airworthy condition. they have limited ability to work on developing repairs for more mature engines. This is understandable given the company is part owned by GE .but he also highlights the importance for them to remain independent from the OEMs and focus on keeping costs low for the customer. Daniel Adamski of HEICO says: “In today’s competitive market. DER repairs to parts of any extent. Then you make claims that your technical solution is equal or in many cases better than the OEM. Aldo Prario says: “If a GE is developing a new engine programme and they have limited resources they are going to put those scarce resources on the new engine program. It could be that if the OEM already has some pressure to come up with a repair in the area or if they realise that this repair is not fixing the problem. The only question remaining is when will the PMA firms stop talking and start acting? 42 Airline Economics: MRO Global 2011 www. the PMAs will be able to guarantee continued parts and repair supply to the market no matter the aircraft age. The climate is very good between us and the OEMs and we have to be an attractive partner. why has no one stepped up to the plate to argue against such a situation? The very same independent MROs are themselves intertwined with the OEMs through aftermarket supply agreements and other jointventure contracts to such an extent that they themselves have become an integral part of the OEM web. In the meantime however the concept of an independent MRO is being completely eroded and the decision power of the independent and airline/ operator with it. It is the only way to secure a solid footing for PMA in the commercial aviation sector for the next decade and beyond. Conversely it is this interaction with the independent MRO market that has protected the OEMs from anti-trust investigations but has attracted the attention of the European Commission and Capitol Hill regulatory commissions. The good thing is that we are not only an engine MRO.” He adds: “In the old world. it is clear that as the MRO market consolidates. Another example Wolfgang cites is bladed disc technology. or buy up maintenance companies themselves. then PMA market consolidation and refinancing will need to take place to facilitate the next phase of proliferation.SMOKE AND MIRRORS very first day with long-term maintenance contracts and there will be many innovations in the new equipment that the OEMs will keep proprietary.” he says. The OEMs are taking care that the whole lifecycle of the product is in their hands. We are preparing for composite repair. If the fact that higher prices and an increased monopoly of the OEMs is forthcoming. will mean higher prices for airlines before the end of the decade. By controlling a section of the front-end market. it is more to be an attractive partner. composites require a great deal of knowledge and experience to repair and also require new and expensive machinery. then the term independent has largely become redundant. “This is difficult for a non-OEM. “I do not see the free market developing in the next generation of engines that there was in the more mature engines. This has got very little traction to date. The PMAs have spent hundreds of thousands of dollars fighting their collective corner and appealing to the airlines and lessors to look again and again at the correct facts.” In a world where the OEM controls everything from conception right through to D-check is one where there is little room for competition.airlineeconomics. we have a lot of know-how on the aircraft side of composites and we have to build it up right away. but in the new world with our ownership we are pretty well in the market and still we are introducing technology we have to be attractive to the OEMs. it is logical that the PMA firms should seek to secure their position at the front end in the maintenance shops through merger and or acquisition and then extend to offer PMA included aftermarket care through base and line maintenance and power by the hour agreements. If they are not large enough to do this. Now as the OEMs increase their grip on the aftermarket.” The next generation of engines contain composite fan blades. the very best option for the PMA firms is to be bought by an OEM or MRO. I would have said we would have to get more and more technology to be a bigger player in that market. In conclusion. Our technology is not to put the OEM under pressure. When MRO shops are woven into the OEM structure to such an extent that they are worried to upset them by commented on the record. We will build up our technology to provide the best service for our customers…. A source at the European Commission confirmed to Airline Economics that they were “looking into the situation”. which have to pass a spinning test to show it is safe. requires a totally new strategy. including the aftermarket. coupled with MRO consolidation. The aviation sector is quietly moving towards huge OEM control and this. which requires a lot of new technology. The change in the industry in selling engines. We want to deliver best performance so we will be a partner to the OEM but we will also challenge them.com . even though they repeatedly maintain there are independent.   Sometimes if we can do a three party agreement with the OEM we will forego MRs. Airline Economics is aware of several clients that have been allowed PMA in non critical areas We preclude the use of PMA at all times "Typically a lessee will not pay reserves to both the OEM care program and to the lessor for the same maintenance event. yes but most often. In the scenario where the lessee pays the reserves to the OEM." Jackson Square Aviation ELFC Willis Lease YES in non critical areas on a case by case basis NO NO ECA funding exclusions Limits the ability to lease or sell ILFC YES on a case by case basis Aviation Capital Group AerCap NO No Comment FLY Leasing / BBAM NO GECAS NO www. we have structures in our agreements with the parties that returns the lessor to the same position at lease expiry had the lessor received the reserve payments during the term. Sometimes.com Airline Economics: MRO Global 2011 43 . 75% of the time no.SMOKE AND MIRRORS PMA LIMITATIONS Organisation Ex-Im Allow PMA NO Limitations It goes against our stated policy to allow PMA on aircraft which benefit from our support The European ECAs have a stated policy not to allow the use of PMA parts on aircraft which benefit from their support. We do everything we can to avoid PMA/DER but we accept that it is the future. ECGD NO Coface Hermes Lessor NO NO Allow PMA Limitations If on care program or PBH agreement does the lessee still have to pay towards maintenance reserves It depends on the airline.airlineeconomics. Operator either has to pay reserves or agree along with maintenance provider to a tripartite agreement ILFC’s approach to the issue of PMA parts is that we allow our customers to make the decisions as long as all certifications and aviation authorities regulations are met. instead of paying engine reserves to the lessor. If the refund is less than the reserves that would have been paid under the lease. 3. and each raises its own issues. There are a number of ways to address this issue. especially in cases of airline bankruptcies. The above two solutions do not involve much negotiation with the maintenance provider. LEAVE IT FOR RETURN In support of this solution. the maintenance provider will refund to the lessor all (or an agreed portion) of the unexpended payments it holds on the basis that the maintenance provider will have been paid for an overhaul it no longer has to perform. but that do require the maintenance provider’s agreement. A financial adjustment. Lessees often resist these solutions as duplicate maintenance payments and as depriving them of the benefit of advantageous pricing under the maintenance contract. when the lease expires. it holds no reserves to apply towards the next engine overhaul. None of them satisfies all the parties all the time. These solutions typically require the lessor to pay the lessee an amount equal to the paid-in reserves upon the successful completion of an overhaul under the maintenance contract. the maintenance provider and lessee can agree that if the maintenance contract is terminated with regards to the lessor’s engines for any reason. 2. Another is to require the lessee to pay lease reserves only to the extent they exceed the monthly payments under the maintenance contract. REFUND The lessor’s key objective should be to avoid a forfeiture of the unexpended maintenance payments paid under the maintenance contract. The maintenance provider might resist this approach because it might 1.airlineeconomics. But lessors often encounter difficulty recovering return condition payments. lessees argue the engines will be maintained and overhauled under the maintenance contract in a manner consistent with the corresponding lease requirements and that any deficiency can be addressed upon return of the aircraft at lease termination or earlier expiry under the return condition clauses of the lease. he main issue for a lessor is that. Top credit airlines that would not pay reserves anyway argue the maintenance contract is not even relevant to the lessor. the lessee can pay the difference. Discussed below are other solutions that seek more middle ground. the lessee pays a maintenance provider based on the hours or cycles of operation in exchange for engine overhauls. To accomplish this. T last overhaul and before lease expiry or termination. but enable the lessor to retain the reserves paid after the 44 Airline Economics: MRO Global 2011 www. presumably when the aircraft will be operated by a new lessee whose lease will require the lessor to pay the portion of the cost of the next overhaul attributable to engine use before the new lease began. LEASE RESERVE PAYMENTS One solution is to require the lessee to pay reserves under the lease without regard to the maintenance contract.co .FINANCE Solving issues with third-party maintenance contracts John Karesh at Vedder Price sets out the issues arising from maintenance contracts where. including expiration or termination of the lease. would compensate for an engine with greaterthan-allowed accumulated hours or cycles or that otherwise does not comply with all return conditions. for example. 8. or to the payment of a percentage of the cost of the next overhaul based on the ratio of the number of hours or cycles for which the maintenance provider is holding payment and the total number of hours or cycles accumulated by the next overhaul. the lessor can elect to require the maintenance provider either to make a refund. the maintenance provider’s obligation to perform an overhaul or refund payments would be limited to what is required under the maintenance contract. exclusion or alternative means of compliance. The lease should include provisions that: (a) prohibit the lessee from (i) 6. three-party agreement among the maintenance provider. that do not apply to the new lessee. such as a competitor. A financial adjustment could solve this problem. the maintenance contract should require the maintenance provider to refund to the lessor all unexpended maintenance payments in its possession attributable to the lessor’s engines.airlineeconomics. these factors should only affect pricing. as a general rule. A cure can be expensive and would only make sense if the maintenance provider has agreed to overhaul the engines for the lessor or a new lessee and otherwise to continue performing under the contract as long as the lessor makes the cure payments notwithstanding any other default by the lessee under the maintenance contract. such as its use profile and assumed quantity of work.co Airline Economics: MRO Global 2011 45 . lessor and lessee providing that. OVERHAUL COST SHARE The maintenance provider might agree to contribute to the cost of the next overhaul the amount of unexpended maintenance payments attributable to the lessor’s engine held at the time of contract termination. Offering an assignment of the maintenance contract to a new lessee could.FINANCE occur after further operation of the engine by a new lessee. absent agreement from the maintenance provider. If the lessor elects not to cure. follow the direction of the lessor to the exclusion of the lessee in relation to the lessor’s engines. ASSIGNMENT A right to assign the maintenance contract to a new lessee is often contentious and might be of limited use to the lessor. (b) following such breach or a default under the lease. Some assignees might simply be unacceptable to the maintenance provider. the lessor could seek to enforce the maintenance contract for its benefit. the maintenance provider might resist contributing to the cost of the next overhaul if differences in the use profile or maintenance practices of the new lessee could increase its obligation. DER repair or other exemption. 5. that it will be damaged by the premature termination of the contract because it anticipated a certain workflow. Since the next overhaul will usually 7. The three-party agreement should also provide that the maintenance provider will: (a) notify the lessor immediately upon a material breach by the lessee under the maintenance contract. (c) give copies to the lessor of any notice it gives or receives under the maintenance contract. following a lessee default under the maintenance contract or the lease. The best way to address the concerns of each party is a separate. and (e) not pledge. WHOLE NEW AGREEMENT The best option. or if the maintenance provider refuses to accept a cure. Moreover. However. it would not have to perform for the benefit of the lessor if the maintenance contract contains a provision generally that it is not assignable. CURE OF LESSEE DEFAULTS Curing lessee defaults under the maintenance contract to avoid termination might not adequately address the concerns of the lessor or the maintenance provider. so if the lessee defaults under the lease. the lessor could be stayed from enforcing its security interest if the lessee were to file a petition under Chapter 11 of the Bankruptcy Code. However. The maintenance provider might object to an assignment on the basis that the monthly maintenance fees and workscope were agreed with the existing lessee based on factors. the maintenance contract to secure its performance under the lease. SECURITY INTEREST The lessee could grant the lessor a security interest in the lessee’s rights under www. (d) not modify the maintenance contract including by means of a private letter ruling. and in any event. without the lessor’s consent. But the new lessee might not want the contract if it is too expensive or burdensome. or to overhaul the engine with costs shared. The lessor should agree to notify the maintenance provider upon the occurrence of a lease event of default. in certain circumstances. assign or encumber its rights (including its right to payment) under the maintenance contract. 4. or if it has its own maintenance programme. or to permit the lessor or next operator or purchaser of the engines to step into the lessee’s shoes under the maintenance contract. or that it ‘over-built’ the engine at the last overhaul to reduce its projected cost under the contract. enhance the lessor’s efforts to re-market the aircraft. The contribution may be limited to overhauls performed in its shop and/or within a limited period of time. It could claim that the maintenance payments form part of a pool to pay for overhauls on a fleet of engines. view maintenance payments as its property or as security for lessee obligations. not the agreement to assign. including mortgage financing and operating leases. Warranty: All warranties of the maintenance provider should be assignable to the lessor or new lessee. and the lease should obligate the lessee to make any necessary ‘catch-up’ payment in case the refund is less than the reserves that would have been paid by the lessee under the lease in respect of the replaced engine absent the maintenance contract. and are growing in importance. and (b) the lessee either should be required to (i) induct the engines into another acceptable maintenance programme or (ii) commence paying reserves under the lease and make any catch-up payment described above. and investors and operators in domestic and crossborder purchases. and (d) require the lessee to pay as additional rent (i) any amount by which traditional maintenance reserves payable under the lease exceed the maintenance payments payable under the maintenance contract or (ii) full. But they raise issues that the parties can effectively resolve if they cooperate reasonably in the process. Conditions precedent: Most maintenance contracts will excuse performance by the maintenance provider or permit it to terminate the maintenance contract if the lessee fails to make payment or perform other obligations. (b) make a lessee default under the maintenance contract a default under the lease. Artisans’ liens: Such liens (sometimes known as mechanics’ liens) are generally limited to the agreed price and reasonable value of the labour and parts furnished by the maintenance provider for the improvement of the particular engine. if any. Workscope: The lessee might argue the workscope is not relevant to the lessor’s interests because the lessee will remain obligated at its expense and risk to perform all maintenance and meet all return conditions required under the lease. due to an event of loss. If the replacement engine is not inducted. Replacement engines: The maintenance contract should permit the lessee to induct a replacement engine into the maintenance programme if a leased engine is replaced. But some maintenance contracts purport to give the maintenance provider a consensual lien on the lessor’s engine to secure all obligations under the maintenance contract. The lease should obligate the lessee to pay any required induction charge. PMA parts: Any lease restriction on the use of PMA parts should be consistent with the maintenance contract. (c) require the lessee (i) to hold the lessor harmless if the refund or credit of maintenance payments or contribution to the cost of the next overhaul from the maintenance provider is less than the amount the lessor would have been holding had traditional maintenance reserves been paid under the lease. subject to the lease and the lien of a lender. then upon withdrawal: (a) the maintenance provider should pay to the lessor all unexpended maintenance reserves attributable to such engines. CONCLUSION Third-party maintenance contracts are here to stay. for example. traditional maintenance reserves at any time when the maintenance contract is not in effect together with a ‘catch-up’ payment if full maintenance reserves become required under the lease. the maintenance provider will waive its artisan lien rights on the theory it has already been paid for the cost of the overhaul by the lessee’s periodic maintenance payments. including any cure payment made by the lessor. sales and financing of aircraft. and should be willing to maintain such confidentiality. Sometimes. and the lessor will have a claim for damages in case the lessee fails to do so. and pay any termination fee due under the maintenance contract. pledging or encumbering its rights under the maintenance contract and (ii) modifying or waiving any provision of the maintenance contract without the lessor’s consent. under the lease). assigning.co . and (ii) to indemnify the lessor for any loss resulting from a lessee default under the maintenance contract. 46 Airline Economics: MRO Global 2011 www.airlineeconomics. and in many instances to the lessor as well. Even pricing of the maintenance contract can be important for the lessor to determine if it risks being ‘under-reserved’ or if the amount of a refund becomes relevant. the maintenance contract should require the maintenance provider to refund the amount of unexpended maintenance payments attributable to the replaced engine. The lessor should seek a waiver of these liens. including for unrelated engines.FINANCE (or supplemented) to cover the lessee’s obligations described in (a)–(d) above. Engine withdrawals: If the lessee has the right to withdraw the lessor’s engines from the maintenance programme (especially in contemplation of return John Karesh at Vedder Price represents lenders and lessors in a variety of domestic and crossborder aircraft finance transactions. Replacement parts: The maintenance contract should provide that title to replacement parts will vest in the lessor. OTHER LESSOR ISSUES A number of other clauses in maintenance contracts can also create issues for lessors: Confidentiality: The lessor needs to know the provisions of the maintenance contract to determine if any them (including those discussed below) affect the lease. They can be of great benefit to the lessee. The lease security deposit should be adequate WHERE AND BY WHOM CAN THE OVERHAUL BE PERFORMED? The lessor should verify that the maintenance provider remains liable for the work performed by its subcontractors or designees and that any subcontracted work is covered by the maintenance provider’s indemnity and warranty. This is particularly troublesome if the maintenance contract contains a cross-default clause to other agreements with the maintenance provider or an affiliate. or do we have to wait for the natural time lag to affect the demand profile for spares? Companies that have greater visibility of future demand and can anticipate the volatility will stand a better chance www. The effects of the recent economic climate have disrupted the normal patterns of demand for a lot of industries. negative effects on service levels.airlineeconomics. DEMAND VOLATILITY One of the main characteristics of an aftermarket business is the large range of parts that have to be stocked. many have forgotten the aftermarket. This has led to many manufacturers improving process efficiency.AFTERMARKET More than an afterthought In this climate it is vital that aviation aftermarket businesses optimise their aftermarket supply chain. smartening up performance metrics. higher T costs. If demand volatility increases. This has helped to position organisations to better manage risks such as failure to supply. the effect on the amount of inventory required can have a major impact on cashflow and bottom-line profit. he economic climate and change in market requirements has seen supply chain management move up the business agenda. Inform’s Cathy Humphreys explains how to boost the efficiency of this process with inventory management planning without making big changes to systems. Now is the time for the aftermarket supply chain to be at an optimum. Product lifetimes are lengthening. In recent years supply chain management teams have begun to look at risk evaluation alongside their process optimisation strategy. rather than being treated as an ‘alsoran’ division.co Airline Economics: MRO Global 2011 47 . or significant firefighting. and companies are seeing changes in demand patterns. and throughout the whole supply chain. and investing heavily in technology to increase the efficiency and cost-effectiveness of their supply chain. While a strong understanding of the efficiency of a standard supply chain operation is commendable. What will be the effect on the required parts to service the aftermarket? Do we know the knock-on effect of this yet. and planning proactively. Offering superior customer service is more important than ever before as it encourages repeat business. improving revenue and profit. when required. This creates an opportune time to sell more – if the customer is happy. accuracy will increase. Ultimately.AFTERMARKET product. especially with the number of revision levels required to support a larger base of older products. The cost of having the wrong parts could be a breaking point. Advanced planning and execution software. but also in the operational. and the requirement now is to dynamically and accurately predict what parts might be required during the lifecycle of each 48 Airline Economics: MRO Global 2011 www. the more EFFECTIVE PLANNING IS THE KEY Supply chain management is constantly evolving. many still use spreadsheets for the management of spare parts.co . A few years ago it was fine to have a spare parts division whose focus was to identify those existing production parts that might be required in the aftermarket and to keep a few to one side for later. It provides a demand shape or pattern for the profile of an item. Benefits include a release of cash tied up from excessive stock. but the rewards are big for getting it right. affects the supply chain dramatically. then this is where businesses should look at getting help. as well as combining known demand such as scheduled maintenance or predicted failure rates. Issues such as backward compatibility and obsolescence have to be managed carefully to ensure the right parts are available in the right strategic location for rapid delivery to the right customers. of supplying customers in the most optimised way. The business benefits will be evident if it can better manage the aftermarket supply chain and achieve optimal stock levels to satisfy service-level agreements. These systems can assist not only in supporting best practice for strategic decision-making processes. yet their portfolio is set to increase. By applying the appropriate algorithms (automatically) to the historical consumption of each and every item. The length of time a company spends doing business in the aftermarket is often far greater than the initial sale. She has been at Inform for four years and was previously a director in the aftermarket services division of rolling stock manufacturer Bombardier Transportation. Cathy Humphreys is UK country manager at Inform. The longer a product is supported in the aftermarket. the appropriate part is sourced at a higher price. which specialises in planning and decision-making software to improve business productivity. Excess stock ties up capital. This is no longer the case. and organisations should recognise the role that decision-support systems can play. By improving the performance of the spare parts division of a business. But it is a good place to start. as well as the potential for increased revenue from happy customers. it is paramount to have the right tools for the job and to use sophisticated systems to manage the complexity. Aftermarket supply chain management is complex. profit can be driven into the company through increased revenue in the aftermarket and reduced wasted cost. That said. and reducing costs. Businesses prepared for future changes in demand of spare parts will strengthen their market position. The key is continuous improvement. so the right parts can be stocked. helping managers make the right decisions. Instead. which can then be adjusted with known information about the future demand. If aftermarket parts are inherently difficult to forecast. It is also essential businesses understand potential changes in the product mix as well as overall volumes. Manufacturers now need to review what parts they will need to keep in stock to ensure a smooth aftermarket service for products being kept for longer periods of time. incurs unnecessary storage costs and affects cashflow. Predicting future requirements. can have a big impact on demand accuracy. catering specifically to aftermarket products. Although it is common practice for companies to use sophisticated software for the new-build market. The key is not to use systems created for the mainstream business by trying to shoehorn them into a completely different environment. A lack of product availability will lose customers and increase the cost of expensive emergency shipments. Many businesses are now aiming for 100% availability of spare parts. isn’t it the latter part of the business that needs the support of sophisticated software and not the other way around? versions of spare part are available. and to efficiently source and stock these items. will create greater visibility and the opportunity to enable a more efficient (and profitable) supply chain. this greater instability in the demand of new products. Then. This can potentially increase revenue in the mainstream business through increased customer loyalty. some people argue that forecasting based on historical consumption is not right for their business. as it becomes far more difficult to manage the all important aftermarket. improved process efficiency and less emergency costs from firefighting. IMPROVED DEMAND ACCURACY Improving demand accuracy is the single most effective action that will cascade through all other supply chain metrics. With the pressures of high service-level requirements and high demand volatility.airlineeconomics. as people hold on to products for longer. transactionoriented decisions that typically get the focus from supporting technology. . it remains at the very front line of cost pressures and demand. looks proliferated at the moment.airlineeconomics. Although it is of course far more targeted. using a computer and the internet to sell parts around the world. “The competitive landscape of the aviation aftermarket has changed considerably over the past decade. and the parts market is no different.THE PARTS MARKET Pulled apart The parts industry is fragmenting. there has also been a deluge of investment dollars coming into the used airplane market that has resulted in financial investors and a few aviation companies taking large positions in asset classes that are approaching their end of life. This view is backed by Dennis Zalupski. chief executive officer of Kellstrom Industries. All of these factors have contributed to a flood of material into the aftermarket over the past few years. “Perhaps even more importantly. with many players compet- ing for the same slice of market share. as more and more players enter the market. The parts market. there is also a proliferation of small companies that work out of other people’s inventories.” he says.co . from the point of view of an investor. And they’re all competing for the same slice of business. Not only are there many more large competitors. MRO Global talks to Kellstrom’s Dennis Zalupski about how his firm intends to retain its share T he global movement in the aviation industry towards younger aircraft has had an effect on all maintenance repair and overhaul firms.” The growing acceptance and availability of used parts is helping to drive down overhaul costs across the globe. Maintenance specialists have an entire spectrum 50 Airline Economics: MRO Global 2011 www. the OEMs are gradually taking control of the market through increased aftermarket agreements at point of order. engine companies or systems providers. Generally. we join forces with them by using our ongoing access to the global customer base to sell and distribute their new products into the aftermarket. which in turn is leading to parts specialists having to join forces with the OEMs in much the same way as the MROs. The advantage we offer them is we already have the infrastructure in place and the relationships with the airline customers and MRO facilities around the world to effectively market their products for them – often better than they could do on their own. This type of relationship works especially well for us. have woken up and are trying to protect their very profitable new parts stream into the aftermarket. Pricing on newer generation equipment. “In some cases. continues to be quite strong. who we are very strong with on the military side of our business.” says Zalupski. reconditioned and PMA parts.THE PARTS MARKET of options to choose from to suit their clients. This is really a direct result of the number of older aircraft that have been removed from service and disassembled over the past few years. whether they are airframers. due to concerns over asset values. we still make every effort to work with and support it when we can.” The leasing sector is generally less receptive to the concept of used. it has been the older Boeing and Airbus models along with the associated engine types. which is an important partner of ours in the Commercial channel. For example. But on the other hand. from new original equipment manufacturers’ parts through to PMA. “There is no question that the big OEMs. The great number of options open to airlines has had an effect on the market Zalupski of Kellstrom Industries is on the front line in the parts market and he is seeing the movements in the global market first-hand. if you can find it. “On the commercial aviation side of the business. However this view appears too be subsiding as new lessors enter the market with a more open mind regarding their use.” “Where we don’t have an aftermarket distribution relationship with an important OEM. approved repairs and reconditioned used parts.airlineeconomics. We also assume the inventory and credit risk for the OEM. with manufacturers such as Ametek Aerospace.co Airline Economics: MRO Global 2011 51 . and Honeywell. something that has always been somewhat of a barrier to success for OEMs in the aftermarket. we are seeing continued price pressure on both surplus airframe and engine parts. when we have surplus material www. from 25–30 years to something more in the 20-year range. Longer-term trends in demand follow the fleets. most of whom are as quality-conscious as we are. The industry has changed greatly over the past decade and as it continues to evolve.airlineeconomics. almost any part from the new-generation airframes and associated engine types. Today. long haul within Asia and short haul within the regions and/or within China. Parts demand.THE PARTS MARKET that needs to be repaired or overhauled.” 52 Airline Economics: MRO Global 2011 www. The lifecycle of an aircraft is getting shorter. assuming it is competitive in price and turn time. changes on a daily basis. “When you combine this with the young. it seems there will be a race to see if the industry can grow fast enough on a global basis to absorb all of the new and used aircraft.co . in addition to the office in Singapore. such as the newer versions of the A320 along with platforms such as the 737NG. If the global economic situation were to cause a Japan-style decade-long recession. 777 and A330. always have more demand than supply. that demand is set to become even greater. which will be parted out. A combination of routes is driving growth – long haul between continents. we have an operation in Australia. both from a quantity as well as platform type. Back in the mid-2000s. This is clearly our fastest growing region on the commercial side. it is little wonder Asia and China have quickly become a force in the global MRO business. As these fleets continue to grow and the OEMs continue to raise prices for new parts. This in turn helps us sell the products to our customers. and China in particular. The future focus of the industry will be on Asia in general.” says Zalupski. so too will companies such as Kellstrom. we anticipated this would happen and opened our Asian regional office in Singapore. we will make a concerted effort to send it to the OEM. “Today. as well as lower wage scales. Based on the number of new aircraft Boeing. vibrant and growing population. which is clearly a growth market.” says Zalupski. Airbus and the others are projecting to build over the next two decades. then we could be faced with massive aircraft retirements. as well as a network of exclusive agents who help us service the region. co Airline Economics: MRO Global 2011 53 . P3. Kellstrom continues to see strong growth in the traditional commercial aviation surplus parts business. and the global aviation industry is still primarily dollar based. “We are fortunate to be in a great industry at an exciting time. At the same time. we are looking for better ways to compete every day in a market that gets tougher all the time. Singapore and Australia.” Kellstom’s growth today is primarily focused on three areas. but to be as efficient a business as possible and to deliver high-quality products and services to our customers at the lowest possible cost.THE PARTS MARKET Kellstrom Industries Kellstrom Commercial Aerospace is one of the largest and most reliable suppliers of aircraft parts and is a full-service provider of logistics and material management solutions. especially in the military MRO business. primarily Europe. All three segments have performed well. not necessarily to be the biggest. Kellstrom has established itself as a global supplier of inventory solutions with specific focus on: between Kellstrom’s order backlog of previously won business as well as a new contract recently won supporting the US Air Force. Kellstrom has seen some softening in Europe. You can contact Kellstom at: Kellstrom Industries 3701 Flamingo Road Miramar. which provides support to aviation MRO companies around the world. One area that any exporter needs to consider is currency fluctuations. “At this time. “We are a US-headquartered company that does more than 50% of our business outside of the US. most of our costs are in US dollars and when we sell outside of the US. the weaker dollar has driven up our cost structure and salaries in the other markets where we have a presence.” The focus at Kellstrom over the past few years has been to continuously improve performance in every facet of day-to-day business. but is confident that if it did. exchange programmes and surplus management.” management team and solutions COMMITMENT TO THE HIGHEST LEVEL OF QUALITY STANDARDS Kellstrom Commercial Aerospace has achieved success through the establishment of various value-added material management and distribution programmes and has existing agreements in place with companies such as: It currently offers supply chain management. Kellstrom is able to fund all of its business needs through its existing credit lines and cash generation. “We are very proud of a very large logistics support contract we recently won supporting Northrop Grumman and the operational fleet of the US Air Force AWACS airplanes. Dennis Zalupski of Kellstrom Industries was recently interviewed by MRO Global and was asked: What have the past 12 months been like for his company and has he had noticed a slowdown of late? He said: “The past 12 months have been strong from a business standpoint for Kellstrom. Lastly. Today’s Kellstrom is a company with a great infrastructure. FL 33027 Tel: (954) 538-2000 Fax: (954) 538-6626 www. The company doesn’t anticipate needing additional funding in the near future. Fortunately.” says Zalupski. is currently transitioning over to Kellstrom and will be 100% under our control by November 1. IT systems. “Because of this.” says Zalupski. but we like where we are positioned in the space we concentrate on and we are bullish on the future of the company. “Our goal is to leverage these strengths into every segment of the business we compete in.” Currently. The contract. we are using a combination of Kellstrom’s heritage in providing surplus engine parts to the aviation market along with our expertise in new parts distribution to build a new business for ourselves focusing on ground-based power. Kellstrom finds itself pretty well diversified. including the power segment. we believe this business can grow into a very profitable niche for us soon. such as Northrop Grumman in the US. With its defence and commercial parts and logistics businesses. Marshall AeroServices in Australia. inventory pool programmes. which is for five years. the weaker dollar allows us to offer more competitive products and services to our customers.” says Zalupski. which it believes is a direct result of the pressures on EU budgets due to the deficit issues there. we keep looking for opportunities to take our strengths and use them to grow into associated businesses. Another strong area of growth has been the defence parts and logistics business. quality systems or its most important asset – its people. it has been able to continue to grow the business. along with its FAA145 repair business. it could raise a reasonable amount of funds relative to its size and profitability. whether it is facilities. On the negative side. all of whom service US military platforms such as the C130. The first is the new OEM parts distribution into the global commercial and defence aviation aftermarkets. For example. Kellstrom might be a relatively small player in a huge global industry.airlineeconomics. While still small. but generally Kellstrom finds it has been helped by the weaker US dollar. F16 and B707. maybe a small loss in the fleet size as consolidation continues in the US air- 54 Airline Economics: MRO Global 2011 www. During 2010 and the first half of 2011 economic recovery gave airlines confidence to make longer term plans. greatly reducing the M number of MD and 757 fleets flying. causing a fresh slowing of passenger demand that might yet lead to additional parked aircraft in the near term during winter 2011/12. what he thinks is in store for the US market over the next five to 10 years. MRO Global asked Chris Doan. The current environment means operators are unlikely to bring back most parked aircraft into service.3% compound annual growth rate from (CAGR) 2011 to 2016 overall followed by a positive 1.4% CAGR from 2016–2021. During the second half of calendar 2011 the positive impact of capacity discipline has been more than offset by economic woes. Aircraft age ranges and the effect on the North American maintenance market over the next five to 10 years will be pro- lific. Team SAI estimates a negative 0. with very low growth. “We see a very black market for the Americas for the next 10 years. The narrowbody fleet is expected to grow in the next five years while the widebody and regional jet fleet contracts over the same period. And no growth in the fleet.AMERICAS id-term growth in North America will be slow. In the US especially there are many MD and 757 aircraft still flying – once these are removed from the market and the new aircraft begin service the MROs will lose business. “We definitely see the phenomenon of new aircraft taking less maintenance requirement.co . which in turn led to the supply of hangar and engine slots tightening.airlineeconomics. chair and chief executive of Team SAI. with limited fleet growth expected for North American operators.” he says. As part of the five-year deal. Delta TechOps will provide engine overhauls for a minimum of 50% of GOL’s CFM56-7 engines and maintenance services for various parts and components on GOL’s fleet of Boeing 737NG aircraft. In February. we announced two unique partnerships.” When asked about aircraft lessors’ affect in the US MRO market. provide cost savings to Delta. We can no longer rely solely on organic growth. Both of these partnerships are great examples of how we are looking at creative opportunities to grow our MRO business going forward. Earlier this year. We’ve experienced strong current-year and long-term growth.” Maybe this is the calm before the storm for Delta Tech Ops. are going to cost a little more to maintain and the components are also being captured by the OEMs. In addition. One of the benefits of the dominance in the lessor market is going to be a drive back to standardisation. What is certain is that Delta TechOps has had a successful 2011. Now.” When asked if the past few calendar months of 2011 have seen a downturn in business. This ultimately means reduced maintenance demand and greater competition for the remaining opportunities. Bolt stated that “many airlines are reducing capacity and parking aircraft. Most of the new engine aftermarket business is being captured by the original equipment manufacturers (OEMs) by design. and tooling support. at this time we have not seen a downturn. which will help us expand our global footprint into the Mexican and Latin American markets. we announced we are forming a maintenance joint venture with Aeroméxico.airlineeconomics. so that is not an easy play for an independent engine shop. there is not a very clear picture at the moment. We are monitoring demand very closely. Tim Bolt. Doan says: “One of the things the industry is having difficulty with today is the fact that over the past – if we roll the clock back 20–30 years – many of the major carriers did their own maintenance and also customised their MRO programmemes significantly. the picture will become more clear over the next few months. materials and facility optimisation. When you look at the order books and what the US carriers have ordered. and will assist GOL with its efforts to secure FAA Part 145 Repair Station Certification. That is a win-win for everybody and it should even help bring maintenance costs down and create more efficiency in www. when the predominance is towards outsourcing. however. The newer engines. The lessors feel this more acutely because they deal with multiple carriers and even more now that airplanes are being moved more often between carriers. the differences actually create a problem. Delta TechOps is providing consulting services related to maintenance workflow planning. In August. AMERICAS MRO line industry. This partnership with Aeromexico will help us to grow our global presence in Latin America and Mexico while also forging ahead toward our goal to achieve $1 billion in annual sales. It will enable us to provide our customers in these regions with a maintenance facility that is near by. marketing manager of Delta TechOps told MRO Global: “This has been a solid year for our MRO business. and at that same time allow us to explore further leveraging the high-quality airframe maintenance work that Aeroméxico provides Delta today.co Airline Economics: MRO Global 2011 55 . Delta TechOps announced it was entering into an exclusive MRO partnership with GOL. unlike the airframes.AMERICAS the way airplanes are managed.” Delta TechOps seem to be weathering the storm well. That maintenance infrastructure is now being strengthened through 40 line support stations for the merged company. At the moment United is using the Amis (aircraft maintenance information system) platform while Continental is using Sceptre. which now handles light. which will take a few years to complete.airlineeconomics. whereas United had a very large maintenance and engineering infrastructure for component and engine overhaul. but with the idea that the groundwork will be laid for a new. The most dramatic of the mergers in terms of fleet differences has to be the Southwest-AirTran merger. AirTran plans to perform more comprehensive. The second phase will involve going to market to upgrade the system for the future. which includes seven AirTran facilities where overnight checks are performed. Southwest will move all maintenance-related data from Wizard to TRAX starting in the first quarter of 2012. to provide the required level of support for the 717 fleet throughout the entire combined airline network. the two carriers established an integration management department that quickly realised there were substantial differences in terms of their capabilities specific to maintenance and engineering. due mainly to the fact TRAX is currently the data provider for AirTran. will cover the 717 and the 737-700. state-of-the-art system to be procured from the commercial market. Southwest therefore has to acquire the tooling. Southwest is moving all maintenance-related IT into a single enterprise networking system and has awarded TRAX the contract to merge the data sets of the two airlines. There are now calls for new hangar space by 2013 at United’s Washington Dulles hub. intermediate type checks on the 717s at AirTran’s Atlanta facility. running an all-737 fleet. the airlines’ information technology infrastructure for maintenance and engineering will be merged. building in some of the Amis capabilities. Southwest handles maintenance mainly in-house while the AirTran fleet has outsourced maintenance. scheduled for the third quarter of 2012. United/Continental is a different matter. TEAM SAI bringing into play a significant foothold in Central and South America that will in the event of a downturn pay dividends as Delta will be able to be at the very forefront of competitiveness. has to absorb AirTran’s 88 717-200s. The merger of these two huge 56 Airline Economics: MRO Global 2011 www. The merged airlines will continue to use AirTran’s Orlando hangar for RON with a view to extending this site to be a 737 C-check station. while United’s 14 Boeing 767-300s will undergo interior modifications for international flights. Southwest’s total maintenance network will expand from 16 to 23 locations. Along with new hangars. The 737 Classics will be covered under the TRAX system by the third quarter of 2013. the Continental fleet will be retrofitted with an Economy Plus section. The US airline merger rounds over the past two years have not had a huge impact on the MRO sector as yet as there have been few route cuts. This means developing a broader intermediate level programmeme for 717 maintenance. The other more obvious fallout from the merger is that the maintenance and engineering divisions have been working flat out on re-spraying aircraft and refitting the interiors to match the new livery and layout for a common image. Under a three-phase programme. Chicago O’Hare and Denver facilities. Following the United/Continental merger announcement in May 2010. In the future. which will no doubt lead to the door of Swiss Aviation Software and its Amos system or indeed Trax. Continental had always maintained a deeper infrastructure to support line maintenance and airframe overhaul at Houston and Orlando. Southwest. Both will perform widebody aircraft maintenance checks. which will include more mechanical type work such as elective modifications and component changes dictated by time requirements.AMERICAS airlines is directly leading to an expansion in maintenance facilities across the US. to include engineering and planning functions to support its maintenance requirements.co . That process is currently being planned on a two-phase basis. In 2012. The first phase will cover the 737800. while the second phase. routine overnight (RON) maintenance with an aim to Atlanta becoming a centre of excellence for the 717. It is the plan of the merged airline to migrate all maintenance and engineering information to Sceptre during phase one. The combined company is also set to make significant investments at the San Francisco. Those interiors will be similar to CHRIS DOAN. and at Continental’s NewarkLiberty International Airport hub. and expand technician training. Southwest’s 16 locations include four that perform major inspections. A big difference between the two airlines’ maintenance organisations concerns heavy airframe inspections. 2% 2. Delta is seeing evidence of this.5 $18.0 $15.000 2.508 8. as an airline MRO we are very familiar with this strategy.000 7.7 $20. recently announced it will be acquiring Boeing 737-900s to replace our older.562 0 2011 2016 2021 AMERICAS’ MRO FORECASTS (US$MILLION) 25 North America Latin America and Caribbean Total $17.7 $3. they will try to delay maintenance checks by parking aircraft due for D-checks and replacing them with new equipment.5% 1. leveraging our economies of scale and operational excellence. through our Complete Fleet Services (CFS) offerings.000 North America Latin America and Caribbean Total 8.1% 3.000 9. are some airlines parking aircraft that are due a D-check and simply using new deliveries to cover for them? Bolt says: “Yes.4% 0.5% 5.130 7.AMERICAS those on Continental’s international fleet. For example.028 8. There is likely to be a marked increase in this type of action by airlines as they move to cut costs on maintenance and fuel.3% 5.0% 6.” Of course. Complete Fleet Services helps clients to consolidate maintenance as well as plan for future maintenance expenses and reduce maintenance CASM spend. “Our plan is to continue to expand on our partnerships in China.529 10.000 4. AMERICAS’ FLEET FORECASTS 12.” The options for airlines in the US are numerous – they can simply park aircraft before a D-check and lease an aircraft or have one delivered new. Many assets are at a point where the maintenance has to be completed or the aircraft have to be parked.590 7.378 1.7% www.3% 1. The market is unpredictable at this time and preparation for 2012 is difficult for a third party MRO.3 20 10 5 $2.7 2021 COMPOUND ANNUAL GROWTH RATES Fleet 2011 2016 2021 Total MRO 2011 2016 2021 NA –0. as airlines come under increasing pressure.co Airline Economics: MRO Global 2011 57 . Latin America and South America. “We expect capacity cuts will ultimately lead to increased market pressure. however.2 15 $15. narrowbody fleet (DC9s). This is a worrying trend for the MROs. with many not wishing to comment on how they plan to confront what 2012 might have to offer.1% 1.2 $16.airlineeconomics.” says Bolt. bearing this in mind.1% Total 1.532 6. and one that should be watched in 2012. This is both a challenge and opportunity. We are well positioned to provide maintenance solutions to our airline customers that are looking for maintenance CASM optimisation and a more holistic maintenance approach.000 1.0% LA&C 2. Delta. and continue to look for creative ways to grow our MRO to achieve long-term sales goals. Delta TechOps.7% Total 0. for example.8% LA&C 5.1 0 2011 2016 $2. is confident it has the global reach to weather any market contraction. we are able to provide truly nose-to-tail support for our customers.003 2.5% NA 0.2% 2.” So. and when asked about the phenomenon Bolt stated: “This has been going on over the past few years.6% 1.3% 1. fuel controls and electrical accessories. LOGISTICS AND PARTS SUPPLY AAR provides high-value parts-related services that include supply chain and inventory management. MAINTENANCE. consignment and lease-back programmes. landing gear services. 58 Airline Economics: MRO Global 2011 www. repair. AAR provides aircraft engines for sale or lease to lower customers’ operating costs and keep aircraft in service during engine maintenance cycles. welding and engineering for a wide range of high-end sub-systems and components for aircraft and industrial applications. engineering. Additionally. AAR also offers technical advisory services and innovative financing solutions to assist customers with adjusting their fleet composition to meet changing economic models. With facilities located throughout the US. regional and cargo airlines. B767 and MD-11 commercial aircraft with systems for the B737. AEROSTRUCTURES & MANUFACTURING SERVICES AAR designs and manufactures cargo systems used on commercial cargo and military transport aircraft around the world. wheel and brake services and component repair for the world’s major. repairs and exchanges. AAR products are designed to meet customers’ exacting specifications and offer lasting performance. Experienced Designated Engineering Representatives (DERs) and Designated Airworthiness Representatives (DARs) plan and execute a wide range of projects. electronics. from engineering new solutions to designing and executing modifications and attaining airworthiness approvals. A330. upper rails and engine mounts. supplying parts for virtually every commercial power plant including General Electric. AAR leverages its diverse MRO. AAR’s expert technicians test. Services are performed by highly experienced. AAR manufactures hundreds of structural components for business jets including aircraft wing fittings. overhaul and perform scheduled maintenance on avionics. stocking new and serviceable components for virtually every commercial aircraft type.co . diagnose. hydraulics. AAR holds 95 Supplemental Type Certificates (STCs) with the FAA for the A300. B757 and A320 in development. parts provisioning and parts trading. AAR sells and leases aircraft and has an experienced team of professionals that provide start-to-finish guidance in aircraft sourcing. purchasing and remarketing. technologies and techniques. safety and service. IAE. repair management. fabrication. REPAIR AND OVERHAUL AAR provides aircraft overhaul and modifications. integrated solutions that lower costs.AMERICAS AAR AAR is a leading provider of products. exchange and replacement options tailored to meet individual customer requirements and designed to improve efficiency and reduce overall costs. overhaul. as well as for aircraft leasing companies and government/defence agencies. pneumatics. commercial and business aircraft markets. increase asset availability and ensure high levels of quality.airlineeconomics. services and innovative solutions for commercial passenger airlines. AAR designs and fabricates advanced interior and exterior composite structures as well as specialised molded components. crank assemblies. AAR is a single-source provider of composites engineering and manufacturing services to defence. technicians and experts that leverage world-class training. on-site warehouse management. instruments. AAR offers a full array of component repair. AAR is the second largest independent MRO provider in North America and ranks among the top 10 in the world. tier-two suppliers and aircraft and engine OEMs. AAR maintains one of the industry’s largest and most complete inventories of airframe parts. logistics and fabrication capabilities to offer customised. A310. cargo carriers. AAR offers high-value engineering support services to supplement customers’ internal capabilities. B747. customer-focused engineers. as well as PMA parts development. AAR is the leading independent supplier of engine components and inventory management services. Pratt & Whitney and Rolls-Royce. route systems and passenger preferences. AAR performs precision machining. www. PW2000. Indonesia. components. quality and responsiveness to more than 150 other operators around the globe. specialising in high-skill work such as engines. Delta TechOps serves more than 150 aviation and airline customers from around the world. NDT. Delta TechOps operates maintenance facilities in multiple locations. engineering. And that’s just what Delta TechOps delivers – to airline operators all over the world.830 square meters or the size of 47 football fields) base of operation. With more than 8. training. No. Delta TechOps’ instructors keep their expertise on the cutting edge by pursuing continued education. as well as in several countries in South America and Asia. Chile.145. EASA. Each of these facilities offers light maintenance for both narrowbody and widebody aircraft. engine leasing. Canada. Delta TechOps currently operates and maintains a fleet of nearly 800 airplanes for Delta Air Lines and supports the aircraft and engines of over 150 customers worldwide. Additional Delta TechOps services include compliance and quality assurance. NG). Delta TechOps’ Complete Fleet™ Services include engine/APU. AOG. test cell. GTCP 331-200 CERTIFYING AGENCIES FAA. Trinidad & Tobago make up the Delta Air Lines fleet. It takes unsurpassed technical knowhow. CFM56-5 CFM567. B767. NDT. Argentina. China . A320. AOG. AIRFRAMES SERVICED Airbus: A318 A319. MD-80. Korea. DALR026A Station No. airframe and line maintenance. airframe and line maintenance.7 million square foot (about 250. MBK. MBK. A321. This has allowed the MRO to develop unparalleled operational and process knowledge and intellectual property on a real-world basis. A330 Boeing: B737 (Classic. Delta TechOps also provides outside operators with technical training. Additional Delta TechOps services include compliance and quality assurance.airlineeconomics. a global network of experts and an unwavering commitment to excellence to maintain the world’s largest airline. B777. Bermuda. B757.AMERICAS Delta TechOps Delta TechOps has a unique competitive advantage as an airline MRO to provide something most other MROs can’t – operational improvement consultation based upon Delta’s 80-plus years’ experience as an operator. CF6-80C2. Delta TechOps provides full-service maintenance to the more than 750 aircraft that Delta TechOps is the largest airline MRO in North America and the third largest worldwide. MD-90 ENGINES SERVICED Turbofan: CF34-3A/B. CERTIFIED PERFORMANCE Delta TechOps is a certified repair station in the US (FAA) and the European Union (EASA).500 technical operations employees system-wide. DALA026A Station No. DALR026A Station No.co Airline Economics: MRO Global 2011 59 Photo: Boeing Corp . CFM56-3. CF6-80A/ A2. B747. MD-11. the 2. Brazil. CF34-8C. on-wing. training and advanced computer knowledge. airframe and line maintenance. To ensure prompt service and flexibility. CERT-0025376 SERVICES Delta TechOps is the largest airline MRO in North America and the third largest worldwide. The average length of service for a Delta TechOps aviation maintenance technician (AMT) with an Airframe and Power Plant (A&P) certificate is 14 years. EASA. engine leasing. inventory and exchange services. JT8D-219. Backed by the proficiency and attention to detail found in Six Sigma and Lean processes. engineering. training. test cell. and extended engine capabilities that include the CFM56-5 and CF34-8C. Delta TechOps serves more than 150 aviation and airline customers from around the world. Delta TechOps delivers industry-leading operational efficiency. inventory and exchange services. Should emergency maintenance be needed Delta TechOps’ quick-response Disabled Aircraft Recovery Team (Dart) can be dispatched from the Atlanta Technical Operations Centre. component. components. Carrier No. full Airbus services. PW4000-94 APUS SERVICED GTCP 131-9B. on-wing. engineering support and inventory management. specialising in high-skill work such as engines.4380 Component Maintenance. including technical dispatch reliability greater than 97% fleet-wide. Aveos fleet management experts allow customers to focus on their core competencies by providing tailored services that optimise carriers’ maintenance programmes and operational reliability. procurement. and leading government agencies entrust heavy maintenance work to Evergreen Maintenance Centre (EMC). Commercial airlines. A319. process and vendor management. 60 Airline Economics: MRO Global 2011 www. and executing AOG recovery repairs on any portion of the airframe structure. undertaking mega-scale modifications such as the Dreamlifter in partnership with Boeing. With 20 million square feet of ramp and storage area able to accommodate up to 400 aircraft. product safety. the EMC also operates the Pinal Air Park and its 6. In addition to airframe.AMERICAS Aveos/ Aeroman Aveos has been carrying out heavy maintenance for more than seven decades. and component solutions.co . With the addition of Aeroman to the stable. A321 ENGINE SERVICES All models – boroscope inspection. logistics. in turn ensuring efficient demand. as well as engaging in complete Section 41 skin replacements. corporate-wide Six Sigma deployment.airlineeconomics. the ideal climate for maintenance and storage. hurricanes and tornado activity. engine. Consisting of three maintenance hangars and a large maintenance flight line. EGAT’s robust management systems and processes the Oracle-based MRO System for engine overhauls. the EMC is one of the largest full-service commercial maintenance.850-foot runway rated for Boeing 747-400 through 747-8 aircraft. is fast emerging as one of the leading MROs in the Americas. Arizona. business support and airline operational support) Fleet management Engineering services Regulatory compliance and audits Technical publications services Technical records management Aircraft maintenance training Training solutions PAINTING AIRCRAFT MAINTENANCE: A318. human resource management. such as earthquakes. the firm is able to cover all the Americas. high business-value MRO. EGAT has since evolved into a specialty. Horizontal Stabiliser skin replacements. Evergreen EVA Air’s Engineering and Maintenance Division was spun off as an independent corporation in September 1998 to become Evergreen Aviation Technologies Corporation (EGAT) with General Electric Company (GE) as an equity partner. knowledge management and e-commerce. job qualification. repair and overhaul (MRO) facilities in the US. the EMC is the largest commercial aircraft storage facility with heavy maintenance services in the world. contracting and purchasing Supplier management Warranty management Logistics: Warehousing Transportation and customs management COMPONENTS: Airline operational support: 24-hour emergency support for AOG Expediting support MAINLINE SERVICES: Supply chain management (inventory management. The company. They are sheltered from natural threats found in the rest of the US. Aveos offers valueadded maintenance solutions such as aircraft maintenance training and supply chain management as part of an integrated offering. engine removal and reinstallation. aircraft leasing companies. A320. balanced scorecard. EGAT was tasked to uphold aircraft maintenance quality and promote technical flight safety while creating adequate business value. VALUE-ADDED SERVICES: Inventory management: Planning levels and allotments Forecasting consumption and service levels Inventory ownership and financing Procurement: Sourcing. now acting as an independent.LRU replacements. FLIGHT LINE: Providing customer support for all types of commercial aircraft: AOG DROP-IN AND TDY SERVICES TEAM STORAGE: wave perimeter surveillance for stored aircraft and engines climate: aircraft are held at a facility in the dry southwest. Located in Marana. Florida. MD-80. where Pemco presently has four 757 cargo modifications in work. PEMCO offers the following services: 300 PEMCO FACILITIES Dothan. Dothan operations will be more focused on military fixed and rotor wing aircraft. The airframe MRO operation employs over 1. 767. fuel nozzle overhaul. avionic and IFE upgrades. plus an equivalent number on the ramp. Dothan. located online for most air carriers at the Tampa International Airport. TIMCO’s Engine Centre provides full engine disassembly (tear down). At the three US sites. Florida. exterior and interior modifications installations. as well as veteran models like the 737 Classics. basic avionics. The facility offers a full range of onsite backshops to support metal fabrication. and A300. A320. 170/190 Series Series TIMCO TIMCO Aviation Services is one of the world’s largest independent aircraft MRO providers. B727. Ohio To continue serving ExelTech’s existing clientele and improve availability for Pemco’s newest location. North Carolina.AMERICAS PEMCO Pemco specialises in airframe heavy maintenance. Its new 757 Combi and Freighter programmes are the latest additions to Pemco’s cargo platform. galleys. Ohio. Alabama Aircraft supported include: 737NG.000 mechanics – many of whom are certificated – and uses nearly 1. www. Alabama and Cincinnati. Ohio. Georgia and Lake City. Michigan facility provides complete non-destructive testing (NDT). The TIMCO Engine Center is an FAA certified repair station (T48R384Y) with focus on complete support for the JT8D series of engines. A310 and A330. MD-11. AOG teams can be sent on field service calls to perform engine on-wing support and recovery services. DC-10.airlineeconomics.co Airline Economics: MRO Global 61 . PemCo offers MRO service for regional jets. parts overhaul and reassembly (build up) services. A leading aircraft MRO services provider for a wide variety of aircraft types. government and private aircraft. with more projects in the making. repair. and limited paint. Florida The modern five-bay facility. upgrades and conversions for commercial.5 million square feet of hangar and office space at its three locations. Pemco is also one of the world’s leading aircraft cargo conversion providers with over 300 cargo conversions across 26 models of cargo aircraft. Going forward. Pemco has maintenance bases in Tampa. aerostructures including standard composite repairs. aircraft cargo systems Tampa. as well as disassembly and parts inspection services for the CFM56-3. 757. nance - AIRCRAFT TYPES SERVICED INCLUDE: Cincinnati. in Cincinnati. TIMCO LineCare offers a range of line maintenance and non-technical support services under FAA Operations Specification D107 certification at a growing number of airports. Macon. gearbox overhaul and HPC disk overhaul. seats. as well as interior reconfiguration. engine AD compliance. employs 700 people and can easily accommodate 12 narrowbody or six widebody aircraft lines in the hangars. lavs. inspection. TIMCO’s services cover light and heavy scheduled maintenance checks. DC-9. and structural and cargo modifications. bleed valve overhaul. In addition. TIMCO LineCare performs a range of services across its growing network. TIMCO provides airframe MRO and modification services from three multi-hangar locations in the US: Greensboro. as well as partner operations in Southeast Asia. The engine team at the Oscoda. repair. 700 Dash 6 EMB120 series BE1900 series CHECKS All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 FACILITIES 2 hangars 55. EA’s. complete backshop.B. 120.B. composites.B.C. rep. backshops. SSI. 767.D A. Aircraft mods Aeroframe Services Headquarters located in: Lake Charles.D A. Avionics upgrades.C.000sq ft FBO services. composites. CPCP. strip & paint. welding.B.C.B.airlineeconomics. mods/completions. APUs. airframe comp. Wheels & brakes. Floor boards.B.airepairs.000sq ft 100 acres of ramp space.D 3 hangars .D A. DC-9 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 A & B Checks Only All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG4 All MPD/MSG2/MSG5 All MPD/MSG2/MSG6 All MPD/MSG2/MSG7 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 A.4 w/b. New avionics systems.Building 850 Miami.000sq ft of climatecontrolled 10. mktg & cust. composites.C. Field & line maintenance.C. 717.B. Component repair & overhaul.B.Building 850 Miami. Engine repairs & overhauls. 737.com Gene Carter Director of maintenance sales 8321 Lemmon Ave Dallas TX 75209 Tel: 972 559 7040 Fax: 214 351 2375 A300 737 757 767 777 MD-80 A. 747. refurbs. SB’s. mktg 3900 N Mingo Rd Kansas City. NDT 62 Airline Economics: MRO Global 2011 www.B. CPCP. maint. Composites. Aircraft mods.D 3 hangars for w/b & n/b aircraft Interior modifications. FL 33152 5300 NW 36th Street .B.C. Exterior/ interior refurbs. 13 n/b Tulsa 6 w/b Alliance Fort Worth 2 . refurbs.D A. TN Bruce Campbell Director of sales & marketing 1945 Merganser Street Chennault Airpark (KCWF) Lake Charles.aeroframe.D A. composites. preservation/storage.C. Calibration lab Leasing . complete backshop. calibration.C. CRJ-100.B.9 A/C slots 226.C. Structural repairs. welding/NDT.B.000sq ft of shop.D A.B. struct. complete backshop. Engineering services. Memphis.C. repair. Exterior/ interior refurbs.co .AMERICAS COMPANY AAR Aircraft Services Hot Springs CONTACT DETAILS Chris Jessup VP commercial MRO sales & mktg PO Box 52-2602 Miami.com www. repair.B.D A.D A. sheet metal.D A. borescope. Interior refurbs AAR Aircraft Services Indianapolis 757/767 737 Classic & NG Airbus 319/320/321 727 MD-80 DC9-10/50 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 10 bays 1. CRJ-200 composites. A/C parking. machine shop. 10 n/b Associated Air Center 707 727 737 747 757 767 DC-8 DC-9 MD-87 A319 A320 A.D A. FL 33152 5300 NW 36th Street . IFE. int.D A. Aircraft & avionics.C.B.B. FL 33152 5300 NW 36th Street .B.B. Meridien Oklahoma City OK 73159 USA Tel: 405 218 3033 Fax: 405 218 3614 7 hangars 300. refurbs. FL 33122 Tel: 786-265-4288 Fax: 305-871-5388 Chris Jessup VP commercial MRO sales & mktg PO Box 52-2602 Miami. Aircraft mods.C.D A.com 5 hangars able to induct a/c as large as A340/747 2 bays fully equip for strip/paint 12 w/b bays will accommodate up to 16 n/b aircraft with a total area of 650.D A.C. teardown. In-flight entertainment.B. machine shop. FL 33122 Tel: 786-265-4288 Fax: 305-871-5388 Chris Jessup VP commercial MRO sales & mktg PO Box 52-2602 Miami. NDT.B. Support 6611 S.C.D 8 w/b.C. Engineering services.D A. FL 33122 Tel: 786-265-4288 Fax: 305-871-5388 AIRCRAFT CRJ100. CAPABILITIES Welding. manufacturing. prop repair capability. batteries. warehouse Facilities repairs. Engineering services. airframe comp.D A. NDT. airframe comp.D A. hvy maint. Aircraft mods. overhauls. 777. NDT. hydraulics. ageing . STCs. LA Airepairs Subsidiary located in: EO’s. airframe comp. machine shop. Dowty/Hartzell/ McCauley. L/G replacement. int.C. NDT. 200.C. repairs. AD’s.726sq ft SPEC. 757.C.mro-aa.com www. [email protected] A.000sq ft Welding. Aeroframe electrical. brakes. Paint AAR Aircraft Services Miami 717 727 737 Classic & NG 747 757 767 MD-90 MD-80 series DC-8 DC-9 A300 A320 Family 737NG 707-300 727 series 737-200/-300/-400/-500 CRJ200/700/900 DC-9 series Dornier 328P/J MD-90 MD-80 series SF340 A/B/B+ A300 A310 A318/A319/A320/A321 A330 A340 DC-10/KC-10 MD-10/MD-11 Airepairs capabilites include all of the above plus: Lear 35/36. Landing gear. APUs. int. LA 70615 Tel: 337 312 2672 Fax: 337 312 2699 E-mail: [email protected]. and support 30.C.B. Landing gear.C.B.engines AA-MRO (American Airlines) John Marshall Director. engineering.Building 850 Miami. ISO9100 Aircraft mods.D A.C. FAA/EASA 145. Paint AAR Aircraft Services Oklahoma Rick Townsend VP sales. Avionics. Exterior/interior refurbs. firebottles.C.2 million sq ft Welding. avionics.AMERICAS MRO Directory: Americas HEAVY MAINTENANCE DIRECTORY .B.D A. STCs.D A.B.C. MD 284 Tulsa OK 74116 USA Tel: 816-891-4049 Cell: 816-729-1369 Fax: 816-891-1817 email: john.700 ft-long runway Letter checks. machining.D A.com www. field support. B. Strip/paint. 727 cargo conversions.C. avionics upgrades. VIP Corp Mx Services www. condition monitoring.D A.B. Component overhaul. strip/paint.D A.D A. TAWS. Engine and landing gear conv.C. Strip/paint.roberge@aveos. Hushkitting.000sq ft Interiors.C.C.AMERICAS COMPANY Aveos CONTACT DETAILS Gaetan Roberge Director.MSG-3 6 n/b 86. Structural repairs Empire Aero Center 707 727 737 747 757 DC-8 A319. AFIRS.D A. CPCP/ SSID. A330 MD-80 DC-10 727 737-200/-300/-400/-500 737NG 757/767 747-Series 777 DC-9/MD-80.D.C. Avionics & upgrades. Sandri President Miami International Airport Hangars 896 PO Box 668500 Miami.B. STCs & Engineering. TAWS/HF/GPS/ TCAS.C.B.cr Jack Turnbill VP technical sales and marketing Dept 460. Engine/APU repair & overhaul.D C.C. Quebec H4Y 1J9 Canada Tel: 514/856-6754 Cell: 514/928-7501 E-mail: gaetan.C.B. 1775 Aviation Boulevard Atlanta GA 30354 USA Tel: 404 714 4949 Fax: 404 714 3281 E-mail: jack. component. letter checks.D All Phase Checks A. Modifications.C.C.C.B.B.B.C. GPS.D. Winglet Modification. CPCP.C.D A.B.D 54.MSG-3 C.C.C. Strip/paint.MSG-3 C.Boston Full support repair facility. CPCP.C.D A.C. NDT. sales & marketing 300 Mts Oeste Aeropuerto Intl Juan Santamaria San Jose Costa Rica Tel: (+506) 2437 2830 / 2828 Fax: (+506) 2437 2829 / 437 28 01 E-mail: [email protected]. avionics.MSG-3 C. NDT.B. DFDR. VIP config.C. Flight controls/ composites.C.C.B.D A.C. Component Repair & Overhaul.D A.C.D A.C. A321. TCAS. structural repairs.C. Rep. interiors.B.D A. Sheet metal.certifiedaviation.D A.co.B. Conversion of civilian aircraft to.0002 hangar 10. structure repairs.D A. CPCP. NDT.D A. FL 33166 Tel: 305 341 5150 Fax: 305 871 0076 E-mail: [email protected] 16 bays .000sq ft ramp space Interiors. Cargo conversions Certified Aviation Services 737 767 A320 C-130 DC-8 DC-9 L-1011 MD-11 707 727 737 757 MD-80 DC-8 DC-9 A.C.D A. Upgrades. Painting.D A. Leland Norton Way.B. MARANA.C.D A. storage/ parking. Ageing a/c mods.C. CPCP.com David M. Commercial Jet 2 hangars 68.C.B.B.Cincinnati 1 bay .MSG-3 C. Ste.C.D A. Composites Winglets STCs Cascade Aerospace Ramsey Sarkis Director planning 1337 Townline Rd Abbotsford British Columbia V2T 6E1 Canada Tel: 604 850 7372 Fax: 604 557 2655 Jim Anderson Director business development Installation & Modification Group 105 S. landing gear. Conversions.D C.C. CAPABILITIES Modifications & cabin. Interiors refurbish & paint.D A. sales PO Box 6000 Station Airport Dorval.D A.C.B.D A. S795 San Bernardino.C.C. teardowns. overhaul.B. installation.C.000sq ft of hangar.com 5 Bays-110.Salt Lake City 1 bay . Composite repairs. 727/737 cargo conversions. Avionics upgrades.AMERICAS HEAVY MAINTENANCE DIRECTORY . Interiors.com 3100 112th St SW Everett WA 98204 USA Tel: 425 423 3604 Fax: 425 423 3508 AIRCRAFT A310 A319/320/321 A330/A340 767 CHECKS A.D. VIP Mods.D A.B.B. CPCP SSID.B.4 lines Toronto .B.D A. Seating reconfiguration. Composites. Hushkitting.C.C.B. Passenger/cargo conversion.D A. Cargo Conversions.D A.B.5 lines Vancouver .B.D A.Atlanta 1 bay . Avionics upgrades.D A.com David O’Neill or Rob Tilson Director sales and marketing 394 Hangar Road Rome NY 13441 Tel: 604 512 4550 or 514 755 7676 Fax: 315 838 1515 n/b & commuter spaces Major modifications.4 lines SPEC.C.D A.B. Avionics upgrades. Graphic design.B.000sq ft Ageing mods/struct.D A.B.D A.4 lines El Salvador .B. NDT.1 line (paint) Winnipeg . Inventory management. 1 Bldg.D A. Optionally piloted vehicles (OPV).B. Post Delivery Mods. Engineering Services.C. & inventory support.ELTt Delta TechOps 737 757 767 777 MD-80/-90/-11 A. training.C.airlineeconomics. AZ 85653-9501 USA Tel: 520 682 4181 Ext 5061 Fax: 520 616 5065 E-mail: [email protected] A. IFE.D All 8 widebody bays 1. SATCOM/IFE ATS – AviationServices Technical Services 737/BBJ 747 757 767 777 A320/Airbus CJ DC-9 DC-10 MD-80 737 DHC-8 C-130 A.B. Technical Publications. Structural repairs. backshop & office space Paint/Strip (n/b & w/b).D A.D A.000ft runway ILS approach No curfews Full paint facility Custom modifications.B. A320. strip/paint. composite repairs. ER fuel tanks Coopesa A320 727 737CL 737NG 757 DC-9 MD-80 C.B.D A.D A. Comp.D All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 All MPD/MSG2/MSG3 w/b and n/b 12 bays [email protected] ft CPCP & SSID.D A.000.com Rodolfo Solis Director. IFE Modification Evergreen Maintenance Center Steve Coffaro VP sales & marketing Pinal Air Park.B. w/shear.B.B.C.D A.B.B.MD-90 DC-10/MD-11 A320 A.000sq ft hangar area 225. Disabled aircraft recovery. training & eng supp. CA 92408 Tel: 909-382-3487 Fax: 09-382-2409 www. Eng.D FACILITIES Montreal . In-flight entertainment (IFE).B.B.B.D A.co Airline Economics: MRO Global 2011 63 . Tech.B.C. Seat Overhaul.C. B. Quick Change & Combi.B.D.AMERICAS COMPANY CONTACT DETAILS AIRCRAFT CHECKS FACILITIES & one 40. Modifications. AL 100 PEMCO Drive Dothan AL 36303 USA Tel: 334 983 7000 Fax: 334 983 7022 E-mail: MarketingDept@pemcoair. Inventory management.B.B.000sq ft line maint facility 290. Int.C.D A.C.C. Americas Building 241.D Mexico City Maintenance Base with: Heavy maintenance Main hangar with 97.D A.B. IFE/Interiors Completion.Laurent.B.ca Letter checks.exeltech-aerospace. Composites.C.B.C. CPCP Hamilton Aerospace Technologies 727 737 DC-9 MD-80 A. Aging Aircraft. IFE/Interiors Completion PEMCO World Air Services 737 747 757 767 DC-8 DC-9 MD-80 DC-10 MD-11 A300 A320 727 737 757 A310 A320. SSI & CPCP.568.B.B.C.D.C.com Dennis De Gonzague/David Hinchcliffe Director of sales 3750 Airport Road Trois-Rivieres. MD-80 ERJ-135/145 CRJ-200/700 A.C.000ft runway No Curfew Full paint Storage & Parking Avionics.D A. A319.C. Canada Tel: 514 631 8999 x 5114 Fax: 514 631 7437 [email protected] Kevin Casey President Dothan.D A.C.D A. Sheet metal. Conversions.B.B. Composite Repair Engineering Premier Aviation Overhaul Center 130. NDT.B.B.000m2 2-3 w/b or 5-6 n/b 150.D. Strip/paint/ refinish. Hushkitting Engineering services. mod & upgrades NDT.C.AMERICAS HEAVY MAINTENANCE DIRECTORY .D A. Cargo conversion.D A.D A.B.D A.C.B. Paint/Strip.B. Strip/paint. Painting.000sq ft 6 w/b and 7 n/b aircraft hangared simultaneously Letter checks.B. Avionics mod & upgrades.B.B.C.D A.C. NDT.B.B A.B. SBs. Quebec Canada. VIP/Corp.002. oil.C. CPCP.D A.C. Hydraulic.951ft2 for 1 w/b & 3 n/b or 4 n/b. Land gear remov.B.C.D A.B.C.C.D A.D A.B.D A.C. Modifications.E A.C.D A.B. 260.com. STCs. 12 n/b aircraft hangared simultaneously.C.B.D A.B.D A.000m2 Interiors. Sheet metal. 15620 Mexico Tel: (+5255) 57 86 65 34 Fax: (+5255) 57 62 15 42 Email: hector.D A.C.B. Structural repairs.B. Composite repairs Interiors Emergency equipment.B. SLs Aging.B.com ATR 42 ATR 72 CRJ 100/200 CRJ 700/900 DHC-8-100/200 DHC-8-300 DHC-8-400 SF340 A/B/B+ EMB 145 series 737 series E170/175 E190/195 CL-215 727 737 HS748 C-130/L-100 ATR 42-300 A.D A.C.B.C.000 sq ft Exterior storage/parking SPEC.C. Seats/Gally’s/Lavs.C. John Saunders Road San Antonio Texas 78216 USA Tel : 210 854 9169 Fax : 210 293 2638 E-mail: [email protected]. Fabrication Composite.D. Shop Strip/paint.206ft2 for two n/b Exterior platform with 1.D A. Exterior platform with 1.B.D A.C.co .C. CPCP. #161 A Col. Panama Tel : 210 854 9169 Fax : 210 293 2638 E-mail: stephenlim@stengg. replacement.C A. A321 CL-215 CRJ 100/200 ERJ 170/190 DHC-8 100/300 Lockheed C-130 MD80.C. Americas 9800.D A.C 7 w/b & 10 n/b 543.D A. DC-10 MD-11. CPCP. San Juan de Aragon Del.C.D A.D A.com www.C. modification Avionics. AD. gear removal/replace. A320 DC-9.C. Interiors refurbishment.com 6 hangars 560. Modifications. Interior Reconfiguration. Interior refurbishment.D A.ca www. Avionics upgrades.B. MD90 727 737 747 757 767 777 A300.B.D A. CAPABILITIES & line maintenance.C.C.B.B.B.C.D A.D A. SSI. Major comp.B.000sq ft Tampa.D A.B. refurbs. EOs/SBs modification. Bryant Avenue Howard.D A.D A.D A. 8 n/b 2 hangars total area: 18.C. STCs.C.C.C.C.D A. Painting hangar with 45.C. Strip and paint. ATEC 5000 & 6000.B.C.D A.D.605ft2 werehouse.D A.D A. STCs.C.D A.C. CPCP.D A.premieraviation.D A.D A.E A. Ontario K2M 2V8 Canada Tel: 613 254 6282 Fax: 613 254 6398 Gordon Hamilton CEO 6901 S Park Avenue PO Box 11746 Tucson AZ 85734-1746 USA Tel: 520 294 3481 Fax: 520 741 1430 Hector Cobo Third party maintenance director Av 602.B. G9A 5E1 Tel: 819 377 4500 Fax: 819 377 7717 E-mail: info@premieraviation. Interiors. Guadalajara City Maintenance Base with: Main hangar with 53.800m2 new east coast office Cargo conversions. NDT.C. field First Air Maintenance Services Rashwan Domloge VP maintenance and engineering 20 Cope Drive Kanata.B.B.D A.B. Line maintenance in more than 40 locations.D A.B. Communications Sheet metal Instruments. & replace.000sq ft Modifications.237ft2 for more than 40 A/C.C.C.D 3 n/b 4.D A.C.955sq m) 240. Welding.C. Structural repairs. Jets/Head of State 64 Airline Economics: MRO Global 2011 www.E A. NDT ExelTech Aerospace Donald Kamenz VP marketing & sales 1200 Pitfield Rd St.B.647.D A. inspection San Antonio Aerospace (SAA) (a subsidiary of Singapore Technologies Aerospace) Stephen Lim SVP marketing.B.D A.0002ft facility 9.B.D A.E A.B.C.000sq ft hvy maint (26.B.D A.D [email protected]. Avionics.D A. Fabrication.C.C.B.E A. pneumatic & accesories shops. Quebec H4S 1A0.C. Venustiano Carranza Mexico City.16 line of HVY Maint Avionics. Component painting.B.C.B.mx 17 commuter. Apare parts with 22.D A.C.D A. CPCP. Avionics Upgrades. A310.C.D A.B.airlineeconomics.B.C.B. Hushkitting Mexicana MRO Services A318 A319 A320 A321 A330 727 737 757 767 F100 DC-9 MD-80 Bombardier CRJ200 737 A320 E190 A.D A. Land. Avionics and electrical.208ft2. A/C Parking Training Panama Aerospace Engineering (PAE) Stephen Lim SVP marketing.C.B.D A. aircraft and components.C.B. fuel. FL 737-300/400 Freighter. CPCP Eos/SBs. composites.5ft2 Four hangars. Composite shop.B.C.C A.C. On site aircraft/records.D 3 hangars .D A.D A.D A.C.B.D A.B.C.C.B. br www. Eddy current.D A.D A. 1 n/b 250.D A. CAPABILITIES Avionics upgrades. Avionics.C.aero Paul Lochab MD sales.B.C.C. 767.B.000sq ft covered Avionics upgrades Winglets Structural.D A.D A.aging mods. Composite repairs. Paintstripping. EOs / SBs modification. Avionics. Avionics repairs United Airlines (United Services division) Center .C. Americas 2100 9th Street Brookley Complex Mobile AL 36615 USA Tel : 210 854 9169 Fax : 210 293 2638 E-mail: [email protected]. Modifications (int/ext).B.B.C A. MP Inspection.B. GA 3 bays n/b up to 757 two hangars 116.B. Landing Gears.B. Interiors.C A. Lease sale exchange.B. Components.000 m Heavy Maintenance.B.D A. Machining Stambaugh Aviation All n/b a/c 747 DC-10 A.com.000sq ft 8 w/b.D A. C.C.C A. CPCP.B.C A.000sq ft covered Structural.B.B.C. Modifications IFE/interiors.lochab@united. Engine overhauls.D A.C A.C. SVP sales PO Box 1909 5530 East Highway 90 Lake City Airport Lake City FL 32025 USA Tel: 336 668 4410 ext 3019 Fax: 336 665 9011 E-mail: john.C 4 w/b bays 10 n/b bays 90+ line stations w/ line network a 2.500m2 Total Area: 250.C. Composites.co Airline Economics: MRO Global 2011 65 .D A.D A.C. Painting.D A. CPCP-Aging Mods.B. ISO 9000:2001 compliant.C.com 7 w/b 14 n/b [email protected] A.B. Inventory management.C A.C. Structural repair. NDT.C. C A. D A. Interior refurbishment.B. C A.B. IFE/Interiors Completion.B.C. Components Overhaul.C. DC-10 MD-11. Composite shop.C A.tapme.C A. Borescope.B.C A.B.D A.C.C. ultrasonic. Door conversion. C 12 years A. NDI: X-ray. Avionics upgrades etc. 5n/b Hangar Area: 12. C A.D A.B. Standardisations etc. C. D A.C A.C.B. Calibration TIMCO Greensboro. Landing gear. D A. Winglets TIMCO Macon.B.C.B 2 n/b 8+ commuter over 23.AMERICAS COMPANY Seman-Peru CONTACT DETAILS Carlos Rodriguez General manager Avenida Coronel EP Edmundo Aguilar Pastor S/N Lima 4 Peru Tel: (+511) 477 5570 Fax: (+511) 4 770877 M.br Rio de Janeiro Hangars: 1 Hangar capacity: 4w/b Hangar Area: 14.C.C.D A.D A.net www. Engines & APUs.D A.C.D A.D A.B. Avionics kit fabrication.com AIRCRAFT DC-8 DC-10 L-382 727 737 CHECKS A.C.B. Line maintenance services. C A. Planning. Avionics mod & upgrades.C.000sq ft NDT Structural modifications (int/ext). Avionics.D A.C.B. MD80 DC-10.aero John Eichten.C A. Interiors.B.C A.C A.D A.D FACILITIES 4 hangars smallest has 1. Stambaugh Jr. Interiors.B. A330 L-1011 A.B.aero John Eichten.D A. GA 31297 USA Tel: 336 668 4410 ext 3019 Fax: 336 665 9011 E-mail: john.D A. Paint/strip.B.B. C A.D A. NDT.eichten@timco. Plating Shop.B. Modifications Victorville Aerospace 2 w/b.D A.C.D A. Engine test cell.C.B. Strip/paint. 10 n/b aircraft hangared simultaneously Letter checks.B.C A. Line Maintenance.C. Avionics. R.vituzzo@tapme. FAA 145 repair station.B. C A.B.D A.B.D A.B. Mechanical Accessories.victorvilleaerospace.B.500 m2 Total Area: 140. marketing & services United Services Maintenance San Francisco CA 94128 USA Tel: 650 634 4269 Fax: 650 634 5926 paul. 757. Composites. Fabrication.B.250m2 727 & 737 cargo.D 8 hangars 671. NC John Eichten SVP sales 623 Radar Rd Greensboro NC 27410 USA Tel: 336 668 4410 ext 3019 Fax: 336 665 9011 E-mail: john. APUs. FL 11 bays maintenance 2 bays dedicated paint seven hangars 632.D A.C. CPCP TIMCO Lake City.B.C. VIP ST Mobile Aerospace Engineering (MAE) (a subsidiary of Singapore Technologies Aerospace) 727 737 747 757 767 777 A300 A310 A320 A330 DC-9.B. Modifications (int/ext).9-million sq ft facility in San Francisco FAA 121 operator. C C C A.AMERICAS HEAVY MAINTENANCE DIRECTORY .B. DC-9 / MD80 DC-10 / KC-10 / MD-11 CRJ200/700/900 C130 707 / KC-135 727 737 757 A320 series C130 / C141 / P3 DC-9 / MD80 DC-8 DC-10 / KC-10 / MD-11 737 757 A320 series DC-8 DC-9 / MD80 A. Interiors. Power-By-Hour Support TAP Maintenance and Engineering Brazil Ricardo Vituzzo GM sales 21941-480 Rio de Janeiro / RJ Brazil Tel: (+55-21) 3383 2140 Fax: (+55-21) 3383 2300 E-mail: ricardo. NDI & Eng. Pax-ToFreighter Conversion. Hydraulics. Maintenance programme.B.B.900m2 (accommodates 2 DC-8s) SPEC. C A. 777 A300 / A310 A320 series DC-8.C.C. C.B. RVSM.D A.com Julius Smith Director sales & marketing 18200 Phantom West Victorville CA 92394 Tel: 760 530 1767 Fax: 760 246 5159 E-mail: sales@vaero. Global emergency/AOG maint.B. TAWS.B.C.C A.B. SVP sales Middle Georgia Regional Airport 150 First Drive.D A.eichten@timco. B.airlineeconomics. Accountable manager 1000 Jetport Road Brunswick GA 31525 USA Tel: 912-265-7244 Fax: 912-262-0225 Stephen Lim SVP marketing. Engine Management. LP. Line maintenance services Heavy Maintenance.B.D A. Wheels and Brakes. MD-11 A320.D A.D A.D A.C.C.D A. MD-80 727-100200 737-200/300/400 /500 737-700/800/900 747-200/300 757-200 767-200/300 777-200 DC-10 MD-11 A300 A300-600 A310 EMB120 ERJ145 F-50 727.SFOUS 737 747 757 767 777 A319 A320 717 727 737 747 757 767 777 DC9.C.com.C.C. Pneumatics.000sq ft Back Shops www.B.C A.B.000m2 Porto Alegre Hangars: 5 Hangar capacity: 1w/b.B. 737.B.B.250m2 largest has 4.B.D A.C A. CPCP . B. Cargo conversions.B.B. PO Box 10136 Macon. Prototype work.C A.C.C. A checks could be conducted every 600 hours (previously 500 hours). A320 and A321 – has amassed over 7. The E checks are sequenced into 36 labour packages. some operators have almost eliminated conventional C checks by following an equalised maintenance programme. Equalised checks that focus on optimised usage of each part have also been introduced. Maintenance glitches such as problems with the air conditioning and brakes have been ironed out and fly-bywire technology is fully accepted. C checks every 20 months (previously 15 months) and heavy checks after six years and 12 years (previously five and 10 years). And Revision 28. each requiring eight hours of ground time. the response was very favourable from airlines. At the time the 66 Airline Economics: MRO Global 2011 www. naturally. which can be performed during a night stop. T he A320 family can be credited for Airbus’ success as an aircraft manufacturer. SR Technics (SRT) says the equalised maintenance or E check concept reduces aircraft downtime by a total of 17 days during a six-year period. The introduction of the A320neo will have little effect on the aircraft type’s popularity as it has over 95% airframe commonality with the existing models making it an easy fit into existing fleets. which was added to its Maintenance Planning Document (MPD) in November 2004. This programme distributes traditional A.MAINTENANCE A320-FAMILY MAINTENANCE: Airline Economics surveys the best maintenance providers for A320-family aircraft revision was introduced. Having applied it while maintaining the easyJet A320 fleet through several years of growth. Stuart Mann. and the six-year/24.and C-check tasks among equal maintenance packages. CSA Czech Airlines is an example of a carrier that has adopted the intervals offered by MPD Revision 28 and so far it is working well for them.flight hours.airlineeconomics. The global A320 fleet continues to grow at a rate in excess of 10% and this will increase as from Q4 2012 to 42 aircraft per month from the current 36. This gave the airline a great deal more flexibility because the check intervals could be defined by the most appropriate usage parameter for that carrier. they get the maximum time out of all the components between overhauls. This software tool enables the necessary resources and maintenance personnel to be in place when the aircraft touches down and thus reduces the time the aircraft spend not in revenue service.600 aircraft delivered to almost 330 customers and operators worldwide.800 flight hours annually to more than 3. flight cycles or calendar time. the tasks were split among three different sub-groups -. A319.000 orders with more than 4. Airbus’ director of product marketing of the A320 family at that time said: “Airlines love the extra flexibility that MPD 28 gives them and. stated that although daily and weekly checks were still required every 36 hours and eight days. Inspecting the A320 The A320s maintenance check intervals have been raised several times since its launch. No C-checks are required.” A popular maintenance option on the A320 is the Airbus AIRMAN system. Airlines were then able to choose the readymade solution that corresponded most closely to their yearly utilisation. Although unbundling the checks and specifying three different usage parameters for the individual tasks meant more flexibility for airlines. Air France took delivery of the first A320 in 1988 and since then the A320 family – which includes the A318.500. Taking the process further.000 flight hour intermediate layover (IL) check is due around the time of the 36th E check. Production rates will steadily rise to 38 in August 2011 and to 40 in the first quarter of 2012.co . Airbus acknowledged this by introducing standard maintenance packages representing three common types of aircraft yearly utilisation ranging from 1. particularly as it now enjoys one of the widest customer bases in aviation history. which allows the aircraft to transmit faults to the ground during flight. This impressive sales record makes it the world’s best-selling commercial aircraft and therefore a maintenance cash cow. it also posed more challenges. Airbus is aware that airlines are constantly looking to reduce maintenance costs and MPD Revision 28 allowed operators to extend the intervals between maintenance checks. They climbed dramatically from 168 in 1998 to 222 in 1999. reduce fuel consumption and optimise flight paths for its A318. Germany. component and parts management. A319 and A320s. according to Airbus.co Airline Economics: MRO Global 2011 67 . was that each operator was able to optimise the checks intervals according to its own aircraft utilisation. The maintenance can be conducted at an SR Technics facility or subcontracted to the operator’s selected provider. Although the requirement over the next five years is relatively stable.000 flight cycles. The zonal check interval has grown from five years to six. “They wanted very specific information from PATS. “[This included] the complete reshaping and reorganising of the maintenance program out of the traditional maintenance program and into an aquiline maintenance program.” Landing gear overhaul Landing gear overhaul for the A320 family is required every 10 years or 20. “As technicians we expected a tech- nical solution. A319 and A320 aircraft. It was statistical analyses that found the answer.Airbus-developed lateral trim solutions Airbus is using data from its Production Aircraft Test System and additional problem analysis tools to optimise performance of its A318.” said Eric Papy of Airbus’ Mise au Point (MAP) design office representative team in Hamburg.MAINTENANCE The service package offered by SRT consists of fleet technical management. Lufthansa Technik and Turkish Technic to enter the market. from measuring aircraft on the final assembly line and the wings at Broughton. the growth of the overall landing gear overhaul market has resulted in several overhaulers of A320 gears such as AFI KLM E&M. E-check maintenance management and line maintenance management. including stripping and repainting of the fuselage and vertical tail. Lateral trim solutions developed by Airbus can decrease possible drag. The result of that change.000 to 24. www. SRT says it has cut the average turnaround time for the IL check.” says a source at SR Technics. “We started together with Airbus to ramp up the maintenance activity on the A320. then stayed in the mid-200s before starting to climb rapidly again in 2005 to reach 387 in 2008. After six years we are doing the E check in Malta but we have started to do it in Zurich. however Shainin are statisticians. But A320 deliveries are still accelerating. allowing the MAP team to make any necessary adjustments during assembly – virtually eliminating the need for re-flights.airlineeconomics. and the requirement for structural inspections has been relaxed from every 10 years (originally eight) to every 12 years. from 21 to 14 days.000 flight cycles. The number of landing gear overhauls required each year equates to the number of 10-year-old aircraft in the fleet. The project made swift progress using the data from Airbus’ Production Aircraft Test System (PATS) – used to verify aircraft during pre-delivery processes – along with problem analysis tools from consultant company Shainin. Finnair. but the fatigue threshold was increased from 20. Upgrades .” Shainin devised a mathematical formula for predicting roll values for each aircraft ahead of its first flight. maintenance cost per block hour in 2008 ranged between EUR570 and EUR770 for high and low cost scenarios. For the A320. Although the results. equated to approximately 15% of block hour direct operating costs (DOC). re-marketers and lessors who have owned and/ or operated A320 Family aircraft.12% 6. which has been working for some years to establish the marginal costs associated with air traffic delays. London. A320 Family maintenance: SURVEY RESULTS Airline Economics asked a selection of A320 family operators from each region (airlines and lessors) who they thought were the best performing maintenance shops.40% 6. And when smaller market players enter the top ten. for the majority.84% 3. Middle East & Africa (EMEA): SURVEY RESULTS 2011 TOP TEN EMEA MRO FIRMS 1 2 3 4 5 6 7 8 9 10 SR Technics / ADAT Lufthansa Technik TAP Maintenance & Engineering AFI-KLM Engineering & Maintenance Iberia Engineering & Maintenance OGMA JorAMCo Turkish Technics Monarch Aircraft Engineering Finnair Technical Services 31% 29% 14% 8% 5% 4% 3% 3% 2% 1% MRO operations. location.08% Global A320 fleet by operator region 7 8 Americas: 29% Asia-Pacific: 26% 9 10 Africa: 1% Middle East: 5% Europe: 36% Methodology Over 5.co . Europe. Researchers from Westminster University. Imperial College. it is clear that they are doing something right. location. However. The 2011 A320 Family Maintenance survey is therefore an accurate reflection of industry thinking at the very highest levels from decision makers who are involved in the decision making process during the course of an aircraft’s life. the researchers concluded. to an extent. with a base figure of EUR620. with a base figure of EUR670. These results also reflect the fact that some of the smaller 2011 TOP TEN MRO FIRMS 1 2 3 4 5 6 Lufthansa Technik ST Aerospace SR Technics / ADAT TAP M&E / TAP M&E Brazil TIMCO Pemco HAECO Aveos / Aeroman AFI-KLM Engineering & Maintenance Evergreen Vote split by region Middle East: 2% Americas: 32% Europe: 43% Asia-Pacific: 22% Africa: 1% MRO players are able to offer services that are highly tailored to an individual client’s needs. turnaround times. 68 Airline Economics: MRO Global 2011 www.01% 13.43% 13. independent or OEM-operated. where airlines choose to have their maintenance performed is dependent on location. the equivalent figures for the Boeing 737-800 were estimated to range from EUR500 to EUR670. 16.airlineeconomics.00% 11. have responded to an increasingly competitive environment by developing more inclusive services to make fuller use of their capabilities and resources while helping their customers contain costs. For comparison.000 industry professionals globally were asked: Which maintenance provider offers the best service for the A320 Family taking into account costs. reliability and convenience? These results were then filtered by Airline Economics so that only airline senior management.08% 4. and Lufthansa Systems found that unit maintenance costs. The figures for the A319 ranged from EUR580-800. including an allowance for overheads such as administration and facilities. whether airline-affiliated. appraisers and investors remained. reflect the size of some operations there are a few surprises.44% 3.18% 3. with a base of EUR630.MAINTENANCE Maintenance cost per hour Some of the most detailed studies of aircraft maintenance costs have been carried out on behalf of Eurocontrol’s Performance Review Commission. while the A321 base costs were estimated at EUR720 with a low of EUR660 and a high of EUR910. the managers of the HABOM project are hoping that they will be well placed to cater to this ever-growing market. There will approximately 3. it is difficult to see how the future of very large MRO bases like the one being developed at HABOM can be assured. Already offering heavy maintenance on the A318. components and material. having checks performed and collecting the aircraft all via non-revenue flights. With this new investment. geographical location and capability mix of our www. the A320 maintenance leader through their various agreements which include Easyjet and AirBerlin. In the case of HABOM. the company says its Total Component Support (TCS) service provides what are normally mutually exclusive benefits: low costs. while overall Total Technical Support can be combined with Technical Operations Management and the management Technical Operations Websuite.airlineeconomics. documentation and engineering services. Turkish Technic is also aiming to establish these new investments as an international joint venture with the participation of a leading global company or companies. This means that when SRT came to streamlining its processes.co Airline Economics: MRO Global 2011 69 . The size. senior vice president marketing & sales. Turkish Technic will be the permanent shareholder of the HABOM Project. CIS and northern Africa as well as Turkey itself. The Aer Lingus A320s that SRT used to maintain at Dublin are now handled by Sabena Technics. This train of thought is backed by Lufthansa Technik’s Walter Heerdt. the Middle East. The operation in Zurich has been a particular headache for the management.500 employees within all the maintenance. and further expansion of this site could prove highly popular with the airlines of the Middle East. including seal changes and gear replacement. The current scenario is one of aircraft flying to bases. And it is tailored to the operator’s specific requirements. The buildings and hangers at the SRT base in Zurich are not owned but rented. Even so SRT has been able to slash turnaround times by shifting and amending the layout of its various workshops. has been trying everything it can to cut turnaround times and costs. repair and overhaul centres which will be established within the HABOM Project. but it is prudent to wonder about the future for the maintenance market in general. independent MROs through the future slated purchase of a US MRO supplier. When asked by Airline Economics why he thought the LHT network gives them an edge he said: “Lufthansa Technik’s Group network is definitely a big advantage.000m2 area. which is not likely. with oil prices above $110 a barrel and Goldman Sachs urging investors to poor into oil with a benchmark of $200 by 2015. SR Technics. But it is SRT. yet with the greater aircraft availability that normally demands heavy investment in a big stock of spares. possibly TIMCO. it had to factor in various building regulations associated with the lease agreement and to an extent this has slowed and amended their progress as time has passed. which seems best positioned to benefit. Turkish Technic too has been building up its capabilities in Istanbul. Istanbul will be the maintenance hub of the region within a short time period if all goes to plan. initial provisioning studies and home base allocation to repair and overhaul. with its Abu Dhabi Aircraft Technologies subsidiary. it has put technicians together with managers and client account managers. LHT says membership of its components pool -. and major refurbishment of the Honeywell 131-9[A] APU. the company achieved A320 landing gear capability in 2010. this will not be possible without a very large route hub being created out of Sabiha Gökçen International Airport. troubleshooting. The airframe maintenance centre facilities at Sabiha Gökçen International Airport will have a total 372.MAINTENANCE Lufthansa Technik’s comprehensive suite of total support offerings covers landing gear.the equivalent of being part of a Boeing and Airbus fleet nearly 400 strong -. The company also offers on-wing repair services. But taking into the account the size of the Middle East fleet on order. targeting operators in Europe. However. amended layout in all areas to make the process seamless and linier and adopted an in house program for staff and graduates to develop new practices to help reduce turnaround times. The Turkish Airlines subsidiary is building a new narrowbody MRO base. Dublin Aerospace was awarded EASA Part 145 approval in October 2009 for its new maintenance and overhaul operation in the former SR Technics Hangar 5 at Dublin Airport. HABOM is estimated to generate a $1 billion share from airframe and component maintenance segments. The service can be extended to include everything from writing the specifications. The estimated total investment requirement for the airframe and component maintenance centres on the whole is around $500 million. the HABOM Aviation MRO Centre at Sabiha Gökçen International Airport. A319 and A320 and overhaul. Given this scenario. engines. MAINTENANCE Turkey hopes this impressive base will become a global MRO hub. Such a trend will play into the hands of Lufthansa and especially SR Technics as they expand to become global. it is unlikely that airlines will want to fly aircraft to distant maintenance centres and will opt for doorstep services. By the year 2020. at any location.reduces operating costs to a level normally achievable only by operators of much larger fleets. And at a time when cost control is more crucial than ever. “But many maintenance providers are able to run extremely high burns and compress the maintenance schedule into fewer days so the airline gets higher yields. Those aircraft are here for five to seven days. it is important to factor in flight and fuel time/costs into the equation and delete the same where possible. The point is we have been pretty well sold out over the past year and a half but we will have the capacity in the fall in two of our locations.MAINTENANCE eight overhaul facilities in Europe and Asia secure that most of the NB and WB aircraft can be serviced close to the customers home base.” he says. So there is no non-revenue ferry flight. so we have to plan routine and non-routine materials because there is no time for recovery while the airplane is on base so it is a high-velocity maintenance concept that we apply in Tampa. Lufthansa Technik is continuously investing in its facilities. which is based in Tampa. They have got sufficient scale to keep their lines from gapping. President Kevin Casey explains: “Customers are drawn to the location. help to keep costs low or even drive it down due to smart interface solutions. As customers demand faster turnaround times at lower cost. Customers also value the tight cooperation on base maintenance procedures as well as on optimizing of individual maintenance schedules which lead to MRO cost savings for the airlines. Even though newer airframes take fewer total man hours for maintenance. So at 6am they can light the fires and kick the tyres and head on out with passengers. In fact. The Lufthansa Technik production processes have been standardized throughout the facilities by analysing and optimizing of all production steps to secure higher efficiency in MRO services.airlineeconomics. which keeps the whole program efficient from a cost and quality standpoint – so it is good for everybody. which I think is really resonating with the A320 community. The exchange of best practises within the LHT Base Maintenance network constantly helps to drive down MAINTENANCE ground times. It doesn’t mean that we always get everything right.” PEMCO’s Casey is very well aware of the fact the US fleet is due to be replaced with newer and more fuel efficient aircraft that will require less maintenance. but he is prepared for this. They fly their last airplane in last thing at night full of passengers and we can taxi their aircraft to our hanger from there and then deliver them the aircraft we have just wrapped up. time and value. he sees it in a very positive light. We include liability. C2s and C3s and will be moving into heavier [checks] later this year. We have two big beautiful hangars with substantial capabilities. for example just recently an A319 D-check was completed in 16 days. We used to have one location – Alabama – and about two years ago we expanded to Tampa and last year we doubled Tampa and also opened our Cincinnati maintenance base. it is clear that many MROs are going to be able to do more airplanes in the same footprint with the same number 70 Airline Economics: MRO Global 2011 www. Florida. it is doing a good job. Lean management. The size of the network guarantees slot flexibility and capacity. which enable LHT to offer base maintenance services to all sizes of fleets. Not having the right materials on hand could slow down the turnaround time.” He adds: “We want to be perceived by our customers as a reliable nextdoor supplier which provides them with exactly those services they individually need in the expected quality. Actually our year-to-date growth rate is 73% but we are making a decision to reduce this rate. We expect to pursue A320 maintenance from North American carriers – to date we haven’t had many customers ferrying airplanes across the Atlantic to our shop. I think that the mixture of our broad service portfolio. although we have grown 50% in size we have essentially sold out already. often in joint workshops with the customer. We get it done well and we literally have had perfect airplanes in our Tampa base as measured by our client’s scorecards. “Newer airplanes require shallower maintenance checks as you would imagine. our world-wide network. very high burn rate.” He adds: “We have been doing C1s. which is essential for not having any late fines from an inspection standpoint.co . Casey backs this trend: “We have grown about 50% overall throughout our three bases. PEMCO has made great inroads into the A320-family maintenance market and. But the point is. We are trying not to do a whole lot of growing right now because it is challenging and requires a lot of resources and it is critical we are making sure we are adhering to the process that helped us deliver the performance that led to the growth.” This philosophy is the future for many MROs. as shown in the following survey results. the high quality and the motivation of our employees are guarantees for our success. it’s a very. but by and large the A320 fleet is one we do as well as anything else we do. quality.” Americas:SURVEY RESULTS 2011 TOP TEN AMERICAS MRO FIRMS 1 2 3 4 5 6 7 8 9 10 ST Aerospace (SAA and ST Mobile) TIMCO PEMCO TAP M&E BRAZIL AEROMAN / Aveos Mexicana MRO AAR Evergreen United Services Aeroframe Services LLP 22% 20% 19% 16% 12% 4% 3% 2% 1% 1% In the Americas one such well-placed MRO base is PEMCO. THE TOP TEN A320 MRO COMPANIES PROFILED 1. LHT ensures the unbroken reliability and availability of its customers’ fleets.” Asia Pacific: SURVEY RESULTS 2011 TOP TEN ASIA PACIFIC MRO FIRMS 1 2 3 4 5 6 7 8 9 10 ST Aerospace HAECO Lufthansa Technik Philippines Evergreen TAECO SIA Engineering Company GAMECO MAS Engineering Air New Zealand Engineering Services China Airlines International 27% 19% 18% 14% 11% 4% 3% 2% 1% 1% Both Airbus and Boeing are bullish about MRO trends in the APAC region. but most MROs are going to be able to continue with approximately similar maintenance facilities because they are getting the burn rate up much higher than they would have otherwise in the absence of heavy structures requirements. and help you go about fixing it. but as expected we were not quite able to match the record earnings of the year before. Each of the airplanes will require far fewer man hours per year. they will be able to have budget control and confidence in when that aircraft is going to be completed and returned. but it also means an increase in demand for more MRO solutions to increase efficiency in airline operations and maintenance. Bhd. which they will not have for a very long time to come. A380 maintenance is currently being conducted in-house. Asia. a 15-com- pany grouping of MROs who work with the manufacturer across a range of services. It has been a constant trend. the fundamentals are there for it to continue growing stronger in MRO demand and development of MRO capacity. www.” He adds: “It is widely thought that the new airplanes are so much more sophisticated in how they tell you what’s wrong. Kortas says. LHT’s senior vice president for marketing & sales.airlineeconomics. the smooth introduction of Lufthansa’s new Airbus A380 flagship was a particular high point for Lufthansa Technik in 2010.” The Lufthansa Technik Group comprises more than 30 subsidiaries and joint ventures in Europe. North America and Australia.” Because Asia is now a driver for aviation growth. Walter Heerdt. Of course newer aircraft equals a reduction in demand for parts and services. that they offer far fewer maintenance surprises both in operation and in the maintenance hanger. The bigger. Airbus senior director. where previously they were doing fewer airplanes each of which required much more man hours for heavy checks. Operatively. ((ASSB). said aviation’s current global downturn should accelerate the consolidation of some MROs. repair. “I believe [consolidation] is a trend that may accelerate in the near term. their eyes are fixed firmly on China and India and a need for the manufacturers to provide full package solutions to airlines. help you diagnose what’s wrong. maintenance and customer service. Airlines that are operating newer aircraft than are maintained by fixed-price providers. based in Arnstadt / Germany) is a maintenance and repair facility for large Rolls-Royce turbofan jet engines. overhaul and modification services in the civil aviation industry. high utilisation of flexible working hours and process innovations. This is an excellent future for the US MAINTENANCE airlines as well as the service providers as there will be a much larger fleet. at Singapore Airlines and Qantas Airways and now Korean but there is potential even on this type for components outsourcing. He said consolidation was beginning to happen among members of the Airbus MRO Network. Wolfgang Kortas. and Airfoil Services Sdn. With tailored maintenance programs and state-ofthe-art repair methods. says: “Lufthansa Technik has survived the last economic and financial crisis relatively well through increases in efficiency. 2010 saw a slight increase in revenue.MAINTENANCE of mechanics. Many A380 operators have asked Airbus for Flight Hour Service (FHS) maintenance programs for example. It has two joint ventures with OEMs: N3 engine overhaul services (with RollsRoyce. older airplanes require lots of maintenance man hours but they are not nearly as efficient and therefore in a world of mostly fixed-price maintenance services they are more challenging for the more typical MRO to be profitable. but as the Asia-Pacific is so dynamic it could be the forerunner of such a movement. Lufthansa Technik Lufthansa Technik is one of the leading manufacturer-independent providers of maintenance. It is a global phenomenon. including a number in Asia-Pacific.co Airline Economics: MRO Global 2011 71 . The Asia Pacific market is pointing towards India for strong MRO growth and there is no reason to assume that South East Asia will not be the largest MRO market in the world by 2050. Lufthansa Technik has recently launched a new T-product (“Total”products. air freight operators and low cost carriers embodies the company to customise solutions to suit unique requirements. as the use of surplus parts enables the operators to save costs.airlineeconomics. B787. we see an ongoing consolidation process in the MRO industry. Its full service spectrum includes: Off-Wing maintenance Aircraft Maintenance certification 3. ST Aerospace provides: On-Wing maintenance Off-Site/Aircraft-On-Ground (AOG) Recovery Services Repairs Engineering Design & Development Asset Management Type Certificate (STC) Development & lease back Engines ST Aerospace offers customized integrated solutions for your fleet of engines. Additionally. their votes have been grouped together. offered by LHT for every kind of MRO service). Its extensive experience serving major airlines. The TBS is especially designed to make Base Maintenance easier for fleet operators and offers a broad range of included and optional sub-products as well as different financing models. These challenges can only be handled successfully by MRO providers operating globally and at a certain scale. SR Technics Because SR Technics and Abu Dhabi aircraft Technologies are now essentially a group under the ownership of the Mubadala Development Company (Mubadala). EMB190 and A380. Established and owned by the Government of Abu Dhabi. helping clients achieve the longest on-wing time at the lowest lifecycle costs for an airline’s engine operations.co . The introduction of new aircraft generations and engines types is combined with high investments in infrastructure. In the end it is an individual strategic and economic decision of the specific operator if and to which range he will go this way. tools and employee training and complex questions about intellectual property. We are following a pro-active and transparent information exchange with our suppliers regarding volume and usage of parts for on-time delivery. Mubadala is a catalyst for the economic diversification of Abu Dhabi. Heerdt says: “As Lufthansa is one of the first customers for the new Airbus A320 neo series Lufthansa Technik will definitely extend its MRO capabilities also to this type of aircraft in the coming years.” Heerdt is bullish on future growth for the MRO market: “We think that the MRO market will further increase in the next years including the business with surplus parts. Heerdt says: “LHT has developed a very comprehensive monitoring and supplier management to avoid delays in parts delivery. together with our subsidiary Lufthansa Technik Logistik we have created an effective supply chain for a global provision with spare parts.” But he also admits further consolidation is expected: “Despite new entries. ST Aerospace With over three decades of experience in providing quality engine services and managing over 500 engines for a diverse customer base comprising over 80 operators worldwide. meeting outsourcing needs and operational demands. From base maintenance side. the company’s strategy is built on the management of Management Painting Aircraft Modifications management 72 Airline Economics: MRO Global 2011 www.MAINTENANCE with MTU Aero Engines) which is specialized in repairing high pressure compressor blades and vanes as well as low pressure turbine blades. ST Aerospace consistently invests in new capabilities and expands technical resources to better deliver innovative and integrated solutions. to better suit each operator’s financial situation or preferences. having the ability to tailor packages to individual needs. called TBS – Total Base Maintenance Support.” LHT is looking to further grow its market share via the launch of new Modifications including Winglet Installation MRO services for the B748.” 2. landing gear swing etc. and is one of the largest independent providers of these services in the world. EMBRAER 175 and EMBRAER 190. TAP M&E / TAP 5. government and private aircraft. engine and major component replacement. A320.) (boroscope. galleys and IFE Services offered include: - landing. 747. With headquarters at Zurich Airport. 737Classics. logistic centres. and provides many types of services tailored to each customer’s individual requirements – including elements such as aircraft checks. The 4. Repair and Overhaul) organization of TAP Portugal. SRT’s proprietary IT system sets it apart from its competitors. EMBRAER 195 and Legacy 600 and Lineage. SRT has been providing maintenance services to customers since the early 1960s as the former maintenance division of Swissair and a founding member of the largest European maintenance consortium. In the 70s started providing services to third party customers – this now accounts for more than half total revenue. world’s largest independent aircraft MRO providers.) (MLG seal replacement. Since the foundation of TAP in 1945. grouped into two broad categories as follows: www. TIMCO provides airframe MRO and modification services from three multi-hangar locations in the United States: Greensboro. C and D Checks partnerships and long-term. . The long-term involvement with a commercial operator. Services are provided either directly to the airline or through other parties such as aircraft leasing companies. North Carolina. cargo hold damage etc. the company is able to manage aircraft and component data online and real-time wherever the airline or aircraft is located. ADAT services (wheel change etc. where it takes over the technical management and technical operation of the entire fleet. upgrades and conversions for commercial. The airframe MRO operation employs over 1.) and repairs (fuselage dents.co Airline Economics: MRO Global 2011 73 . 757. Via this system. TIMCO LineCare offers a range of line maintenance and non-technical support services under FAA Operations Specification D107 certification at a growing number of airports. TAP M&E Brazil has the most upto-date MRO technologies .5 million square feet of hangar and office space at its three locations. ERJ 145. ERJ 135.including the only Inertial Navigation System in Latin America. exterior and interior modifications installations. TIMCO M&E Brazil TIMCO Aviation Services is one of the TAP Maintenance & Engineering (TAP M&E) is the MRO (Maintenance. engines and components. Macon. BBJ. SR Technics (SRT) offers an extensive network of maintenance facilities. Airbus A300. The company is certified to maintain the entire Boeing line 727. TAP M&E is duly certified by several aviation authorities amongst which is the FAA and EASA. volcanic ash exposure etc. EMBRAER 170. TAP M&E is therefore committed to offer its customers cost efficient maintenance with short turn-around times and high quality and reliability standards. that provides maintenance and engineering services in aircraft. engines and components) and services. vibration survey etc. 767. SR Technics provides technical solutions for airlines on a global basis. line stations and sales offices across the globe. SRT offers services for most Airbus and Boeing aircraft and their associated engines and components.MAINTENANCE MRO states that it is its “independence [that] ensures every customer receives the same high-quality service and treatment under one SR Technics service umbrella”. Florida. 737NG. TIMCO’s services cover light and heavy scheduled maintenance checks. 777.airlineeconomics. troubleshooting and defect rectification. A300-600. ADAT in Abu Dhabi provides comprehensive line and light maintenance services including ‘A’ checks. the Lisbon based operator. Georgia and Lake City. and a horizontal Gemini GE-1600S lathe. aircraft casualty and AOG response.000 mechanics--many of whom are certificated--and uses nearly 1. engine overhaul or component management and repair. which can machine very long parts for the landing gears repair services. TIMCO LineCare performs a range of services across its growing network. capital-intensive investments that deliver strong financial returns and tangible social benefits for the Emirate of Abu Dhabi. The MRO firm offers total solution packages to airlines. made TAP M&E aware of the importance of on time delivery of products (aircraft. presently with more than 50 Airbus aircraft. and contribute to the growth and diversification of its economy. one of the five Griffon GTW-U3 cylindrical milling machines in existence in the world. TAP M&E has been responsible for the maintenance of its entire fleet. Embraer EMB120 (Brasília). A330 and A340.) B. MD11 and DC10. A310.) and business class seating systems. OEMs (Original Equipment Manufacturers) or component trading companies. airlineeconomics. with one or two exceptions. Florida. fuel nozzle overhaul. it’s a very. maintenance check because they can get so much extra revenue out of the airplane. Its new 757 Combi and Freighter programs are the latest additions to Pemco’s cargo platform. where Pemco presently has four 757 cargo modifications in work. on schedule and without budget surprises. however. not physical hangar space. Our average on time performance was two and a half days early. Our schedule is very easy to measure. as well as partner operations in Southeast Asia. diminishing the talent pool and airlines re-hiring mechanics – Delta for example has hired a lot of mechanics recently – and there has also been an increase in overall maintenance and modification rates as a result of the rebound in the economy and the desire of the mainline carriers to capitalise on the restoration of business travel demand – so lots of first class modifications on widebodies and even on their narrow body and regional feeder aircraft. We routinely get aircraft back on time and early. PEMCO offers: - Airline Economics: What makes PEMCO a good destination for A320 maintenance? Kevin Casey. We have two big beautiful hangars with substantial capabilities. In Tampa we have a different complex. parts overhaul and reassembly (build up) services.MAINTENANCE TIMCO’s Engine Center provides full engine disassembly (teardown). having said that. The JetBlue fleet is younger. A leading aircraft MRO services provider for a wide variety of aircraft types. 6. so it is a more involved check and that work was split between ourselves and another provider. as well as interior reconfiguration. Ohio. A320 customers have historically been Northwest.co . avionic & IFE upgrades. C2s and C3s and will be moving into heavier later this year. Dothan. with more projects in the making. Alabama and Cincinnati. In North America over the past 10 months we have been affected by a lack of capacity. A lot of that has consumed the capacity over the past year and a half in the United States and in Canada. The A320s that we routinely get out early. bleed valve overhaul. They fly their last airplane in last thing at night full of passengers and we can taxi their aircraft to our hanger from there and then deliver them the aircraft we have just wrapped up so at 6am they can light the fires and kick the tyres and head on our with passengers. At the three US sites. which is essential for not having any late fines from an inspection standpoint. but competence mechanic capacity. we routinely produce the airplanes two and a half days early. So there is no non revenue ferry flight. president of Pemco: The fundamental requirement our customers want is for us to provide them with reliable aircraft. Delta and JetBlue but we have also done leasing customers for RBS and ILFC. We haven’t experienced a great deal of overcapacity that has affected rates. AE: Are your good turn times advertised as a competitive advantage? Casey: It is clearly an advantage to have an aircraft returned early from a Aircraft types serviced include: AE: Are you seeing any price sensitivity because of the overcapacity in the market? Casey: We are not seeing too much overcapacity. we have a very active and lean team so we 74 Airline Economics: MRO Global 2011 www. That kind of extra utilisation is huge to an airline. Every day they track the aircraft we have seen out at least for a month or so and our in service reliability has in that 21 day period is very high. There has been an interesting shift over the past few years where mechanic wage rates have gone up significantly through a combination of retirement. But not every airline is agile enough to take on aircraft out of service unexpectedly and replace with another quickly. We only have a couple of days to turn around the airplanes and we get the airplanes out early. Our customers want to have aircraft to fly well after they leave us and our in service reliability is managed by our quality department. PEMCO Pemco specializes in airframe heavy maintenance. not having the right materials on hand that could slow down the turnaround time. they went a long way to ratchet down our turn times. Pemco has maintenance bases in Tampa. inspection. Michigan facility provides complete non-destructive testing (NDT). we have been doing C1s. Once we join forces with a customer. There is another reason that is more esoteric and objective that some customers are drawn to the location. very high burn rate. The TIMCO Engine Center is an FAA certified repair station (T48R384Y) with focus on complete support for the JT8D series of engines. We have periods of time strung together that are literally perfect ten score cards for one customer. which I think is really resonating with the A320 community. which is a slightly older fleet than the JetBlue fleet. Principally. The engine team at the Oscoda. gearbox overhaul and HPC disk overhaul. our costs have increased faster than our pricing. Pemco is also the world’s leading aircraft cargo conversion providers with over 300 cargo conversions across 26 models of cargo aircraft. Those aircraft are here for five to seven days. In addition. and structural and cargo modifications. repair. as well as disassembly and parts inspection services for the CFM56-3. AOG teams can be sent on field service calls to perform engine on-wing support and recovery services. On the Northwest fleet. The operation team does a good job on the A320 fleet. engine AD compliance. Mexico. In addition. Taikoo SIchuan Aircraft Engineering Services Co. and Taikoo (Shandong) Aircraft Engineering Co. With the addition of Aeroman to the stable the firm is able to cover all the Americas as a modern local provider of services. These are the things that more experience mechanics. otherwise known as Interjet. In fact we have hired OEM mechanics.better known as HAECO . www. in turn ensuring efficient demand. which they control. and sometimes it is motivated by somebody that came to the OEM 7. are much better at. Supply chain. but it won’t be the case in airframe maintenance. an airframe bill is 75% labour. (STAECO) at Jinan. and component solutions Aveos offers value-added maintenance solutions such as aircraft maintenance training and supply chain management as part of an integrated service offering. S. They are going to pick their airframe services from the best providers – in house light check or outsource the heavier checks. all three of our major legacy programs we did not increase the price at all. of Mexico. Ltd. But the truth is airlines like a buffet. now acting as an independent is fast emerging as one of the leading MROs in the Americas. Every decade or decade and a half. I agree with the trend that the OEMs are going to have a heavy impact on high intellectual property items – engines and components – and particularly those items where the invoice is highlighted by the cost of parts. That trend is continuing. over the years. Aveos fleet management experts allow customers to focus on their core competencies by providing tailored services that optimize carriers’ maintenance programs and operational reliability.V.co Airline Economics: MRO Global 2011 75 . they really have to think on their feet and be more of a craftsman than just assembly. from the MRO world who thinks they can bring their expertise to Boeing and leverage that to provide MRO services that no one else can match.A. These guys are used to dealing with clean airplanes. and Bahrain. Shandong. to repair and overhaul all components on its growing fleet of 24 Airbus A320 aircraft. engine.Singapore (HAECO) (SHAECO). HAECO has. HAECO has established joint ventures with key major Original Equipment Manufacturers (OEMs) in pursuit of providing “Total Care” services to its customers. full stop. (TAECO) at Xiamen. hopefully with some grey hair. Aveos/AEROMAN Aveos. Fujian.” 8. In the eight years I have been at Pemco. it became the only full service provider at the new Hong Kong International Airport at Chek Lap Kok offering comprehensive line to heavy maintenance packages including aircraft component overhaul support and AOG/aircraft recovery service. When HAECO signed a 20-year franchise agreement with Hong Kong’s Airport Authority. and so far we have been able to do that. So when your invoice is 75% labour and the skills of the mechanics aren’t just about reading a manual or putting an engine back together as per the tolerances in the manual. But they haven’t cornered the market on skill. logistics.airlineeconomics. and where they will always have an advantage over the OEMs. Ltd. HAECO Hong Kong Aircraft Engineering Company Limited .has provided comprehensive aeronautical engineering and maintenance services to airlines and operators since 1950. has been formed in Sichuan. they don’t order off the limited menu. business support and airline opera- - engineering support (AOG) Facilities and Locations Aveos has signed a five year contract with ABC Aerolíneas. But at the same time our labour costs and retirement costs have all increased. procurement. The only was we can afford that is to increase efficiency. not difficult and lighter. AE: Does the rise of OEM aftermarket agreements worry you? Casey: Sure! The only way the OEM has a real advantage and has real potential value is where the invoices have a high cost component and where technical data is effectively controlled by the OEM – this is either the engine manufacturers or in the high-value components such as black box recorders. process and vendor management. Sometimes it is motivated by offshore requirements such as China or India. We all know OEM labour costs more. Recently. That’s where independent airframe MROs have the advantage over OEMs. expanded beyond the boundaries of Hong Kong SAR into other cities in China with Taikoo (Xiamen) Aircraft Engineering Co. the US level of outsourced heavy maintenance has gone up from about 35% to about 68%. The company. Last year. And they are not going to Boeing.MAINTENANCE very rarely increase prices. and it always fails. The agreement includes access to an inventory pool for Interjet as well as the placement of main base stock in Toluca. Mainline Services management. It also operates maintenance facilities in Singapore . the OEMs have gone into this mode where they want to extract some more vertical integration and over their services in a Goldshare programs or whatever their term-du-jour is.. Aveos is an MRO to keep an eye on. fleet and logistics management In addition to airframe. An engine bill is 75% parts. They are going to pick their engine services from the best provider – many times that is the OEM but many times it is not. shallow dive. Aveos will also support the development of Interjet’s in-house component and repair capability. in its various guises has been carrying out heavy maintenance for more than seven decades. checks. They don’t get into heavy stuffs or modification. de C. a joint venture. The operating units responsible for production place their skills in the service of Air France-KLM’s fleet as well as those of its customers. Human Resource Management. Commercial airlines. combined with 30 years of experience in aircraft exterior painting equals distinctive results. etc. EGT margin. Arizona location provides the ideal dry southwest USA climate for aircraft maintenance and storage. or different kinds of Flight Hours programs.airlineeconomics. Evergreen Maintenance Center is your source for aircraft painting. Its airline-MRO position also guarantees its independence when it comes to choosing the most effective options for customers’ engines. AFI KLM E&M has set up a combined organization responsible for strategy. reduced engine operational and maintenance costs. and leading government agencies entrust heavy maintenance work to Evergreen Maintenance Center (EMC). EGAT was tasked to uphold aircraft maintenance quality and promote technical flight safety while creating adequate business value. EVERGREEN EVA Air’s Engineering and Maintenance Division was spun-off as an independent corporation in September 1998 to become Evergreen Aviation Technologies Corporation (EGAT) with General Electric Company (GE) as an equity partner. the Evergreen Maintenance Center also operates the Pinal Air Park and its 6. The firm has a 75-year-plus track record. Engine Removal & Reinstallation. incident prevention. corporate-wide Six Sigma deployment. EGAT’s robust management systems and processes the Oracle-based MRO System for engine overhauls.) and recommend on-wing maintenance actions. undertaking mega-scale modifications such as the Dreamlifter in partnership with Boeing. The Marana. This approach leads to increased engine on-wing lifespan. Contact EMC to discuss how Evergreen Maintenance Center can provide the finest aviation services in the industry. AFI KLM E&M can recommend customized engine performance Painting: Whether your flight path takes your fleet around North America or around the world. AFI-KLM E&M AFI KLM E&M provides MRO services while also guaranteeing a whole raft of requirements ranging from safeguarding air safety. the EMC is one of the largest full-service commercial maintenance. warranties on all parts that have not come fully up to expectations. properly managing aircraft operation. Knowledge Management and E-Commerce. marketing. Relativity Capital has recently acquired EMC. Engines Measurements carried out on engines provide daily data. Balanced Scorecard. The firm’s worldwide customer base. oil consumption. allowing the AFI KLM E&M engineering team to monitor performance (fuel consumption. Located in Marana. Arizona. Consisting of three maintenance hangars and a large maintenance flight line. sales force (present throughout the world) and external communication. EGAT has since evolved into a specialty. as well as engaging in complete Section 41 skin replacements. AFI KLM E&M is able to get the best from its strong partnership with OEMs as well as to develop alternative solutions that increase customers’ benefits. Horizontal Stabilizer skin replacements.MAINTENANCE 9. Aircraft maintenance 10.during which it has achieved a level of undisputed excellence in managing large aircraft fleets. high business-value MRO. Product Safety.co . Drawing on its extensive operational expertise. repair and overhaul (MRO) facilities in the United States. Location: Evergreen Maintenance Centre is famed as the site where aircraft are stored. 76 Airline Economics: MRO Global 2011 www. monitoring parameters.Boroscope Inspection. business development. and minimizing costs. the EMC also holds the distinction as the largest commercial aircraft storage facility with heavy maintenance services in the world. and executing AOG recovery repairs on any portion of the airframe structure. LRU Replacements. Structural Mods Flight Line Providing customer support for all types of commercial aircraft: and TDY Services Team Storage passive video and microwave perimprograms for stored aircraft & engines mate Components - AFI KLM E&M provides: Engine services All Models . With 20 million square feet of ramp and storage area able to accommodate up to 400 aircraft. Job Qualification. both costs and “Mean Time Between Removal” (MTBR) network skilled and experienced labour force to Fixed Prices. aircraft leasing companies.850-foot runway rated for Boeing 747-400 through 747-8 aircraft. . It expects overall European growth of 4% over the next five to 10 years. North Africa and Japan are all important markets for Lufthansa Technik.4%. predicts their portion of this expenditure will grow faster than the global average of 3. but that business has fallen away in 2011.1 billion of this figure. The volume and structure of our growth reflect this trend. and the company could be seen as a barometer for the industry. and the consequences of the political unrest and natural disasters there are prompting revenue to shrink and are delaying contract negotiations. vicepresident.2 billion on maintenance. repair and overhaul services in the first six months in 2011 has been growing once more in a number of regions. The Egypt political crisis was a heavy blow. Despite the challenges posed by the market. at SH&E. Political unrest in North Africa and the Middle East has continued but global economic confidence has fallen away sharply as austerity measures take effect across Europe and beyond. This year has brought much by way of political uncertainty to the North African region. with firms in eastern Europe leading the way. with tourism to the county still nowhere near pre-political crisis levels. meanwhile. However. which has had an effect on MRO companies across Europe as flights have been grounded and/or cut back. Eastern European and Commonwealth of Independent States carriers account for only $2. MROs enjoyed a strong return to growth on the back of aircraft premium seating upgrades. Eastern Europe. which equates to 24% of the global maintenance. is among the fastest growing regions worldwide and is forecast to gain 8–9% of the overall European market share by 2021.” The second half of calendar 2011 has been a very different story from the first half.co Photo: Gregor Schläger/Lufthansa Technik . with western Europe returning to fleet growth after recent years of decline. In Europe during 2010. European MROs are global players in the main.7% compound average growth rate. but David Stewart. experiencing 3% growth. Lufthansa Technik chief executive August Henningsen spoke to MRO Global about the events of the past 12 months: “Although global demand for maintenance. Cost pressure on airlines and growing MRO capacities around the world mean margin pressure in the MRO business has risen further. it was unable to match the previous year’s operating result mainly due to provisions and revenue losses associated with clients from the crisis-hit parts of North Africa. The Middle East. and so the subject of cur- rent market performance should be approached with an eye on global events. as a mature region. with western Europe. Against this backdrop. Despite the challenges posed by the market and the competition. Meanwhile. ICF.EUROPE EUROPE MRO E uropean airlines spend $12. Year-to-date fleet growth has remained slightly stronger than expected. repair and overhaul expenditure. Lufthansa Technik grew its revenue vis-à-vis 2010 in the first half of the year. Lufthansa Technik grew its revenue in the first half of 2011 compared with 2010 figures. at a 4. Lufthansa Technik is working on a number of projects to further improve its cost base and its competitive position. Team SAI also foresees European MRO growth will stay solid.airlineeconomics. The most powerful MRO company in Europe remains Lufthansa Technik (LHT). it has been recovering at a slower rate than the passenger and cargo business. 78 Airline Economics: MRO Global 2011 www. and at that point the quality of an MRO’s customers comes into play. We have also picked up a considerable amount of maintenance work of the back of it. and therefore emit less CO2 and other greenhouse gases. At that time. our service and our quality.” MAEL has also successfully reduced turnaround times: “A-checks on narrowbodies. the MRO business is dependent on the fortune of the airline business. It is perhaps a perfect template for the MRO industry to follow when adjusting to uncertain times. www. We are very flexible. engine replacements. there can be no doubt about this.2% 2.1% 4. people and the airline – we are attached to an airline and we understand an airline. including giants such as LHT. The key for MROs within Europe and the rest of the world will to become a local maintenance provider and a global player that is able to provide services COMPOUND ANNUAL GROWTH RATES Fleet 2011 2016 2021 Total MRO 2011 2016 2021 WE 2. major skin repairs. two or three years ago had a turnaround time averaging 23–24 hours. which lend themselves to undergoing heavy airframe maintenance in far-flung locations with low labour rates. The introduction of the European Emissions Trading Scheme (ETS) in 2012 will both help and hinder MROs based within the European Union. use less fuel. organisational and technical foundation in place to weather these pressures. Western European MROs have for some time suffered from stiff competition from lower-cost regions when it comes to widebody aircraft. high quality and minimised cost are the terms to be fulfilled by the Lufthansa Technik Group. “Today they take eight hours on an overnight check.7% 3. Best possible turn-around times. although it also means all MROs.co Airline Economics: MRO Global 2011 79 .” says Adams. LHT’s Henningsen is sure the ETS will have a marked impact on his business. where some roles were made redundant. managing and technical director at Monarch Aircraft Engineering. which can be contracted or maybe ad hoc: “Typically it is an ad hoc service where a customer has called in to our integrated operations centre. the Middle East and Africa.2% 3.EUROPE As one would expect. comments: “We faced significant pressures but the good news is that since that time we have secured new business and we have resized the business and. The responsibility of the MRO is to say to the operator that we can do that.2% wherever an aircraft might be.2% EE 9. the quality. and rising fees and taxes. and the standards when we deliver that aircraft.5% 8. Additionally. “For our customers it will be even more important to reduce fuel consumption and minimise emissions than it has been in the past. That scheme is indicative of the way Monarch Engineering delivers a service. There is a point where an MRO can do no more. meaning that MAEL now counts among its customers airlines that have their own MRO shops.” WHERE WILL THE INDEPENDENT MRO BE IN 10 YEARS? The key to the future of MRO is to be global.3% 4. thanks to our people who are absolutely dedicated and loyal to our brand and values.” says Adams.” The large. We have had overseas repairs.9% 8.” This is just one aspect of the story though. Currently.1% 4. It knows it needs the aircraft back in service as quickly as possible.3% 7. such as consolidation among airlines. provided we maintain the service.4% EE 9.” Originally SMART was set up for the Monarch Airline operation “but it very quickly showed so much value and we got such a huge amount of interest that we actively promoted it to the marketplace. resulting in cyclical ups and downs. Says Adams: “We have customers that make significant use of it. The MRO understands the pressures and requirements of an airline. rescuing aircraft etc. namely Asia-Pacific.airlineeconomics. even ones who have their own engineering arm too. will have to increase joint ventures with other MROs to ensure they retain a good local presence. airlines are facing strong cost pressures due to increasing oil and spare part prices. bespoke and part of a global network through joint ventures with the OEMs. One MRO that can claim to be both the bespoke local provider and a global player is Monarch Aircraft Engineering (MAEL). we have continued to invest in systems. All of this has a direct impact on MRO businesses. This has led to a focus among the European maintenance bases to service the huge domestic narrowbody fleets of local carriers and those of North Africa. They have done 60-70 sorties in the past year to different parts of the world. The challenge is to have a good financial. ecological and political crises.2% 3. We can absolutely punch above our weight and back that up with our values.4% Total 4. And the aviation industry is sensitive to regional or international economical. Two of MAEL’s key customers consolidated. Companies such as LHT will be in a good position to benefit.1% Total 4. Airlines expect tailored service packages that are optimised to their specific needs. our engine-wash system Cyclean™ already helps several airlines to run aircraft engines at lower temperatures. A lot of the work we have done recently was all around having flexible working initiatives – we have a SMART team of engineers that are ready to go in two hours anywhere in the world. “We have surprised customers with how quick we have responded. we have emerged stronger. Henningsen sums it up: “There is a clear trend in regard to the customisation of the MRO business. you name it. We are already working on several research and development projects to help our customers achieve these goals. global MRO companies based in Europe are still very much focused on the regions that have a strong growth in aviation. Over a year ago MAEL was in the middle of a resizing exercise.9% 6.1% 4. Another high is the long-term investment – despite those pressures. Mick Adams.” SMART is the Special Monarch Aircraft Response Team.9% WE 3. engine recoveries. there were enormous pressures on the industry. much like the airlines in the US who are now able to trim capacity and adjust prices at will. Operators look very favourably on MRO shops that can turn around an aircraft in three days. “We are small but very bespoke. don’t make this viable. so having slots open to be able to do the work makes this strategy attractive.000 8. where the aircraft is in a hangar for up to a month. This operation was launched from a leased two-bay hangar in October 2010. In terms of market and customers. there is a long-term shift in the workforce from traditional airframe maintenance jobs – such as structural technicians and painting staff – to more licensed mechanics and avionics experts. and involve less labour and material than a full overhaul. and the intention was to build a four-bay facility by early 2012.” The ETS will have an effect on all facilities that require additional flights.000 2. Overhaul events. One facility in the firing line is Mubadala. These usually take eight to 10 days for a narrowbody. as operators try to phase traditional D-check tasks over multiple C-checks on modern aircraft. is OEM market incursion.EUROPE increasingly rare.425 4. made possible by partnerships with MRO facilities. Mubadala has halted a planned expansion of the centre in Malta for the time being because it has been unable to attract customers in addition to existing customer easyJet. The OEMs have reached a critical mass on a global scale in both clients and support facilities. and its current E-check. We have also completed a maintenance contract with Cyprus Airways. We want to grow and go beyond our current territories. are becoming 80 Airline Economics: MRO Global 2011 www.000 7. Depending where the operator is located.” says Adams. This does mean the traditional model for an MRO is being ripped apart and teams of technicians have to be broken up to work on more aircraft.000 4. The way it operates and its requirements are quite different to other operators – but of course no one operator is the same – we are quite adaptive. quality and values. and we are not going to take on the big guys because we are too busy. has contributed to EUROPE’S FLEET FORECASTS 9. named due to its bespoke nature for client easyJet. The MAEL management team is clear. like most others. are adapting to a world where maintenance events are becoming more individualised and less predictable.co . We are not going to be distracted from our clients by trying to compete in all areas.668 Western Europe Eastern Europe Total 7.657 Moreover. is proving to be a big hit with UK low-cost carriers.266 6.000 3. but this was postponed in January this year. done by our Manchester MRO. SR Technics has been at the forefront of adapting its practices to suit clients.000 6. We aren’t so big that we don’t understand what it is they need. For lessors this might be different as aircraft availability is absolutely key. This could especially be a problem for operators of older narrowbody aircraft. So being based in the UK. As new-generation aircraft enter fleets across Europe.000 0 2011 2016 2021 890 1.841 5. Third-party maintenance providers face a fundamental challenge in the growing aftermarket influence of the original equipment manufacturers. “I absolutely believe we will still be punching above our weight.000 5. and in the near future the emissions costs. European MROs are acutely aware that striking the right balance between team size and skills and facility capacity are becoming more important. with the additional costs that entails. as issues such as wing corrosion become a regular find at the C-check stage and will lead to additional hanger time. we have Boeing Gold Care and the 787 on the horizon with Thomson. We have done in excess of 80 inputs for easyJet last year. it would have been worth flying an aircraft down there for main- tenance work. MROs need to be able to meet the needs of clients in a manner that ensures the airline or lessor can hold their margins. as OEMs look to capture the aftermarket and operate in competition with third-party MROs and MRO data providers alike. This trend is important for airlines to note because.246 4.airlineeconomics.136 5. But the fuel costs today.989 1. we are in a very strong position and are backing that up with the service delivery. We are pleased about this. including those in Europe. whereby the equipment is linked up to work as an integrated server network. The elephant in the room for all MROs.000 1. with its dedicated narrowbody airframe overhaul centre in Malta. flying an aircraft to the Middle East could mean losing a few days as well as fuel. The European MROs. And this is while airlines were still growing. If you look at the rates in Middle East shops three or four years ago. The SMART team is a good example of that marketing strategy. the key is to be quick to move with the market. as the MROs move away from aircraft spending long hours in a hanger with large teams. when an older aircraft requires a structural repair the costs will be higher as the business model of the MRO will make this project an exception to the norm. The move from traditionally separate onboard systems towards software-controlled components on the 787 and A380. as previously it had its narrowbody and widebody contracts with different maintenance providers. Access to construction and maintenance documentation has become increasingly restricted. the requirements for this aircraft are likely to change.” For this reason Lufthansa Technik has started offering its Aircraft Leasing and Trading Support (ALTS) service. lease companies and airlines. ALTS is an all-embracing product that recognises and supports the dynamic behaviour of the owners and operators of leased commercial aircraft.airlineeconomics. Lufthansa Technik’s Henningsen thinks the requirements of both.7 $13. This involves the reporting of aircraft technical defects not when they occur but rather when they become convenient to rectify. the EU went public and published German-related safety issues in Europe’s airline operator blacklist. however. but there are concerns the process has lost momentum. the European Union could no longer ignore the situation. like airlines.co Airline Economics: MRO Global 2011 81 . the FAA has been fining airline operators for many years now and to great success. regulators including the European Aviation Safety Agency (EASA) have failed to enforce the requirement that an engineer have the final say independently of their employer. The lessors also have to be considered with care by the MROs. even large NAA’s have allowed their oversight of airlines to become compromised.4 2016 2021 REGULATORY CONCERNS WITHIN THE EUROPEAN MARKET There is growing concern that airline outsourcing of maintenance is leading to a lack of direct oversight and therefore control of maintenance activities carried out on commercial passenger aircraft. With an increase in safety-related findings uncovered within European airlines by the Safety Assessment of Foreign Aircraft (SAFA) programme. MROs. www. the Commission has moved very slowly on the issue of fines and penalties for breaches of aviation safety regulations. as well as the occasionally incalculable state of an aircraft used by an airline for several years. licensed engineers are examined independently from their employers. there are several circumstances that call for a specific approach to aircraft management.” he says. non-maintenanceaffiliated aftermarket orders continue to be captured by the OEMs.2 0 2011 $4. To ensure safety is monitored objectively. At this time the non-reporting of aircraft defects and abuse of the minimum equipment list (MEL) is fast becoming common practice. Engineers are on the front line of this problem. must be met or exceeded accordingly. The result is that airlines have been able to severely reduce the influence of licensed engineers. In the US. with the licensed engineer remaining the only person authorised to certify an aircraft is ready to enter commercial service following maintenance. On achieving a successful examination result. comprehensive maintenance might have to be carried out to comply with re-delivery conditions and certain airworthiness requirements in the countries of future aircraft operators. The leasing market holds close to 40% of the global fleet and will be a strong partner for any MRO. But the European Commission has acted. still retain a great deal of leverage at the point of aircraft purchase and this could give them the in-house fleet knowledge on the 787 and A380 to carry over to retain third-party maintenance business. such as LHT or AFI-KLM Engineering & Maintenance. Following an aircraft transition. “Despite the fact a leased aircraft has to have the same basic servicing as a regular owned aircraft.9 15 $11. Their job is to ensure operational aircraft are safe and fit to fly. Although current aviation regulations contain clear and specific references to the responsibilities of these engineers.6 10 $15. and many engineers remain sceptical the 2008 EU whistleblower protection legislation will save them if they turn on their employers. Large fines and the inevitable negative publicity act as a strong incentive for airlines to ensure safety is truly paramount. “These include limited ownership (generally lease contracts can vary from a few weeks to five years) and the associated short-term MRO and especially documentation services. In April. as increasingly large. It was most likely designed to do so. Since then. There appears to be no real will from regulators to deal with this issue across the globe.7 20 $16.8 $3. Airline-affiliated MRO providers. which some commercial airlines are supporting. This product looks set to gain momentum over the coming years. and transferring it from one operator to another often means far more than just changing the cabin interior or the paint scheme on the fuselage. This should provide the engineer with an element of independence from the airline.EUROPE further OEM control. Airlines in the US are named and shamed by such actions and this can only be in the best interests of both the passenger and safety.9 $13.6 5 $2. a maintenance licence is then issued. The OEMs hold all the cards to control the aftermarket in the future. EUROPE’S MRO FORECASTS (US$MILLION) 25 Western Europe Eastern Europe Total $20. will become detached from what is going on with their client fleets as new aircraft come online. The MROs will have to be a part of the various OEM aftermarket networks. So the ongoing EU consultation into introducing a similar system in Europe is welcome. Depending on aircraft age and use. line maintenance manager for XL Airways France.” Despite a buoyant year. Monarch Aircraft Engineering will continue to work on building capability for the additional GoldCare types. Monarch Aircraft Engineering has had a highly successful 2011. The agreement sees the MRO provide support to the Turkish operator’s twice-weekly flights into Gatwick for its Airbus A310 freighter fleet. MAEL has conducted many thousands of heavy maintenance checks.” 82 Airline Economics: MRO Global 2011 www. A300B4. Monarch Aircraft Engineering’s base at Male in the Maldives has had a great Q3 2011. HEAVY MAINTENANCE Heavy maintenance. as the MRO has been an approved Boeing GoldCare maintenance provider since 2009. Monarch Aircraft Engineering has formed a team of specialist engineers who have completed more than 100 Rear Spar repairs for its customers. For each of its 787s. Agrimi Alessandro. including a deal with Thomas Cook Scandinavia for heavy maintenance support of the Airbus A321 C-checks. A310. TUI has committed to GoldCare for 12 years. are carried out at Monarch Aircraft Engineering’s hangar facilities at London Luton and Manchester International airports. Monarch Aircraft Engineering (MAEL) is an award-winning MRO ideally placed to provide value-adding aircraft maintenance and engineering solutions to include heavy maintenance. Birmingham International. design services. Monarch Aircraft Engineering saw its ambitions of a home fleet of 787s end in 2011 when sister airline Monarch Airlines cancelled its long-delayed order in the third quarter. plus the full GoldCare maintenance. LINE MAINTENANCE Line maintenance is carried out across the globe. are Sweden-based Tuifly Nordic. Since the business was established in 1967. Patrick De Mare. manager of line maintenance. The other TUI subsidiaries now scheduled to receive 787s. We look forward to its continued support in the Maldives this winter.” In September. Monarch Aircraft Engineering secured a line maintenance technical handling agreement with Turkish Airlines. major modification campaigns and complex structural repairs for clients around the globe. London Luton. technical director for Thomas Cook Scandinavia. and Part 147 technical training for Airbus and Boeing aircraft types. As Boeing continues to roll out GoldCare across the aircraft range. Boeing says the TUI group is to begin taking delivery of 787s in 2012. engineering and consultancy.EUROPE Monarch Aircraft Engineering Based in the UK and at several international locations. said: “Our extension of this agreement is testament to Monarch’s professionalism and the first-class service it provides. Osman Ozdilek. B767. line maintenance outstation manager for Turkish Airlines said: “This agreement reflects Turkish Airlines’ decision to strengthen our working relationship with Monarch and we look forward to its continued support. Monarch Aircraft Engineering was selected by Boeing as the airframe MRO supplier for GoldCare launch customer TUI Travel with its 13 787s. B737NG. having secured a number of large long-term contracts for MRO services. the MRO is ideally positioned to meet all heavy maintenance requirements. where line maintenance technical handling is carried out on Boeing 737CG. Kiev. engineering and material management package. which in 2007 became the first 787 customer to publicly state it intended to sign up for the GoldCare package. With a highly experienced and motivated team. This technical handling agreement will take place throughout the winter season. line maintenance. More recently. which suits our business needs. Thomson was created following the merger of Thomsonfly and First Choice. Jens Elm Nielsen. A320 family and A330 aircraft. Airbus A300-600. which is when the first heavy check for the 787 will be required. with permanent stations established at London Gatwick. sales and procurement for Alitalia said: “Monarch Aircraft Engineering has provided us with a costeffective maintenance solution.” In September the same line station also signed a technical handling agreement with Alitalia to provide full maintenance support for the Italian based airline’s Airbus A330 aircraft operating out of Male in the Maldives. The agreement sees the business continue to provide support for the French airline’s fleet of Airbus A330 aircraft from its line station at Male International airport in the Maldives. however. said: “We are delighted that Monarch Aircraft Engineering has demonstrated it is able to provide us with a high-quality maintenance service at excellent value. UK-based Thomson Airways is one of four TUI group airlines due to operate the 787.airlineeconomics. Manchester International. Alicante. Canary Islands. The MRO can also offer full component support. having been selected for a line maintenance technical handling agreement with XL Airways France. and is the only Boeing GoldCareapproved supplier in the UK. Belgium-based Jetairfly and Dutch carrier Arkefly. from ‘A’ checks up to heavy ‘C’ and ‘D’ checks on Boeing and Airbus family aircraft.co . B777. B757. Goa and the Maldives. Malaga. The business does not have much to worry about. and this success places the business in a strong position for the future. Implementation of the GoldCare service will begin about 12 months prior to delivery. when XL Airways France will operate flights to Male from Charles De Gaulle. which also included embodiment of Rear Spar Corrosion Service Bulletins. Monarch Aircraft Engineering is acutely aware of the significant impact to airline operations and revenues when AOG events are not responded to immediately. With an extensive component inventory with both EASA and FAA certification TECHNICAL TRAINING Monarch Aircraft Engineering’s technical training facility has gained a worldwide reputation for its continuing high standards providing full EASA Part 147 B1 and B2 courses and Part 66 category A basic training.EUROPE it is able to provide power-by-the hour programmes or single unit loans and exchanges.” In exceptionally tough times for our industry. The business has created a Specialised Monarch AOG Response Team (SMART) comprising highly qualified engineers who are available 24/7 and are armed with the necessary tools and equipment to carry any AOG or specialist support requirements. engine trend monitoring. This service is available on demand and is managed through Monarch’s Integrated Operations Centre. The agreement sees the business continue to provide support to the Irish flag carrier’s fleet of Airbus A320s at its line stations in Gatwick. We are also sized to meet the demands of large customers and not too big to be unable to adapt to smaller operators. sales and marketing director Ian Bartholomew commented: “We are committed to seeing our customer operations succeed and working closely with them. in some of the toughest locations. HOW CAN POTENTIAL CUSTOMERS BENEFIT FROM AN AGREEMENT WITH MAEL OVER COMPETITORS? Bartholomew says: “Monarch Aircraft Engineering is an airline MRO and as such we are acutely aware of the needs of an airline operator. Monarch Aircraft Engineering has demonstrated it can provide costeffective and innovative solutions for its customers and is determined to develop and grow the business as it enters into the next phase of its long-standing history. Since introduced. at the client’s own facilities worldwide. and the rescues have ranged from a routine test or basic component change. Next year will be equally busy for Monarch Aircraft Engineering as it seeks to develop other revenue opportunities in support of the growing customer base. technical consultancy. including planning. To ensure instructors remain at the forefront of aviation technology and to support the company’s status as a Boeing GoldCare provider. We are located at major airports in the UK and overseas. The design capability – coupled with the extensive Part M engineering knowledge and capability lends itself to a full turnkey solution for operators who have to flex and change the fleet configurations and sizes to meet today’s very demanding and changeable market. As an approved Part 21J Design organisation it has built up an enviable reputation for modification design on many different aircraft types. Dominic Ryan.” COMPONENT MAINTENANCE CENTRE Situated at its London Luton and Manchester facilities. We are nimble. technical records. it can also provide expert advice on initial provisioning strategies. to engine changes and major structural repairs. When asked how the company can help clients get through these worrying times. MAEL’s highly motivated and flexible workforce can provide a cost-effective maintenance solution.airlineeconomics.co Airline Economics: MRO Global 2011 83 . The Composite capability is MRO leading and a key area of growth for the future as new technology aircraft enter into service. and we can offer a fully networked total MRO management solution. technical service support. Its highly skilled and professional instructors www. ENGINEERING SERVICES Monarch Aircraft Engineering.” DOWN ROUTE AOG SUPPORT AND RESCUES With a large number of line maintenance clients and its sister Airline Monarch. dynamic and innovative and can flex our services to suit. Whether an individual component repair or a long-term contract to support operations. and warranty and consultancy service. The facility has a full range of specialist tooling and test equipment and can provide services for mechanical. thus assisting with the supreme on-time performance Monarch Aircraft Engineering continues to deliver to its customers. avionics. reliability management. and will now begin to develop this training capability in-house. COMPONENT SUPPORT Monarch Aircraft Engineering has a team of experts who can advise clients about the benefits of contracting for full component and material support across both Airbus and Boeing aircraft types. with its highly skilled workforce. Monarch Aircraft Engineering has established a modern Component Maintenance Centre. safety equipment and engines. The Component Maintenance Centre turn times lead many other suppliers. Through its consulting division. We are now seeking out opportunities with potential customers in two of the largest emerging markets. Monarch Aircraft Engineering has also this year extended its line maintenance technical handling agreement with Aer Lingus. and we really know what an AOG or return-to-service delay means in terms of cost and passenger impact. developing new and increasing revenue streams from training. can assist airline operators with a multitude of fleet support solutions. to name but a few. spares trading and engineering services management. we challenge non-value-adding processes and find innovative ways of working together. SMART has been dispatched on more than 60 occasions to 17 different countries. director of maintenance and engineering for Aer Lingus said: “We are delighted to be continuing our ongoing working relationship and extending this line maintenance agreement. are approved under Part 147 by the UK Civil Aviation Authority and are able to complete the training in Monarch’s own facilities if preferred. they have attended and completed the first EU-based EASAapproved Boeing 787 training courses. EUROPE Lufthansa Technik Lufthansa Technik is one of the leading manufacturer-independent providers of maintenance, repair, overhaul and modification services in the civil aviation industry. With tailored maintenance programmes and state-of-the-art repair methods, LHT ensures the unbroken reliability and availability of its customers’ fleets. Walter Heerdt, LHT’s senior vicepresident for marketing and sales, says: “Lufthansa Technik has survived the last economic and financial crisis relatively well through increases in efficiency, high use of flexible working hours and process innovations.” The Lufthansa Technik Group comprises more than 30 subsidiaries and joint ventures in Europe, Asia, North America and Australia. It has two joint ventures with OEMs: N3engine overhaul services (with Rolls-Royce, based in Arnstadt, Germany) is a maintenance and repair facility for large Rolls-Royce turbofan jet engines; and Airfoil Services Sdn Bhd ((ASSB), with MTU Aero Engines), which is specialised in repairing highpressure compressor blades and vanes as well as low-pressure turbine blades. Heerdt says: “LHT has developed a very comprehensive monitoring and supplier management to avoid delays in parts delivery. We are following a proactive and transparent information exchange with our suppliers regarding volume and use of parts for on-time delivery. Additionally, together with our subsidiary Lufthansa Technik Logistik we have created an effectivesupply chainfor aglobal provision with spare parts.” Heerdt is bullish on future growth for the MRO market. “We think the MRO market will further increase in the next years including the business with surplus parts, as the use of surplus parts enables the operators to save costs. In the end it is an individual strategic and economic decision of the specific operator if and how much it will go this way,” he says. But he also admits further consolidation is expected. “Despite new entries, we see an ongoing consolidation process in the MRO industry. The introduction of new aircraft generations and engine types is combined with high investments in infrastructure, tools and employee training and complex questions about intellectual property. These challenges can only be handled successfully by MRO providers operating globally and at a certain scale, having the ability to tailor packages to individual needs.” LHT is looking to further grow its market share through the launch of new MRO services for the B748, B787, EMB190 and A380. “As Lufthansa is one of the first customers for the new Airbus A320neo series, Lufthansa Technik will definitely extend its MRO capabilities to this type of aircraft in the coming years,” Heerdt says. “From the base maintenance side, Lufthansa Technik has recently launched a new T-product (‘T’ for ‘total’ – the product is offered by LHT for every kind of MRO service) called TBS – Total Base Maintenance Support. The TBS is especially designed to make base maintenance easier for fleet operators, and offers a broad range of included and optional sub-products as well as different financing models to better suit each operator’s financial situation or preferences.” AIRFRAMES SERVICED: Learjet, Global Express (including Airbus Corporate Jetliner) ENGINES SERVICED: Boeing Business Jet) APUS SERVICED: COMPANY FACILITY LOCATIONS Lufthansa Technik AERO Alzey GmbH, Alzey, Germany Lufthansa Technik AG, Hamburg, Germany Lufthansa Technik Airmotive Ireland, County Dublin, Ireland Lufthansa Technik Brussels, Steenokkerzeel-Melsbroek, Belgium Lufthansa Technik Budapest , Budapest, Hungary Lufthansa Technik Intercoat GmbH, Kaltenkirchen, Germany Lufthansa Technik Maintenance International, Frankfurt Airport, Germany Lufthansa Technik Malta, Luqa, Malta Lufthansa Technik Milan, Somma Lombardo (VA), Italy Lufthansa Technik Philippines, Pasay City, Philippines Lufthansa Technik Sofia, Sofia, Bulgaria Lufthansa Technik Switzerland Basel, Switzerland 84 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE MTU Maintenance MTU Maintenance provides customers with service packages and one-stop solutions for all current engine types of practically all thrust categories. Its line of service includes the maintenance of commercial engines and component repair. Its portfolio is rounded out by comprehensive additional services, such as engine leasing through its e.pool services. The MTU maintenance segment operates affiliates in Germany, Canada, China and Malaysia. MTU MAINTENANCE HANOVER, LANGENHAGEN, GERMANY The Langenhagen facility is the centrepiece of the MTU Maintenance group. It is responsible for the maintenance of medium- and large-size commercial engines. These include the General Electric CF6-50 and CF6-80C2, Pratt & Whitney PW2000, International Aero Engines V2500 and CFMI CFM56-7. Comprehensive service offerings complement the company’s line, such as engine ENGINES SERVICED CF6-50, CF6-80C2, CFM56-7, V2500, Turbines LM 2500, LM5000, LM6000, CF6- leasing, 24-hour AOG service, training and Total Engine Care. The location is MTU’s centre of excellence for high-tech repairs, which is busy developing novel repair techniques. Iberia Maintenance Because of its near 80 years of experience on the Iberia fleet and for third parties, Iberia Maintenance increasingly is exploring ways to help customers, keeping not just costs but also efforts to a minimum on airframe heavy maintenance, engine overhaul, component maintenance and field maintenance. Moreover, Iberia Maintenance provides essential, sector-specific services customised to fit client needs and budget. With almost 4,000 experienced technicians and engineers, Iberia Maintenance provides a wide array of MRO solutions, from relatively simple options to the more complex ones. In every Iberia Maintenance service there are hundreds of hours dedicated to improve process, reduce turnaround times, increase force effectiveness and cut down on logistics and engineering management expenses. With the new aviation environment and the expanding globalisation of the MRO industry, Iberia Maintenance has updated its management and technical services, gearing them towards developing concrete solutions to help clients define maintenance plans and ensure efficiency. The installation of the SAP system for complete management has been very successful. customers painting ADDITIONAL AIRCRAFT SERVICES MAJOR TOPICS: Minor checks: A A310 A330 B707 B757 B767 MD80s Major checks: C, overhaul and structural A330 B707 B757 MD80s Gulfstream Hercules C-130 P3 Orion Emergency equipment (available in stock) Slide ramps Fire extinguisher cylinders Slide raft and door cylinders Oxygen cylinders   Painting, marking and labelling (temperature and humidity computer controlled hangar)   Major modification of avionics and interiors Composites Cabin interiors repaired a year 3,000 components with 14,000 P/N. AIRFRAME MAINTENANCE SERVICES Almost 150,000 m2 gives Iberia Maintenance space to perform a wide range of airframe maintenance. The facilities include the necessary back-up shops such as safety equipment, structural repair, wheels and brakes, galleys, interiors, painting, marking and labelling providing services in material processing for wide- and narrowbodies. Iberia Maintenance offers seven complete production lines for heavy maintenance checks and two dedicated hangars for painting, marking and labelling works. It handles a wide range of temporary and permanent hole and dent repairs on wing and in shop from different composite and metallic parts in fuselage and flight controls. It also offers refurbishment, ageing aircraft and corrosion prevention programmes. Portable and fixed oxygen cylinders, fire STATS AT A GLANCE: www.airlineeconomics.co Airline Economics: MRO Global 2011 85 EUROPE CFM56-5A1/-5B/-5C4/-7x, CF34-3A1/3B1, JT8D-217/-219 engines and a full range of engine accessories, in accordance with its capability list. ENGINE FULL OVERHAUL: RR RB211-535E4 RB RB211-535C37 RR PEGASUS MK 150/-152/-157 CFMI CFM56-5A/-5B/-5C CFMI CFM56-7B GE CF34-3A1/-3B1 PW JT8D-217/-219 Iberia Maintenance is one of Europe’s maintenance providers that is still growing. Recently, it added CF34-3A1/-3B1 to its maintenance portfolio (which already includes CFM56-5x /-7x, RB211-535E4 and JT8D-217/-219). Each operator has its own unique engine maintenance requirements. Experienced and highly trained technicians and engineers are committed to giving customers the highest quality service and spare parts support in the industry. The focus is on parts repair wherever possible to avoid costly replacements. By employing an efficient workforce and developing the most productive maintenance workscopes, Iberia works to improve on-wing durability and reduce non-scheduled events or requirements. To ensure a competitive service the company has committed to reduce unforeseen turnaround time. Iberia Maintenance provides MRO and engineering services for engine, APUs, power-generation systems and associated accessories and thrust reverses. Iberia Maintenance has a 100,000 lbs test cell capacity. extinguishers, slide raft and door cylinders can be recharged immediately. Furthermore, its seven day/24-hour AOG service provides the most effective and flexible support on emergency service. FULL LINE MAINTENANCE COVERAGE Pre-flight Transit Daily Service Weekly A-checks On-call requirement/support On-wing support Full member of Line Maintenance Organisations IATP International Airlines Technical Pool ELMO European Line Maintenance Organisation LINE MAINTENANCE Iberia Maintenance knows every minute that an aircraft is on ground represents a loss of potential airline revenue and how a skilled workforce is absolutely necessary in reducing downtime for line maintenance. It provides line maintenance services at Barajas Airport (Madrid-Spain) and in strategically located centres around the world. Precision repairs and testing is performed by highly skilled technicians. Furthermore, it offers to dispatch emergency teams of expert mechanics to any location around the world, another flexible and very affordable alternative. Iberia Maintenance technicians are very aware of the aircraft’s needs and are very proud when a customer is satisfied. APU FULL OVERHAUL GTCP85-98DHF (MD80) GTCP36-300 (A320) 131-9A (A320) MAJOR TOPICS: POWER PLANT MAINTENANCE SERVICES The engine repair centre assist customers in the design of customised services to suit any specific requirements. The repair centre is integrated in Iberia Maintenance global maintenance network. Occupying an area of 52,560 m2, Iberia Maintenance provides MRO services for the RB211-535E4, RB211-535C37 Full overhaul including parts repair Engine lease pool LRU pool On-wing support Engine trend monitoring Work scope preparation Full range of engine services Round-the-clock spare parts service Test cell capacity: 100,000 lbs. 86 Airline Economics: MRO Global 2011 www.airlineeconomics.co EUROPE Sabena Technics AIRCRAFT SERVICED Airbus A300 B2-B4, A300-600, A310, A319CJ, A320 family, A330, A340, C-160 LINE MAINTENANCE Important platforms providing services 24 hours a day, seven days a week include Brussels and Paris Charles de Gaulle, as well as numerous outstations adaptable to customers’ needs. DC-10, KDC-10, MD-11, MD-80, MD-90, Bombardier Canadair CL-415, Dash 8, sault Falcon 20, Embraer ERJ 135, ERJ 145, Xingu, Fokker F70, F100, Grumman Tracker, Lockheed Martin C-130 Hercules LIGHT MAINTENANCE Modern hangars and expert technicians across numerous sites provide quality and proximity services with, if necessary, the assistance of the infrastructure the firm’s heavy maintenance activities offer. COMPANY FACILITY LOCATIONS Brussels Paris Dinard Bordeaux Merseille Moscow Monastir Koweit Singapore Papeete Phoenix Miami Louisville Martinique HEAVY MAINTENANCE Sabena Technics benefits from a pool of expertise specialising in regional, Airbus and Boeing aircraft heavy maintenance services. Sabena Technics’ service offering and centralised slot management system enable it to offer unrivalled flexibility and adaptability tailored to the customer’s needs. MODIFICATIONS AND UPGRADES Sabena Technics benefits from the experience of a strong engineering department, an EASA Part 21J design office and an EASA Part 21G product office, providing an array of à la carte modification and upgrade services. Recent projects include first and business class cabin modifications and IFE upgrades, VIP cabin modifications and implementations of ATC/TCAS. TAP M&E TAP Maintenance & Engineering (TAP M&E) is the MRO organisation of TAP Portugal, the Lisbon-based operator, which provides maintenance and engineering services in aircraft, engines and components. TAP M&E is duly certified by several aviation authorities among which are the FAA and EASA. Since the foundation of TAP, in 1945, TAP M&E has been responsible for the maintenance of its entire fleet, presently with more than 50 Airbus aircraft. In the 70s TAP started providing services to third-party customers – this now accounts for more than half total revenue. The long-term involvement with a commercial operator made TAP M&E aware of the importance of on-time delivery of products (aircraft, engines and components) and services. TAP M&E is therefore committed to offer its customers cost-efficient maintenance with short turn-around times and high quality and reliability standards. TAP M&E Brazil has the most up-todate MRO technologies – including the only Inertial Navigation System in Latin America, one of the five Griffon GTW-U3 cylindrical milling machines in existence in the world, and a horizontal Gemini GE-1600S lathe, which can machine very long parts for the landing gears repair services. The company is certified to maintain the entire Boeing line 727, 737Classics, 737NG, 747, 757, 767, 777, BBJ, MD11 and DC10, Embraer EMB120 (Brasília), ERJ 135, ERJ 145, EMBRAER 170, EMBRAER 175 and EMBRAER 190, EMBRAER 195 and Legacy 600 and Lineage, Airbus A300, A300-600, A310, A320, A330 and A340. SERVICES OFFERED INCLUDE: Daily and overnight checks Components overhaul Engineering projects with technical support Interiors projects and overhaul Avionics systems and installations projects Airframe repair, projects and improvement A, B, C and D checks www.airlineeconomics.co Airline Economics: MRO Global 2011 87 skilled and experienced labour force.airlineeconomics.EUROPE AFI-KLM E&M AFI KLM E&M provides MRO services while also guaranteeing a whole raft of requirements ranging from safeguarding air safety. AFI KLM E&M has set up a combined organisation responsible for strategy. Drawing on its extensive operational expertise. network. 88 Airline Economics: MRO Global 2011 www. and reduced engine operational and maintenance costs. incident prevention. fuel consumption. sales force (present throughout the world) and external communication. AFI KLM E&M can recommend customised engine performance monitoring parameters. to fixed prices. This approach leads to increased engine on-wing lifespan. EGT margin. The firm has a 75-year-plus track record. business development. AFI KLM E&M is able to get the best from its strong partnership with OEMs as well as to develop alternative solutions that increase customers’ benefits. ENGINES: Measurements carried out on engines provide daily data. during which it has achieved a level of undisputed excellence in managing large aircraft fleets. The operating units responsible for production place their skills in the service of Air France-KLM’s fleet as well as those of its customers. or different kinds of flight hours programmes.co . oil consumption) and recommend on-wing maintenance actions. Its airline-MRO position also Photo: Patrick Delapierre/AFI-KLM E&M guarantees its independence when it comes to choosing the most effective options for customers’ engines. marketing. allowing the AFI KLM E&M engineering team to monitor performance (such as. properly managing aircraft operation. AFI KLM E&M PROVIDES: both costs and Mean Time Between Removal (MTBR). and minimising costs. Repair and Overhaul Centre). 2008. repair and overhaul segment. Airframe maintenance centre facilities at Sabiha Gökçen International Airport will have a total 372. repair and overhaul centre project and all the investments by Turkish Technic within Sabiha Gökçen International Airport. Istanbul will be the maintenance hub of the region within a short time period. There will be approximately 3. Habom Project. are named as the Habom Project (Havacılık Bakım Onarım ve Modifikasyon Merkezi – in English the Aviation Maintenance. the new international maintenance centre is designed to be a full service provider for both narrowbody and widebody aircraft. North African and Middle Eastern MRO markets. Asian.EUROPE Turkish Technic Turkish Technic is the provider of maintenance. The maintenance centre will be established as a centre-of-excellence. repair and overhaul centres established within the Habom Project. the Turkish Technic project team has worked together with world-renowned consulting firms and established a feasibility study to assess the various opportunities. Turkish Technic will be the permanent shareholder of the Habom Project. will aim to serve the aircraft belonging to various surrounding countries. The years of experience earned within the existing technical facilities. The geostrategic location of the new facility will enable the new maintenance centre to reach to European. Turkish Technic is aiming to establish these new investments as an international joint venture with the participation of a leading global company or companies.co Airline Economics: MRO Global 2011 89 .000 m2 area. the total aircraft number within Turkey is estimated to be over 300 within a short time period. engine and components maintenance. Goodrich Aerostructures is the leading OEM in this area. The company also signed a memorandum of understanding with Goodrich Aerostructures on November 8. It also provides services to various customer airlines from Turkey and surrounding countries. By the year 2020. Pratt & Whitney is one of the most important OEMs in the engine segment and a strong player in the engine aftermarket. which is around 70 km’s away from the existing facilities located at Istanbul Atatürk International Airport. The new facility will be located at the Sabiha Gökçen International Airport. having full capacity for specific types of aircraft for which the projections indicate quick fleet growth and increasing outsourcing rates. Habom is estimated to generate a $1 billion share of the airframe and component maintenance segments. market demand and required investments to meet those demand for the establishment of this new international MRO centre. This ensures many opportunities for doing MRO business at the Habom Project area with the establishment of a greenfield facility. With this new investment. by doing heavy maintenance. an area reserved for the set-up of an international MRO centre.500 employees within the maintenance. Negotiations on the joint-venture agreement with Goodrich Aerostructures are ongoing. FOREIGN PARTNERSHIPS Turkish Technic aims to establish international joint ventures with potential partners that are leaders and global players in their segment and that will bring with them the desired technology and know-how. As a result. Yesilköy. as well as the Turkish market. 2007 to establish a joint-venture company on the nacelle and thrust reverser maintenance. One unique feature of the Habom Project area is that a circle drawn with a radius of three-hours flight distance centred at Istanbul includes 55 countries. Besides that. All the facilities that will be constructed within the scope of the Habom Project are environmentally friendly designs that will provide maximum energy savings. Adding the highly increasing aircraft numbers of the surrounding region leads up to the idea of establishing a completely new maintenance centre at the heart of these emerging markets. a joint-venture agreement was signed with Pratt & Whitney on January 8. combined with the developed and well-qualified labour force.airlineeconomics. as a newly established and a totally customer-oriented maintenance centre. and the quickly growing fleets of the other airlines. the strategic location and the increasing market demand has pushed Turkish Technic to setup a new MRO facility. As a result of these studies. The new international maintenance. repair and overhaul operations primarily to the Turkish Airlines fleet in its existing facilities at Istanbul Ataturk International Airport. www. The estimated total investment requirement for the airframe and component maintenance centres on the whole is around US$500 million. THE HABOM PROJECT During the establishment of the business plan for the Habom Project investment. Considering the growth trend in the Turkish aviation industry. Post-delivery lease returns).aero www.com Tony Bauboff VP maintenance Lufthavnsvej 2 DK-6400 Sønderborg Denmark Tel: +45 7412 2366 Fax: +45 7443 2458 E-mail: gar@cimber. Capabs Avionics upgrades. Lasham & Major airframe & component manufacture & overhaul. Plating processes 40 workshops Engine test cells Training centre ATC Lasham 727 737 (incl. CEO Grenzstr.000ft2 (Southend) Avionics upgrades. Composite repairs.aero Rob Pruim VP sales international 1117 ZL Amsterdam Airport Schiphol Tel: +31 6 51535504 Fax: +31 20 6488044 Email: [email protected] m2 airberlin technik (Part of the Air Berlin Group) 737 757 767 A319 A320 A321 A330 A340 A320 A321 A-C A-C A-C A-C A-C A-C A-C A Düsseldorf. Cabin modifications. Classroom & pract.dk 737 747 757 767 A-C A-C A-C A-C A-C A-C A-C A-C A-C A-C A-C A A 24. Composite repairs. training (Part 147). Comp. Engineering services. Engineering services. Design engineering (Part 21).EUROPE AIRCRAFT Aeroplex of Central Europe Business development director PO Box 186 Budapest Ferihegy International Airport H-1675 Hungary Tel: +36 1296 7214 Fax: +36 1296 7218 E-mail: [email protected] .000m2 workshops Training Center workshops metal. BBJ) 747 767 777 A320-family ACJ A330 A340 A380 BAE146 CRJ 100-700 MD-11 Alitalia Compagnia Aerea Italiana Fleet Maintenance Services Fabio Schinelli Marketing. 45.000m2 Avionics upgrade.EUROPE MRO Directory: Europe HEAVY MAINTENANCE DIRECTORY .afc. Composite rerepairs. Technical training. Modifications. A-D A-D Light Maint. Major modifications. sales & cust. 7. Structural repairs Airbus Freighter Conversion GmbH A320P2F and A321P2F passenger-to-freighter conversion with integrated maintenance checks Air France Industries KLM Engineering & Maintenance 737 (incl. Corrosion control. CPCP 90 Airline Economics: MRO Global 2011 www.airberlin-technik. Executive Jet Maint. 77 bays 7 industrial sites Exteriors.000m2 Component support.com Head of Technical Sales Flughafen. Logistics support. Engineering mgmt. Sheet metal work. Cabin interiors refurb. Training.com 767 777 A320-family A330 DC-10 MD-11 MD-80 A-D A-D A-C A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-C A-S8C A-C 12-yr Light Maint. Design & modification. Support [email protected] 737 767 A320-family CHECKS A-D A-C A-C A-C FACILITIES SPEC. lease returns).arcone@cargolux. Struct. maint. CAPABILITIES Refurbishments. 1a 01109 Dresden Germany Tel: +49 351 8839 1400 Fax: +49 351 8839 1499 E-mail: [email protected] (Lasham) 140. Halle 8 40474 Düsseldorf Germany Tel: +49 178 94 18 444 Fax: +49 211 94 18 5847 www. JAR 147 eng. and rework. work. Modi- Cimber Air Maintenance Centre CRJ200 A A-D A-D 7 bays 6600m2 hangar onics upgrades. full back shop supp. maintenance. Munich Base Maintenance facilities 3 Hangars approx. VIP upgrades.airlineeconomics. M tech manage- Global Express & Challenger Cargolux Airlines International Tony Arcone Mgr. Configuration changes. Global operational & maint. repairs & CPCP.it Sales manager ATC Lasham Ltd Lasham Southend Hampshire England Austrian Airlines Technik MD ATM (marketing & sales) Airport base A-1300 Vienna Airport Austria Tel: +43 5 1766 63838 Fax: +43 5 1766 65115 E-mail: technik@austrian. sales & contracts management Leonardo da Vinci Airport 00054 Fiumicino Italy Tel: +39 066543 3050 Fax: +39 066543 2117 E-mail: mro.com Lars Becker. Avionics upgrades. BBJ) 757 A320-family AR ops sub part GU34 5SP 737 767 777 A330 A340 A-D A-D A-D A-C 160. svcs L-2990 Luxembourg Airport Luxembourg Tel: +352 4211 3290 Fax: +352 4211 3441 E-mail:tony. bays A320-family workshops.airlineeconomics.co Airline Economics: MRO Global 2011 91 . APU & Fokker Services 737 A320-family CRJ ERJ 145 F27 F28 A-D A-D A-D A-D A-D A-D A-D A-D A-D A A-D A-D A B. A340 Challenger Global Express Learjet. Corrosion prevention & protection.V.. Struct. Cabin interior.Paris Chateauroux .rs Jet Aviation AG Michael Sattler SVP & accountable Mgr for Basel & Geneva bases PO Box 214 CH-4030 Basel-EuroAirport Switzerland E-mail: jbsl@jetaviation. Logistics programmes 737-300 2 hangars Two base maint. CPCP. Support.o. 737 (incl. support Maintenance.. Major system and structure modification.is Radoslav Ilic Director. EASA design organization. Gulfstream Dassault Falcon Hawker A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D 7 hangars [email protected]@tuifly. Logistics support AOG Desk 24H. Struct. Modifications European 737 757 767 A320-family A330 A340 A-C A A A-C A-C A-C Amsterdam . 727. Avionics shop Engine.es www.000m2 (incl backshops) Modifications. bays Four line maint.400m2 haul (737). Interior repairs. Hangar Avionics upgrades.com Örn Ingibergsson Customer services Maintenance Centre 235 Keflavik Airport Iceland Tel: +354 4250 142 Fax: +354 4250 188 E-mail: [email protected]. Painting 757 A320-Family A340 MD-11 A-D A-D A A-D A-C A-D mods.com Hapag Lloyd Fluggesellschaft mbH Uwe Kopelke Manager Sales & Contracts Flughafenstrasse 10 30855 Langenhagen Germany Tel: +49 (0)511 97 27 275 Fax: +49 (0)511 97 27 611 E-Mail: Uwe. La Munoza Edificio Motores 1a planta 28042 Madrid Spain tel: +34 915 875 132 Fax: +34 915 874 991 E-mail: maintenance@iberia. ACJ) A330. 12.nl Finnair Technical Services Mikko Koskentalo Manager. Composite repairs.ilic@jat-tech. Sheet metal workshop.000m2 (incl backshops) Avionics. Sales & Marketing Finnair Technical Services Helsinki-Vantaa Airport 01053 Finnair Finland Tel: +358 9 818 6233 Fax: +358 9 818 67 E-mail: mikko. CAPABILITIES Avionics upgrades. Sheet metal work.koskentalo@finnair.) 727 737 DC-9 A-D A-D I A-D 3 hangars 35. tions. repairs & CPCP. 737-800 winglet mod. ics upgrades Engine maintenance Component maint. Technical training. sales & contracts 11180 Belgrade Serbia Tel: +381 11 2280 115 Cel: +381 63 8199 412 Email: radoslav. Sheet metal work www. mktg. CPCP. Component repair. InsulaCabin & interior mod. 767 A310 A320-family (incl.EUROPE AIRCRAFT CSA Czech Airlines Ondrej Konyvka Director aircraft heavy maintenance Hangar F. Logistic marking. Sheet metal work Jat Tehnika d. Engineering services.ch 737 A310 A320 CHECKS A-D A-C A-D A-D FACILITIES SPEC. Post delivery progrms. Eco engine wash Solutions.500m2 (incl backshops) Avionics upgrades. Inventory mgmt 2 general workshops 1 painting hangar Icelandair 1 hangar 2 bays 12. 757.cz Fred Hilgeman Director Hamersveldse weg 84A 3833 GT Leusden Tel: +31 33 434 3040 Fax: +31 33 494 8101 E-mail: fgh@steltenberg. CPCP.Lisbon Madrid On-wing eng.com Ignacio Diez Commercial director Madrid Barajas Airport.EUROPE HEAVY MAINTENANCE DIRECTORY . Global operational & maint. Aircraft ageing programs. Interiors. Composite repair. Dismantling of aircraft. Avionic upgrades.o (Jat Technics Ltd. Praha Ruzyne International Airport 160 08 Praha 6 Czech Republic Tel: +420 2 2011 4118 Fax: +420 2 3309 6766 E-mail: ondrej. Composite repairs & surface treatment. BBJ) 747. DOA engineering Technical training.konyvka@csa. Part-21 approval Iberia Maintenance 707 757 A310 A330.fi Stephen Hands VP marketing and sales PO Box 3 Aviolandalaan 31 4630 AA Hoogerheide Tel: +31 164 618 642 Fax: +31 164 618 666 E-mail: stephen. A340 MD-80 Falcon 20 Falcon 900 Gulfstream C130 Hercules P3 Orion 737 Classic 757 767 A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D Line maintenance A-C A-C 7 hangars Cargo conversion. Structural repair. Composite repairs. Compressed cylinder. Airline support teams.claeson @sat. support. CAPABILITIES Avionics mod.. Cabin refurbishment.. Hydrostatic testing. A320 rib 5 modification Composite repairs. Engineering services.airlineeconomics. Painting.co . Paint Structural works.EUROPE HEAVY MAINTENANCE DIRECTORY .000m2 Fleet management. Engineering services. 757 767 777 A300-600. Emergency equip. Composite repair Avionic works Avionics upgrades. Training.000m2 145 repair stn Interiors. (Design) EASA Part M 737 757 767 A330 line A-D A-D A-D A-D A OGMA A320-family ERJ-145-family C212 Aviocar Legacy 600 Lineage 1000 P-3 Saab 340 Saab 2000 E-mail: geral@ogma. Test nacelle equipment.000m2 & break unit shop Maintenance.ie Peter Kamenz Executive VP Sales & Marketing PO. Composite repairs. Airframe assembly Composite Aircraft inspections.se www. Engine 92 Airline Economics: MRO Global 2011 www.com A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D 139.EUROPE AIRCRAFT Lufthansa Technik AG Robert Gaag Dir. 767 BS955 mods & reps. Embraer. recovery.de 737 (incl. SR Technics 737 747. Refurbishments Sabena Technics TAT Group 737 757 767 A300 A310 A320-family A330 A340 737 A320 A330 A340 MD-80. Thrust revr & nacelle overh.Box [email protected]@lht. design svcs. Avionics upgrades. Line maintenance. Marshall Aerospace The Airport Cambridge CB5 8RX England Tel: +44 1223 373737 Fax: +44 1223 373373 mick. Sheet metal work. Technical & engineering services. Avionics modifications. VIP & corporate refurb. Cabin refurb. 1. Sheet metal work. technical pubs. Int. Composite Sheet metal work. Cust. MD-90 737 757 767 DC-9 MD-80 A-D A-C A-C A-C A-D A-D A-C A-C A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D Hangars for 23 aircraft across Europe shops. Composite repairs. dev. Modifications. Manufacture & assembly of airframe & components Design & manuf. Renovations. Lease end transitions. Zurich Airport Switzerland Tel: +41 43 812 11 88 Fax: +41 44 810 97 98 E-mail: peter. BBJ) 747 757 767 777 CHECKS A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-C A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D FACILITIES 3 dedicated painting bays Structural mod Lufthansa Technik (HAM) Lufthansa Technik (SXF) Insulation blankets LT Budapest (BUD) LT Malta (MLA) LT Sofia (SOF) LT Switzerland (BSL) Coop. w. Logistics centre. Components. Aerostructures manufacturing. Sweden Tel: +46 13 18 3102 Fax: +46 13 18 5115 johan. Project mgmnt. EASA 145 Part J. County Clare Ireland Tel: +353 613 70006 Fax: +353 613 61020 E-mail: paul. Interior completion. Modifications. Technical training A340 Avro RJ CRJ MD-11 MD-80 Saab 2000 Marshall Aerospace Michael Milne Director of marketing & bus. repairs. Austrian Ailines (VIE) Coop.saabgroup. satcom Support structure. Croatia Airlines (ZAG) SPEC.com Damien Erceau SVP Sales & Marketing Tour Maine-Montparnasse BP 47 33 Avenue du Maine 75755 Paris Cedex 15 France Tel : + 33 1 56 54 42 30 Fax : + 33 1 43 21 70 91 Birgitta Hogman SE-19587 Stockholm Sweden E-mail: birgitta. repr & overh. Installation services. Cabin interior.2m m2 paint remov.net Paul Murray Head of Marketing and Sales Shannon Airport Shannon. Line maintenance. Calibration.milne@ marshallaerospace. aircraft maintenance SE-581 88 Linköping. A310 F100 MD-11 A-D A A-D A A A-D A A-C verser and nacelle overhaul. Cargo conversion. valve & regulator shop. Cockpit upgrade SAS Tech Avionics upgrades Shannon Aerospace 5 maintenance bays plus 1 paint bay 32. shop Services. Comp.com Volkan Eser Marketing manager Ataturk Havalimani B Kapisi Teknik Hangar Binasi Turkey Tel: +90 212 465 06 86 Fax: +90 212 465 06 99 E-mail: volkan.com Monarch Aircraft Derek Gibson Engineering Commercial director London Luton Airport Luton Beds. LU2 9LX England Tel: +44 1582 398 764 Fax: +44 1582 706 984 E-mail: enquire@maelbox. Repairs.murray@sal. Logistics. EASA 147 training school. w. Design & modification.kamenz@srtechnics. Tanker conversions.dlh.com Mario Lobato Faria Aviation Services VP 2615-173 Alverca Portugal 747 767 777 DC-10 MD-11 L-1011 BAe 125-700 727 737 757 A300 DC-9 MD-80 Conversions.hogman@sas. Central Europe 22335 Hamburg Germany Tel: +49 40 5070 2590 Fax: +49 40 5070 8866 E-mail: marketing. refurbishment.pt Saab Aerotech Johan Claeson Sales mgr. Freighter conversions.. of long-range fuel tanks 5. flying. CPCP. A340 DC-10 MD-11 Embraer 120 Embraer 145 Legacy F50.co Airline Economics: MRO Global 2011 93 . HMU repair www. mainteposite repairs. CPCP. 53.EUROPE HEAVY MAINTENANCE DIRECTORY . 224F Otopeni Town. CAPABILITIES Composite repairs. Engine Modifications technical training.com 737 A300 A310 A320-family A330 A340 Gulfstream GIV A-D A-D A-D A-D A-D A-D K-D A-D 2 hangars Avionics upgrades.dumitrescu@tarom. Landing gear overhaul Painting. Comp.767. SSIP. Major avionics mods Turkish Airlines Technic Dr.pt 727.O. Interiors.747.airlineeconomics.380m2 TAROM Lorin Dumitrescu Deputy Technical Director Calea Bucurestilor nr._smail Demir General Director Maintenance Center (Bakim Merkezi) Ataturk Airport (B Kapisi) Turkey Tel:+90 212 465 25 74-75 Fax:+90 212 465 25 57 E-mail: [email protected] A300-600 A310 A320-family A330. F100 L-1011 737 A320-family CHECKS A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-D A-nC A-C A-nC FACILITIES SPEC.ro structural mods. County of Ilfov Romania Tel: +40 21 201 4549 E-mail: l.EUROPE AIRCRAFT TAP Maintenance & Engineering Carlos Ruivo VP marketing and sales P. Box 50194 1704-801 Lisboa Portugal Tel: +351 21 841 59 75 Fax: + 351 21 841 59 13 E-mail: [email protected]. Mean time between failures of flight deck systems was improved by more than 60% through a combination of reliability.airlineeconomics. A digital cabin pressure control system used fewer mechanical parts than the analogue system it replaced. Increased seals between critical parts and protective finishes were added to prevent corrosion.and time-saving benefits they provide hen Boeing launched the 737NG programme. improve the corrosion detection. With that in mind. enhance fault identification and improve accessibility. MRO Global takes a look at the various features of the new design and the cost. while improved Bite capability increased mean times between unscheduled remov- als (MTBUR) by around 75%. the new design enables the 94 Airline Economics: MRO Global 2011 www. one of its design targets was a 15% reduction in maintenance costs.737NG MAINTENANCE High tech. The electronics and equipment bays were also redesigned. redundancy and Bite. removal and installation. Other changes that helped reduce the scheduled maintenance workload included the trailing edge flap-drive system. low maintenance Boeing designed the new generation 737 with a reduced scheduled maintenance workload in mind. The main landing gear assembly W was simplified and brake change time reduced by 30%. Boeing also used state-of-the-art 3D computer models with maintenance access solids to reserve space for parts access. and built-in test equipment (Bite) interfaces were made more consistent and user-friendly. with leading-edge panels designed to make access easier. engine removal and installation time was cut by more than 50% and the auxiliary power unit was redesigned for improved access and maintainability. and increase commonality among models.co . The wing of the 737NG has 30% fewer parts than its 737 Classic predecessor. This now uses grease lubrication instead of an oil reservoir: in conjunction with the application of corrosion-resistant steel in place of the original chrome plating. the new models’ designers worked to reduce part counts. which are stored near an airline’s base and paid for only as they are used. At the same time. Budapest in Hungary and Sofia in Bulgaria. own the parts. and engineering support. $710–930 for the -400 and $570–770 for the -500. Boeing offers a growing range of support options for the 737NG. Documents are available digitally on CD-ROM. Its CFM56-7B capabilities include on-wing and spare engine support. to component and engine repair. in line with the wishes of airlines. at Lufthansa Technik Qantas Engineering in Melbourne. airlines are able to obtain complete global coverage for their aircraft maintenance needs more readily and at less cost. Having 737NG facilities located in the key aviation hubs across the globe means operators are assured of consistent service standards. ST Aerospace already has a materials services agreement and an engine overhaul support agreement with engine manufacturer CFM. whether in Asia-Pacific. New training courses have been developed to help mechanics make better use of these information sources. Boeing offers repair. Boeing states that early in-service experience confirmed the new series is delivering substantial maintenance savings. offers integrated MRO services for the 737NG that range from airframe maintenance and modification. and 18% lower per seat. As part of an integrated service ST Aerospace can offer customised solutions to fit the operational requirements of a wide range of customers with very diverse needs: Fixed fee per flight hour schemes. A joint review by Boeing and a European operator identified an 18% reduction in actual maintenance costs for the year to June 1999. SAS and Xiamen Airlines. The now large and still growing 737NG fleet has led Lufthansa Technik to extend its 737NG support capabilities gradually in line with fleet increases. compared with $690–900 for the -300. ST Aerospace’s airframe maintenance and modification capabilities include heavy maintenance (C and D) checks. via the portable maintenance aid software tool and on the MyBoeingFleet website. Singapore Technologies Aerospace. It now carries out heavy maintenance at Shannon Aerospace in Ireland. aggregated airframe maintenance costs for the 162-seat 737-800 compiled from US Department of Transportation data were nearly 10% lower than those for the 147-seat -400 in total. including landing gears. and at Lufthansa Technik Airmotive Ireland.737NG MAINTENANCE scheduled maintenance interval to be extended from 20. and ageing aircraft inspections and modifications. but with the advent and expansion of the Boeing GoldCare network for the 737NG with joint ventures with MROs across the globe. The region’s biggest MRO. Close co-operation with the original equipment manufacturers enables the company to offer 737NG customers maintenance solutions based on actual OEM data. Europe or the Americas. It suggested that by the end of the last decade the maintenance cost per block hour for a 737-800 was in the range of $500–670. as well as C-checks at Berlin-Schoenefeld and other locations. along with component exchange services on demand from an extensive component and rotables inventory for aircraft on-ground situations. corrosion prevention and control programmes. similarly. dispense with the need for oil servicing. IMM is intended to relieve airlines of the burden of purchasing. repair and overhaul of a wide range of 737NG components. overhaul and exchange services covering avionic and hardware components. and the company deploys airline support teams for quick aircraft on ground (AOG) support and on-wing troubleshooting. in addition to the Hamburg and Beijing shops and others. There is also maintenance and overhaul of airframe-related components such as engine cowlings.airlineeconomics. Ameco in Beijing. As well as maintaining what it claims is the industry’s most comprehensive spare parts sales and distribution network. which include Hamilton Sundstrand and Honeywell. ranging from parts supply to support for electronic logbooks hosted on electronic flight bags (EFBs). A study carried out in the mid-2000s by the University of Westminster for Eurocontrol attempted to quantify maintenance costs in order to establish the costs resulting from aircraft suffering technical delays at the gate. the maintenance steering group MSG-3 Rev 2 process uses 737 Classic maintenance and reliability data to optimise maintenance intervals for each task and allow operators to group them in suitable packages rather than specifying the content of each letter check. Redesigned air conditioning packs that use air instead of ball bearings. with the greatest growth being experienced by low-cost airlines in the Asia-Pacific region. Customers who have signed up for MBH programmes for 737NG include AirAsia. and materials management solutions are offered under the integrated materials management (IMM) programme. Jeju Air. This is overhauled at Hamburg. inventory management and logistics of expendable aircraft parts: Boeing and its suppliers. www. The 737NG will continue to increase in number over the next two decades. engine sale and lease-back programmes. There are new fault reporting and fault isolation manuals. IATA data indicates overall costs for the 737700 are almost 14% lower than those for the -300. The engine on the 737NG is the CFM567. along with an enhanced structural repair manual. The company also offers maintenance.000 flight cycles. integrated services and customised solutions are offered with ST Aerospace’s maintenance-by-the-hour (MBH) programmes for the 737NG engines and components all of which have been popular over recent years. and overhaul including engineering and technical services. In its second and third years of service (1999 and 2000). Its global airline inventory network programme manages the supply chain for expendable airframe parts. ST Aerospace and Lufthansa Technik were once among the only MROs to have full global networks. China United Airlines. engine lease programmes. Landing gear overhaul is provided by subsidiary Hawker Pacific in Los Angeles and London.000 to 75.co Airline Economics: MRO Global 2011 95 . Primera Air. co . which covers 737NG components such as nacelles and landing gear. and KLM E&M handles the rest. The CSP. reducing their inventory and repair costs by as much as 30%. with Messier Services Asia. In 2008 Boeing extended the landing gear overhaul and exchange programme initially established for the MD-11 in 1997 to include the 737NG. Airframer and MRO have equal shares in the inventory: Boeing manages the repair of its own proprietary parts.737NG MAINTENANCE In 2006 Boeing spent $2 billion on the acquisition of Aviall. located alongside the partners’ joint spares distribution centre near Amsterdam Schipol. makes a pool of high-value components available to members. following the formation of a similar programme for the 777 with Air France Industries in 2003. and overhauled 737 landing gears and the CFM56-7. KLM E&M already provided base maintenance for the 737NG. to enhance and accelerate the IMM programme. SR Technics and Guangzhou Aircraft Maintenance Engineering (Gameco) as 96 Airline Economics: MRO Global 2011 www. until then one of the biggest independent providers of parts and aftermarket service. Boeing has also been developing a component repair and leasing services network. By 2009 the 737NG CSP was supporting a global pool of around 200 aircraft. among other models.airlineeconomics. Both Spirit AeroSystems and the Goodrich Aerostructures service centres in Singapore and Scotland provide nacelle component repair and overhaul services. Boeing and KLM Engineering & Maintenance (KLM E&M) established the 737NG component services programme (CSP) in 2005. Automatic notification of issues identified in this way is sent to operators. in which the airframer has a 60% stake. Boeing is offering end-to-end integration with commonality across EFB classes.co Airline Economics: MRO Global 2011 97 . systems. The first three of those provide access to updated maintenance data such as manuals and catalogues. Enhancements over recent years include the ability to integrate with parts provisioning systems. On the 787 this facility is key. but in March 2009 Boeing revealed it had reached an agreement with Esterline CMC Electronics to provide Class 2 (that is. consists of a suite of web-based tools available through MyBoeingFleet that help manage technical documentation and records. Beyond material management and component exchange. library. on-demand training and additional engineering tools that will enable operators to evaluate alternative courses of action. for example.737NG MAINTENANCE and MROs. Having introduced digital manuals and other maintenance aids with the 737NG series. give users the ability to customise the information and support the development. monitors and analyses real-time data such as maintenance messages and flight deck effect faults from the aircraft condition monitoring system (ACMS) to determine current and predicted serviceability. approval and management of task cards. As well as the CMC PilotView hardware. installed but removable) EFB hardware. Boeing Shanghai Aviation Services. and extend AHM capabilities beyond the ACMS function to encompass other types of faults. initially on the 737NG and subsequently on other models for both production and retrofit. is one such venture that has been awarded FAA repair station certification. its functionality has been expanded to include an electronic logbook (ELB) application. Southwest Airlines and Turkish Technic have all been signed up for some time now. leaving it to be done by the airline. tasks and training. Also available via MyBoeingFleet is the now-vital Airplane Health Management (AHM) maintenance decision support capability. This can add unanticipated cost. which has a growing number of 737NG users for the Class 3 (built-in) EFB more commonly found on the flight deck of the 777. Many Class 2 providers offer no integration. but the Boeing EFB solution is fully integrated.airlineeconomics. Boeing has broadened the scope of its electronic-enabled port- folio to include a variety of additional services. Boeing has also embarked on many MRO joint ventures. AHM also collects data from EFB-equipped aircraft. The first six modules cover authoring. service providers. Airlines www. including Ryanair. and increase technical and schedule risk. The maintenance performance toolbox. with Boeing support throughout the lifecycle of the product. co-ordinate logbook data with aircraftgenerated maintenance messages. and the signup by Boeing at point of order to AHM has been impressive. The ELB is rapidly replacing paper logs and in the process is also enhancing operators’ ability to plan unscheduled maintenance ahead an aircraft’s arrival. which collects. Where the original EFB was an electronic repository of the information normally carried in paper form. structures. Fiji-based Air Pacific became the first 737NG operator to sign up the programme in April 2007. The region’s airports are being developed in tandem to handle the exponential traffic growth that is forecast. Approximately 4.5 billion people reside within an eight-hour flight of the Middle East. particularly the Gulf countries. The development of the Middle East region as an aviation hub has lead to a major shift in the global air transport market as the Middle East carriers. particularly the Big Three.co . The Arab Air Carriers Organization 98 Airline Economics: MRO Global 2011 www. have altered the way traffic flows have been routed. A paradigm shift has materialized that has transplanted European and Asian hubs to Gulf-based hubs such as Dubai. The aggressive emergence of the Middle East Airlines on the global aviation industry has been a notable development for many established players. Qatar Airways and Etihad Airways – the Big Three Gulf carriers – are changing the dynamics of international aviation and have quickly emerged as the new global challengers. Doha and Abu Dhabi. providing a huge potential to connect that population to any city though a single stop.airlineeconomics. These carriers are largely responsible for this growth and have capitalized on their geographical centricity by cannibalizing the traditional traffic flows between other hubs and by connecting secondary cities as a result of exercising their sixth freedom traffic rights using their hub and spoke network. Emirates.MIDDLE EAST MRO MIDDLE EAST MRO A strategic axis shift in trade routes has fuelled the growth of air transportation in the Middle East. Together these airlines currently operate a fleet of 303 aircraft (EK-155.0 $14.0 $8. And they have a much lower cost structure due to labour policies different than the West and an abundance of labour from South Asia and Arab countries outside the Gulf. QR-182. It is this increased capac- ity on order that poses the major threat to established European and Asian airlines. Fuel and labour cost are the two most significant operating costs for any airline. which reduces their supply chain costs compared www. but the Gulf carriers enjoy advantageous positions in both. They have continuously stimulated demand through continuous brand awareness campaigns.6% $6.0 $4. Emirates is the dominant carrier with Qatar Airways and Etihad Airways combined being 70% of its size. Both Qatar Airways and Etihad Airways also follow this model. Emirates started the unique insight that it was theoretically possible to connect any two significant cities on the planet with only one stop in Dubai.0 $6.0 $2. The Big Three have 57% more long-haul seat capacity on order than the 35 member carriers of the Association of European Airlines (AEA) and 27% more than the 17 member airlines of the Association of Asia Pacific Airlines (AAPA). They offer one of the best in-flight products as full service airlines to attract the high-yield customers. Yet it is the rise of Emirates.9 33% 1.4% MIDDLE EAST $2. Fuel is cheaper in the region due to its proximity to oil production and refining facilities.9 5% 6.6% Global CAGR EAST EUROPE $1. EY-98).4 6% 9. Emirates’ strategy is to provide connecting long-haul services via its hub in Dubai.airlineeconomics. Etihad Airways and Qatar Airways as the fastest growing full service airlines that is the most spectacular.MIDDLE EAST MRO APAC Market ($B) Market Share (2010) CAGR (2010-20) CHINA $2.5 billion people in an 8-hour flight radius.4% 9.3% $16.0 $10.6 16% 5.8 4% 4. The competitive cost structure at these airlines also helps.8% NORTH AMERICA $13.0 Commercial Jet Aircraft Retired $12. QR-91.0 $0. EY-57) and have a further order book of 470 aircraft (EK-190.4 6% 5. They essentially are network carriers that use a hub and spoke mechanism to collect short haul traffic into long haul operations through their respective mega hubs.6% INDIA $0. connecting city pairs worldwide with only one stop in Dubai.6 1% 9. The Big Three airlines have specific long-term strategies guiding their successful business models.co Airline Economics: MRO Global 2011 99 . The most significant strategy of these carriers has been capitalizing on their strong hub and spoke network model in a region with a geocentric potential of 4.3% LATIN AMERICA $1. These airlines are forecast to increase their capacity by more than 15% per year over the next five years.0 AP CH IN ME 2010 LA&C EE 2011 NA WE AF lists 25 airlines at its members covering the entire Arab World. co . has also helped keep the costs of skilled labour low. The Arabian Gulf had the luxury of being able to start with a blank piece of paper to create the airline and the airport infrastructure model. And they are stimulating this through the growth of their airlines and respective hub airports. They formulated a plan to prepare for the post-oil era by diversifying their industrial base. Bangladesh and Nepal. Global advertising and sport sponsorships are being used extensively by these carriers to carry their marketing message. their governments have positively impacted their economic prosperity. relocation of corporate headquarters.000 ME 500 ME ME EE AF EE AF EE AF 2010 2015 2020 100 Airline Economics: MRO Global 2011 www. Doha and Abu Dhabi are playing a significant role as prominent stops in international trade routes. with trade unions and strikes being banned.995 global trade markets before the oil ran dry. Each airline has succeeded in elevating their brand to an international level to stimulate customer demand in line with their global aspirations. Dubai certainly was the pioneer of this model as its oil supplies dwindled and it raced to integrate itself into ME 12% AF 13% EE 12% 5. Emirates. Jazeera Airways in Kuwait. Low labour costs exist.airlineeconomics. Pakistan.913 2011 8. Emirates has in particular been very prolific in the range of world sports that is sponsors as a brand. sporting events.000 Asia 1. In fact it would not be far from the truth to say that it would like to become the Coca Cola of the airline world. Another development has been the rise of low-cost carriers that are capturing the boom in point-to-point budget travel with the region. RAK Airways in UAE. trade shows. international conferences. This is the reason why it currently enjoys a lead over Doha and Abu Dhabi as an aviation hub. Bahrain Air in Bahrain 2. The development of the mega-hub airport is influencing the growth of cities through industrial development. Sri Lanka.MIDDLE EAST MRO to European. Etihad and Qatar Airways are all devoting a huge budget to their brand awareness campaigns in a bid to position themselves as full-service carries and generate sales throughout the world. light manufacturing. American or Asian airlines.500 Asia Billions Asia 1. Fly Dubai. Their young fleet age also helps keep their fuel costs as the latest generation aircraft burn fuel much more efficiently. increased tourism and the growth of a logistics and distribution hub. This has been a huge advantage in running a labour-intensive operation such as the massive transit hubs at Dubai. It is not surprising that each of these airlines is part of a broader city master plan for growth in the world and reflects the New New World order as well as the New Maritime Silk road. The management friendly labour laws. The airports in the cities of Dubai.500 2.4% CAGR Asia 64% ME 12% AF 10% Asia 63% EE 14% 2010 6. By integrating these cities into global trade markets. and aviation was an important sector. The success of Air Arabia. as workers are sourced from the cheap labour markets of India. As the fastest growing aviation region. The total will grow from $7 billion in 2010 to $11. In the next ten years. the Middle East can play a vital role as a hub for aircraft maintenance for the region covering Africa. this presents an enormous economic potential. through its subsidiary Abu Dhabi Aircraft Technologies. The focus on companies in the region continues to be fleet performance of aircraft in operation. And they are using cost saving measures in other areas such as engineering to outsource work to external parties. the total aftermarket spend base in the Middle East. is expected to grow substantially. This is keeping them focused on their main business of air transportation. MROs and airline maintenance companies are therefore expanding in preparation for such a high growth rate. and SR Technics bringing the first network overhaul provider approved by OEMs to the region. business aviation and civil helicopter.3% annual increase. Airlines in the Middle East have huge fleets and have a surge of new aircraft deliveries coming in. but in 10 years time will exceed the share of the Americas by 14% The effect of the European Emissions Trading Scheme on Middle East MRO companies should not be overlooked. Currently Mubadala Aerospace in Abu Dhabi is working in partnership. Mubadala Aerospace is also creating a military MRO in Al Ain called Ammroc Advanced Military Maintenance Repair and Overhaul Centre that is supported by Sikorsky. The new trend is for these MROs to provide a package of customized services for airlines that addresses all their line and base maintenance needs in order to win their business. Western Europe Eastern Europe North America Middle East ddle East Asia Pacific South America Africa www.7% (2010-2020) Market is equivalent to that of Americas.4B in 2010 Regional CAGR is a very healthy 6. The low fares have stimulated many people to fly that previously would not have flown at all or as frequently. Middle East and Australasia. However.co Airline Economics: MRO Global 2011 101 . it is sure to give them an additional boost and further enhance their cost savings to customers over European Union based MRO suppliers. The rise of these carriers has further given the region a stamp of approval as one of the leading air transportation markets in the world today. TeamSAI is an aviation consulting firm providing strategic and tactical solution in MRO. military. Thus they are outsourcing contacts of maintenance work to established MROs which creates more work potential in the Middle East region.airlineeconomics. As the central location.MIDDLE EAST MRO and NAS Air in Saudi Arabia. During MRO Middle East exhibition in 2011 the company presented research that showed profits have been pretty elusive for aftermarket companies in the region so far but a lot of positive developments have taken place in preparation for the coming growth in maintenance work. have clearly show that the market for air travel has grown to unprecedented levels. with GE and the Engine Alliance on engine maintenance. according to figures presented by Aerostrategy.2 billion in 2019 showing a 5. including air transport. Middle East is ideally situated to capitalize on the area growth 37% of the global MRO market surrounds the ME $15. which together form the largest free-span structure in the region. B727. Cargo conversions .0 $29.0 $20. business has been quiet in the thirdparty maintenance sector. The roll list of services remains impressive: Services include: Heavy maintenance services.airlineeconomics. which provides it with a leasing and management capability through the purchase of an airline’s component stock allowing it to maintain the same on a contract basis through ADAT and SR Technics.B737.0 2010 Asia 2015 ME AF 2020 EE 102 Airline Economics: MRO Global 2011 www. B767. Will the Chinese and Indian airlines look to Israel for their MRO needs? JorAMCo is proof that the business is there to be won. The new MRO will not only service the Gulf Air fleet but will actively seek third-party work with a new facility that will become operational in 2012. Gulf Technics (GT) is a subsidiary of Mumtalakat established to act as the Technical Investment and Innovation $35.DC-10. That said this MRO remains a prolific military service provider and it will not be short of business on that front. Emirates is currently in the process of developing in-house practices and skills to move forward with third party maintenance as a core business.0 $5. Re-engining and/or hush kit installation. B757. this will hit Bedek.4 $10. B747. Communications and navigation systems modernization programs. in 2011 at least. Avionics modernization and numerous military upgrade programs. B737. Life extension and aging aircraft AD note compliance. On-site maintenance services. IAI Bedek Aircraft Group Thanks to its location. This MRO continues to perform well but there have been few new contracts of late to shout about and one cannot help but see this MRO becoming more and more isolated as the Gulf region continues to grow rapidly. Cabin/cockpit standardization/modernization programs. MD-11. Gulf Technics This MRO was formed through a jointventure between Bahrain state holding company Mumtalakat and Singapore’s SIA Engineering (SIAEC). which is a strategic investment vehicle wholly owned by the emirate of Abu Dhabi which also owns SR Technics.8 Billions $15. A recent deal with General Electric means that the MRO is now a specialist centre for GE90 AND GEnx engines. ADAT caused a stir in 2010 when it launched Sanad.0 $30. ADAT is in a position to challenge the very best in the market as it now has base maintenance capabilities for all major current and future aircraft models and has just built its A380 hanger which will receive its first A380 aircraft in 2012. something that is a surprise given the age of the Emirates fleet. MD-80. At the same time however its eight hangers. Emirates Engineering Emirates Engineering. has confirmed that it has plans in place to seek third-party maintenance work in the future. IAI Bedek Aircraft Group is certainly one to watch through 2012 and as a specialist converter the outlook in this market is far from bleak.6 $25. Moreover the European ETS will lead to many more airlines/operators being forced to opt for new cargo aircraft rather than conversions. Bedek is able to offer services for: B707.co . Customized interiors. IAI Bedek Aircraft Group sits alongside its Middle Eastern peers. which has a remit to support the Emirates airline fleet. This does mean that Emirates is in no position to move into third-party services in earnest as there remains only very limited spare capacity with no new capacity coming into play in the near term and its own airline still growing at a very fast pace. It will be interesting to see if this MRO is able to make some gains in thirdparty maintenance and if it will be able to keep up the pace in the conversion market with so many airlines opting for new aircraft. which.0 $20.0 $15. given the age of the same leaves quite a bit of capacity for third party work. ADAT is owned by the Mubadala Development Company. This MRO remains a very strong conversion specialist but of late. A320 and A340 Series among others. are reporting heavy utilisation. Total maintenance services on “Flight Hour Rate” basis. B747 and B767 Aircraft.MIDDLE EAST MRO The ones to watch are coming to the fore but what of Qatar? Abu Dhabi Aircraft Technologies Abu Dhabi Aircraft Technologies (ADAT) services the Etihad fleet. MIDDLE EAST MRO arm of Mumtalakat. GT’s role is to identify and establish viable industrial and technical investments and to establish technical research capabilities. Currently the company can perform: Import, export and logistics of aviation parts, aviation components repair and overhaul, aviation Maintenance, Repair and Overhaul (MRO). GT also has a research and development centre. Planned for 2012 are: Line Maintenance, modular engine repair and overhaul, aviation components manufacturing, automotive components manufacturing. GT is actively establishing research capabilities, both numerical and experimental, in various fields including MRO, NDT, reliability, aluminum and steel metallurgy, energy, aerodynamics, combustion, and heat transfer. JorAMCo JorAMCo a Jordanian based Maintenance, Repair and Overhaul (MRO) facility is a dynamic aircraft maintenance center that specializes in aircraft airframe services, component repair and overhaul covering Airbus, Embraer and Boeing products. JorAMCo is an EASA- and FAA-approved MRO supplier and performs all levels of aircraft maintenance for a number of airlines in the Middle East, Europe and Asia. 2011 has been a success story for JorAMCo and has seen it collect new business from emerging markets. A highlight of 2011 came in September when Jet Airways signed an agreement whereby JorAMCo is to perform D-Checks on six B737NGs operated by the Indian Carrier; the confirmed checks include landing gear and thrust reverser removal and installation and paint. The agreement is another building block for a more tangible business for JorAMCo in the Indian Market and a continuation of JorAMCo’s strategy in that region as JorAMCo continues to establish presence there, with a noticeable increase in Indian operators frequenting JorAMCo’s facilities with their maintenance requirements. JorAMCo has successfully positioned itself as a serious alternative option for Indian operators. Qatar Airways Qatar is the big question out there at the moment - Will the airline move to create an MRO arm in the near future? Qatar’s fleet is growing at a staggering rate and more aircraft orders are being announced at the 2011 Dubai Air Show. The airline, by the time of the FIFA World Cup in Qatar in 2022, will have a huge fleet with a massive network and will need maintenance facilities to match. The investment going into the new Doha International Airport, opening in 2012, gives Qatar Airways the option to start bringing fleet maintenance services in-house. Any other airline in the US or the EU would be mad to bring maintenance inhouse as high labour costs means it would not be economically viable, but, as with so many things in the Middle East, state ownership and relatively cheap labour costs mean that bringing maintenance in house Airline Financial Results Intensifies the COST Focus – Profits have been elusive in many regions, and the Middle East has had its troubles too Surrounding regions like Asia have been most profitable though The quest for profitability drives business behavior Revenue focused innovation is evident Cost improvements are needed at every turn For MRO value stream, this means Motivation toward best value Outsourcing will continue to grow Supply chain innovation will be imperative Preparing for a new generation of technology Consolidation will be important to value creation Value-oriented innovation will be rewarded – – – – – – – – is the best option to take. If there is spare capacity for third party maintenance then so be it. The current crop of global MRO providers needs to have presence in the Middle East if they are to be at the forefront of the market in fifteen- to twenty-years time. The problem for many MRO companies is that financing is very hard to come by. Some providers will no doubt be looking to launch a joint venture with Qatar in the near future. This would be both a bold and rewarding option. 16-Dec-10 ADAT unveils timetable for GE and Engine Alliance Network Partner Shop for the GEnx and GP7200 Engines. 22-Jan-10 SIA Engineering and Gulf Technics to set up and operate MRO facility in Bahrain. 15-Jul-10 Turkish Technic and Goodrich complete agreement for MRO JV. 21-Jan-10 Mubadala and Goodrich sign JV agreement. 20-Aug-10 NAS Tech and Lufthansa Technik sign strategic cooperation agreement. 27-Jan-11 ADAT signs deal to overhaul IAE jet engines. 1-Feb-10 1-Mar-10 1-Apr-10 1-May-10 1-Jun-10 1-Jul-10 1-Aug-10 1-Sep-10 1-Oct-10 1-Nov-10 1-Dec-10 1-Jan-11 Mubadala Aerospace launches component and engine financing company, Sanad Aero Solutions. 3-Feb-11 Mubadala and Honeywell form strategic partnership. 20-Jul-10 Pratt & Whitney and Turkish Technic strengthen partnership with Advanced CFM56 and V2500 Center of Excellence. 1-Nov-10 Turkish Technic, Turkish Airlines, and TAI launch cabin interiors business. 29-Dec-10 www.airlineeconomics.co Airline Economics: MRO Global 2011 103 MIDDLE EAST MRO The Middle East may have a high portion of growth but it is no different to any other region in that the most successful MROs will be those able to offer a full array of services across all aircraft types offering total maintenance through a long term partnership. The advantage for MROs independent from OEMs as independent third party or in house providers is data sharing. If you are able to service a mixed fleet at any time in any zone with one service provider that is working with you and will share data at all times over all types that will also embrace the latest cost saving technologies be they PMA, DER or whatever is needed – then you have a flexible and cost efficient service that an operator will be at pains to refuse. This is the blunt truth of the MRO sector moving into 2012. And for many it is a truth that will require either expansion, acquisition or investment. There is no middle ground and although an MRO may inform you that they are secure in their sphere of influence, if they do not meet the aforementioned criteria, then they are operating on borrowed time as globalisation of the aviation sector speeds. $110 $15.1 $12.9 $90 $9.1 $80 $100 $70 $0.7 $0.4 $60 2001 2002 2003 2004 2005 2006 -$0.1 2007 -$0.1 2008 -$0.3 2009 -$0.6 2010F 2011F $50 -$4.1 -$5.6 -$7.5 $40 $30 -$9.9 -$11.3 -$13.0 -$16.0 $20 $10 $0.0 104 Airline Economics: MRO Global 2011 www.airlineeconomics.co AFRICA AFRICA MRO A frican maintenance, repair and operations is currently estimated to be worth some $1.2 billion per annum but this is forecast to grow by over 40% to $1.9 billion by the end of the decade. Ethiopian MRO expenditure in Africa is expected to increase but forecasts differ due to the continent developing a north-south split with the Ethiopian Airlines maintenance arm with Egyptair Maintenance & Engineering looking to dominate the north, while South African Airways Technical (SAA Technical) continues to dominate the south. Ethiopian and Egyptair are in the better position due to geography – being on the periphery of Europe and the Middle East gives an obvious edge. Boeing projects that Africa will need 710 new airplanes between 2009 and 2029 with African airlines not just replacing old aircraft, but actively grow- ing their fleets. African carriers account for approximately 100 aircraft in Boeing’s backlog for delivery over the next ten years with a mix of 737s, 777s and 787s on order. African MROs are no different from any other. If African MRO is to grow beyond servicing the local airlines of the continent then they must position themselves to attract business from Europe and the Middle East in the north and, in the case of SAA Technical in the south, it must expand to have teams across the local regions. The African MROs will need to prove a record for safety, turnaround reliability, competitive pricing and be full service providers. African MROs must know their strengths and weaknesses as well as look at outsourcing areas of low competitiveness, such as large engine overhauls and low-volume components. SAA Technical outsources large engine overhauls as its throughput is not enough to make it competitive for the firm to do the work alone. Yet African MROs remain well positioned to provide MRO services to African airlines, and at reasonable prices. As new technologies are introduced, so African MROs need to source capital to invest in the new tooling, equipment, systems and training required to undertake MRO on new generation aircraft and engines. African airlines therefore need to collaborate to grow. They need to outsource work within Africa whenever possible, throughput needs to be increased by pooling resources and creating centres of excellence through the sharing of expertise and mutual assistance. African MRO’s best bet is to partner with OEM (Original Equipment Manufacturer) programs to increase expertise, improve systems, develop worldwide marketing coverage and generate reciprocal business. www.airlineeconomics.co Airline Economics: MRO Global 2011 105 A320. A340 A300-600. ultrasonic. It obtained the EASA approval Part 145 through the certifying staff and hangar’s facilities to perform scheduled checks on A319. B757. A330. Experienced mobile technical team and crew available for a short. radiography. B737. tive downtimes and guaranteed on-time redelivery. A300-B4. Egyptair M&E provides the following base maintenance services: Hangar 8000 is fully equipped with docking system to accommodate A320. Spare parts inventory Fokker. CAI and LOS. Ethiopian Airlines maintains modern and complete aircraft. Bombardier DHC-6. With an all-Ethiopian workforce of over 750 technical personnel – most of whom are trained by the airline’s Aviation Maintenance Technicians School and are US Federal Aviation Administration and Ethiopian Civil Aviation Authority licensed – Ethiopian has gained a distinguished recognition for its high standard and excellent safety record. General engineering support Development of ing. the MRO offers service at various international stations such as NBO. BOM. - TOTAL AIRFRAME CARE Total Airframe Care services includes regular aircraft checks.airlineeconomics. A330 and A340. FCO. components and associated equipment. Hangar 6000 is used to perform scheduled checks on the A300-600. structure and cabin modifications. engine and component overhaul and repair facilities. Our team of highly qualified and motivated engineers is ready to provide all the professional services you require. A300-B4. check-related discrepancies. This base maintenance has been designed to act for a variety of different aircraft types. parts. TAKING BETTER CARE OF YOUR AIRFRAMES AND ENGINES tion gramme Egyptair M&E has a well-established operational background and extensive knowledge of airframe and engine maintenance and airline operations. Hangar 7000 is used to perform scheduled checks on B737and the B777. reliability analysis Facility evaluation. Examples include various successful cockpit. Ethiopian airlines maintenance Established in 1945. Smartly combining regular maintenance checks with modifications makes it possible to minimise turnaround times. Engines maintenance overhaul 106 Airline Economics: MRO Global 2011 www. included in European Aviation Safety Agency (EASA) 145 Scope of Approval. for Avionics components Non-destructive testing (NDT) with specialised inspection: x-ray. A321. development plans and recommendation ment on aircraft at any location Line station technical handling In addition to our base at ADD.and longterm assignment upon request.AFRICA Egyptair Maintenance & Engineering Egyptair Maintenance & Engineering (M&E) is a leading provider of aircraft maintenance services in the Middle East region with over 75 years’ experience. salvage work and modification Component overhaul/testing ing of components fitted on the above mentioned fleets a state-of-the-art Automatic Test Equipment. ATR. packages Operational assistance through trol services - APPROVED CAPABILITIES Airframe maintenance The base provides complete package maintenance on: Boeing Models B767. magnetic particles and dye penetrant. Fokker Model F-50.co . technical planning functions. solutions for many EASA and Federal Aviation Regulations-driven mandatory modifications. A321. monitoring and scheduling of ADs. make Egyptair M&E a specialist in customised maintenance and modification programmes. Egyptair M&E has a base maintenance facility at Cairo International Airport. eddy current. De Havilland and Lockheed aircraft. ATEC 5000. B727. B777 and EMBRAER 170. MD80 and L382. ACARS-ARINC (Communication and Reporting System) installation. Lanseria. GPS (Global Positioning System). HUD (Head Up Display) installation and yaw damper modification and cabin reconfiguration. SAA Technical has nearly 85. Anything from minor maintenance. the cabin appearance and functionality is a key consideration in customer satisfaction and loyalty. Boroscope and NDT services are also provided. Cape Town and Durban as well www. SAA Technical does all major maintenance for SAA. major maintenance. enhanced IFE system installation. SAA Technical is expanding its footprint into Africa. Line maintenance includes A and B checks. composites. engine shop. capable of accommodating five B747 aircraft simultaneously. the Middle East. Luanda and Kigali. EASA and SACAA approvals on various aircraft types such as the B737.co Airline Economics: MRO Global 2011 107 .co. a dedicated team ensures that aircraft interiors are maintained to a high standard. including the capability to test. EGPWS (Enhanced Ground Proximity Warning System) installation. Jetworx support aircraft in various theatres in Africa. engineering and maintenance planning services are provided. African and Middle East airlines. also referred to as Power by the Hour agreements. Mauritius. A multipurpose dock is capable of handling aircraft and MD11 aircraft.000 square metres of hangar space.AFRICA Jetworx Jetworx (see Jetworx. Staffed with around 650 personnel from various disciplines it is well poised to deliver a comprehensive and customised solution for its customers. SAA Technical is the only maintenance facility in the world providing customers with the specialist service of hand-polished aircraft. It has locally trained technical staff placed in Lusaka. The high capability in modifications includes strut modifications. SAA Technical has a dedicated paint hangar. repair and release components on site. The facility is geared to do around 50 major overhauls per annum. Europe and even as far as Arctic areas. equipped to do all levels of painting including complete repaints as well as internal and external decals. Traffic Collision Avoidance System. the largest in Africa. This team is fully equipped to handle any type of emergency in Africa and the Indian Ocean Islands and these services are jointly conducted with the International Airlines Technical Pool. structures and painting makes it an ideal one-stopshop for major maintenance and AOG support. B727. LINE MAINTENANCE SAA Technical has more than 700 technical staff providing line maintenance services to South African Airways and a large number of international airlines. It also provides major maintenance to a number of European. engineering ity monitoring.za) in South Africa provides a wide spectrum of aircraft maintenance functions. Capabilities for C and D-checks include: as other centres.airlineeconomics. This includes the 36. These services are provided at Johannesburg. especially technical maintenance. FQIS (Fuel Quantity Indication System) replacement. It typically complies to a 98% dispatch reliability for its routine recurring clients. avionics. Major clients are listed as: monthly flight hours – 1. on the African continent SAA Technical provides an aircraft recovery service through a specialist team on a 24-hour standby basis. technical defect rectification and aircraft exterior cleaning. The logistical and support centres provide various aerospace related services with such approvals.000 square metre major maintenance hangar. but it facilitates the development of aviation services. Aircraft downtime is reduced by world-class facilities and equipment and through scheduling aircraft modifications and repaints during C and D checks. The company possesses the approvals of various African countries but also holds FAA. This not only assists SAA. Satellite Communication installation.500 sectors per month 1. earned over decades of providing heavy maintenance services to local and international airlines. Dakar.000 monthly flight hours – 400 sectors per month shops such as wheels and brakes. Jetworx was born out of the merger of Safair’s technical division and Aeronexus Technical. Its comprehensive array of support SAA Technical HEAVY MAINTENANCE SAA Technical has a reputation for highquality work at very competitive labour rates. SAA Technical is a one-stop shop for all heavy maintenance. logistical support. In addition to the normal maintenance programme. When all airlines have similar aircraft and technical facilities. Maintenance services can be provided for ad-hoc or AOG situations as well as Comprehensive Maintenance Agreements. B. CAPABILITIES avionics upgrades.C. CPCP.B.C. Mkt. full strip & repaint. IFES retrofit. repairs.000m2 refurbishment Bedek Aviation Group Israel Aircraft Industries (IAI) 707. structural 1 w/b hangar 1 n/b hangar 20.airlineeconomics.B.C. & hydraulics wkshops.C.B.B.com A300 707 727 737 747 L-1011 MD-90 A. Strip and paint Arkia Israeli Airlines Aircraft Maintenance ATR 42/72 B-200 Citation XL DHC 7 BD-700 (Global 5000) A.B.D A.co. 747 section 41.B. FAR 145. 70100 Israel tel: +972 3 971 7278/7748 fax:+972 3 971 7849 e-mail: [email protected]. structural and comp. 737 747. Inventory mgmnt Line maintenance.D A.D 1 hangar 2 w/b. IDG.B. NDT. 767 MD-11 MD-80 DC-8.eg Ran Ackerman Senior Marketing and Sales Mgr PO Box 41 Ben Gurion Airport.sa Nir Dagan VP.B.D A.C.C. operations & maintenance Dov Airport PO Box 39301 Tel Aviv 61392 Israel tel: +972 3 690 2222 fax: +972 3 699 1390 email: nird@arkia. 727.C.B. components incl: hydraulics. B747 135.D A.B. 2478 fax: +263 (4) 575 058 Claude Rakotoarivelo VP Maintenance and Engineering 31 Ave de l’ Independence Antananarivo 101 BP437 Madagascar tel: 261 20 22 446 85 fax:261 20 22 446 74 claude. components shop.D A. landing gears.C.B.AFRICA MRO Directory: Africa/Middle East HEAVY MAINTENANCE DIRECTORY .D A. composite repairs. DC-10 A320/321/319 C-130/L100 A.D A. Strip & painting. & Busin.000m2) 11.B.D modifications 3 w/b hangars (each B747-400 size) Total hangar space15. interiors Upgrade. avionics shop.B.B.B.D A.B. Shop Avionics Shop Structure Shop Components Shop 3 Bay. Sheetmetal Training VIP refitting/refurbishment strip & paint.D A.000m2 hangar space 350 airframe engineers modifications. 747 section 41.C. B A Heavy Heavy Heavy Heavy FACILITIES 12.C.co.D A.C.C. transmissions Mods & upgrades. Commercial Sales Abu Dhabi International Airport PO Box 46450 Abu Dhabi United Arab Emirates el: +971 2 505 7530 fax: +971 2 575 7263 e-mail: kirubeltegene@gamco. materials process.D A. component o/haul engine test cell engine overhaul. full cabin refurb.700m2) hangar 4 (10.268m2 area 3 w/b bays 1 w/b paint: hangar 2 (4.com.com 707 737 767 BAe 146 A. ISO9001:2000 108 Airline Economics: MRO Global 2011 www. line maintenance.D A A. composite repairs.B.B. aircraft cleaning.DN A.C.C.D A. CAAI.B.Dev.D A. Component overhaul & repairs. strip and paint. engine test cell..C.co.B.B. ageing a/c mods. 757. 747 pylon mods.C A.B.000m2 avionics upgrade. 900 m2 Composite repairs.B.B.B.business development Commercial PO Box 8012 Riyadh 11482 Kingdom of Saudi Arabia tel: +966 1 220 3966 extn 324 fax: +966 1 220 0199 mob: +966 553031611 [email protected] A.D A. Full cabin refurb.B.C. inc.C A.D A.B.C.C A. Ageing a/c inspect.C A. Mods.sa www.D A.000m2 workshops 100. and tailor made solns.C.D 4 w/b bays 3 n/b bays 20.1 Harare Airport Harare Zimbabwe tel: +263 (4) 575 111 ext. build up. 20. NDT Air Zimbabwe G Gambiza Technical mktg manager PO Box AP.ae AIRCRAFT A300 (all) A310 A320/321 A330/340 747-100/-200 747-300/-400 757-200/-300 L-1011 B767 B737 (NG) CHECKS Heavy Heavy Heavy Heavy A.C.C.000 m2 logistics support.C.B.B. EASA 145.alsalamaircraft.. wheels & brakes CSD. powerplant shop ELAL TECH/EL AL Israel Airlines Engine Shop Hyd. ageing a/c progs.B.elaltech. 747 pylon mods.C.B. Avionics upgrades. Logistics support Machining/plating. engineer supp.B.C.D A.100m2) hangar 3 (2.co . Ben Gurion International Airport Israel 70100 tel: +972 3 935 3979 fax: +972 3 935 4262 e-mail: [email protected]. CPCP Denel Aviation 6 hangar bays EgyptAir A300B4 A300-600 A320/321 A330-431 A340-200 777-200 707-300 737-500 747-300 747-200/400 767 757 737NG 777 A.000lb 1 APU SPEC.C.com. Engineering svcs Fuel tank report. 1 n/b modifications Alsalam Aircraft Fawaz Sharabi Manager .D A.D A.C A.C.B.C.il www. aircraft weighing Cockpit layouts.D 4 w/b hangars (5 aircraft) strip & paint 4 n/b hangars (10 aircraft) cargo conv.D A.il Martin Laubscher Business Development PO Box 11 Kempton Park 1620 tel: +27 11 927 4575 fax: +27 11 927 4411 Hassan Sakr Marketing and sales director Cairo International Airport Cairo Egypt tel: +20 2 696 4842 fax: +20 2 696 4896 [email protected]. NDT. DC-9. Corrosion prevention/ control. composites.C.D A.000m2 250 engineers Air Madagascar 737 767-300 ATR42 DHC6-300 [email protected]. engine.D 1 w/d 6 n/b 3.AFRICA/MIDDLE EAST COMPANY Abu Dhabi Aircraft Technologies CONTACT DETAILS Kirubel Tegene Manager. VIP interior design. avionics.D A.B..il Joseph Oren General Manager. C. approvals: JAR145. 2 n/b 13.246m2 strip & paint Dy modifications Oman Aviation Services 2 bays 1. MRO of Components.D A. airframe & Engine Engineers SBs.D B.D A.B.D A.C.B.A319 A340 707 727 L-1011 CHECKS A. Bureau Veritas.D 2 w/b.C. avionics upgrades.C. 747 pylon mods. production planning & control Mehrabad Airport Tehran IR Iran tel: +98 21 603 5310-14 ext 6330 fax: +98 21 600 1810 mobile: +98 911 258 0597 Faris Haddadeen Director.C.162m2 of hangars 10.600m2 of support shops 800m2 of paint shops 146 A & P lic. FMS.D A. etc. modular maint.B.C A.C.B.C.000 licensed engineers engine test cell training centre strip & paint.C.B.B. Avionic Upgrades – FDMP. paintshop Royal Air Maroc 727 737-200 737-300/400/500 737-700/800 757 ATR 42 B. Cabin refurbish.C A. CPCP/ ageing a/c mods. component o/haul Iran Aseman Airlines 5 hangars for w/b aircraft 20 bays 80 licensed engineers strip & paint. ADs. avionics upgrades.D A.C.B.C.D A.C A.B.AFRICA HEAVY MAINTENANCE DIRECTORY .C. composite repair.D A.B.D 8 w/b 6 n/b strip & paint.B.B. bldgs 1.B.C.B.D A..B. Moroccan DAC South African Airways Technical 737 747 A319 A320 A340 A.jo Ahmad Abdulla Al Zabin dir.B. avionics upgrades.C. engineering affairs PO Box 394 Safat 13004 Kuwait tel: +965 431 fax: +965 474 7105 Khalid Bin Al Abdesalaam VP Maintenance Seeb International Airport PO Box 58 Seeb-Muscat Oman tel: +968 519 294 fax: +968 510 018 Fouad Benbrahim Technical sales & contracts mgr Centre Industriel Aéronautique Aéroport Mohammed V Nouasser Casablanca Morocco tel: +212 2 49 9007 fax: +212 2 53 9425 [email protected]. full cabin refurbs.D B. full strip & paint Kuwait Airways A300 A310 A320 A340 727 747 767 A310-300 F27 ATR 42-500 DHC-6 A.com.B.C.C A.D B.B.D A.C. 747 Section 41 www. modifications. full cabin refurbs.B.D B.440m2 of eng.C.C.D FACILITIES 2 bay w/b 2 bay t/prop hangar 750 licensed engineers SPEC. composite repairs.D A.D A.C.B.C.D A.B.D A..C.D A. tech sales & support Room 309.000m2 (hngr + b/shops) 1.co Airline Economics: MRO Global 2011 109 .C B.co.B.C.D 1 n/b hangar (4 aircraft) 38.B.D A.D A.D A.D A A.ma Jorge Duarte Executive mgr.D A.B.A321.D A.B.020m2 floor space strip & paint.C. modifications.B.D A.com Mazia Darafsh Mgr.D A. CPCP.AFRICA/MIDDLE EAST COMPANY Ethiopian Airlines CONTACT DETAILS Zemene Nega Director technical sales & mktg PO Box 1755 Addis Ababa Ethiopia tel: +251 1 615 272 fax: +251 1 611738/474 [email protected]. eng.B.C.B. 12. CAPABILITIES strip & paint.C major major all lvls to 10Y all lvls to 10Y all lvls to 10Y A.C.C.C. interiors. engine overhaul. Hangar 8 Private Bag X12 Johannesburg International Airport 1627 South Africa tel: +27 11 978 9993 fax: +27 11 978 9994 AIRCRAFT 707 727 737 757 767 DHC-6 ATR 42 C-130 F50 727 F28 F27 ATR 42 ATR 72 Falcon 20 Do228 A310 A320.C. Marketing & Sales Engineering & Maintenance Division PO Box 39328 Queen Alia International Airport Amman 11104 Jordan Tel : + 962-6-445 1272 Fax : + 962-6-445 2996 Mobile : + 962-777-828811 [email protected]. structural repair Jordan Aircraft Maintenance Co (JorAMCo) 3 L-1011s sim.D A.B.D A. FAR145.C..airlineeconomics.B.C.C.C. ETOPS is an International Civil Aviation Organization T 110 Airline Economics: MRO Global 2011 www. The introduction of the Boeing 777 shortly after the launch of the A340 effectively removed the need for four engines and changed forever the yield prospects of a 295-plus seat. sales figures might have been very different.airlineeconomics. A340S IN SCHEDULED SERVICE AS OF SEPT 1. its investment curve. Airline Economics examines the history of the A340. the one area where four engines is a benefit is compliance with the Extended-range Twin-engine Operational Performance Standards (ETOPS). but the A340 simply could not gain pace against the Boeing 777.A340 MAINTENANCE All downhill from here? A great aircraft. maintenance options and future parts potential. 2011 Aircraft type Airbus A340-210 Airbus A340-210 Airbus A340-310 Airbus A340-310 Airbus A340-310 Airbus A340-310 Airbus A340-310 Airbus A340-310 Airbus A340-540 Airbus A340-540 Airbus A340-540 Airbus A340-640 Airbus A340-640 Total: Engine type CFMI CFM56-5C3/F CFMI CFM56-5C2 CFMI CFM56-5C3G CFMI CFM56-5C4/P CFMI CFM56-5C4 CFMI CFM56-5C3/F CFMI CFM56-5C2 CFMI CFM56-5C2F RR Trent-553-61 RR Trent-553A2-61 RR Trent-556-61 RR Trent-556-61 RR Trent-556A2-61 Number 13 5 5 19 150 12 20 5 10 14 1 38 41 333 he A340 is now perceived by many as a good aircraft that was simply offered at the wrong time. long-range.co . passenger aircraft in a world of high fuel costs. If the A340 had been launched 10 years earlier. Although two engines are better than four where fuel burn is concerned. Airbus’s widebody production was all about the A330/A340 line. This is an attraction not to be underestimated in a market where carriers are vying on a global basis for quality pilots that are in very short supply. But with the backlog of A340s down to four units. But the A340 still offers benefits to operators of other Airbus types. which on this stretched version of the type can make the nose of the aircraft too heavy and affect performance. Iberia. through large orders and subsequent follow-up orders of variants. while the cross-crew qualification concept means pilots can more rapidly qualify for another aircraft type within the Airbus fly-by-wire product line.65 111. South African Airlines and Air France (now Air France-KLM) as the major operators of the A340.4 186. mountain ranges or long distances over water. while the ultra-long-range -500 is one of the heaviest aircraft in service.2 120. Operators that in hindsight all admit it was a mistake to order the A340 given the advent of the far superior 777 family. All four A340 aircraft can be flown with the same type rating.75 135 64 147 dual-aisle aircraft.75 136. enabling a more varied flying experience and more flight hours for the same duty time.25 101 103 46. So the leading players in the A340 maintenance market come as no surprise: AFI-KLM Engineering & Maintenance.4 37. The final nail in the coffin for the A340 was the rise in fuel prices starting in the latter half of the past decade. which allows pilots to be current on more than one type of Airbus’s single-aisle and Aircraft A340-200 A340-300 A340-500 A340-600 777-200 777-200ER 777-200LR 777-300 777-300ER List 127. saving travel time and cutting fuel consumption – a significant benefit for many operators over many routes.co Airline Economics: MRO Global 2011 111 . both in size and weight. Virgin Atlantic. this family of aircraft is not expected to receive any further orders. the A340 offers an exceptional degree of operational commonality with all of the company’s fly-by-wire aircraft.9 95. Lufthansa Technik/Lufthansa Technik www.35 113.airlineeconomics. with a select band of initial operators of the early types.3 meters (one inch shy of 247 feet) was the longest aircraft in the world at one point. with a maximum take-off weight of 372 tonnes (820.75 78. at some points.5 228 261.A340 MAINTENANCE 300 Value in US$million 250 200 150 100 50 0 List 2007 2008 2009 2010 2011 A340-200 A340-300 A340-500 A340-600 777-200 777-200ER 777-200LR 777-300 777-300ER (ICAO) Standard and Recommended Practice (SARP) permitting twin-engined commercial air transporters to fly routes that.45 90.2 2011 18 59. the aircraft ended up being grouped.35 123. and production of the A330 line will increase until the first deliveries of the A350.3 262.3 2008 40.8 68.8 75. This is reflected in the maintenance providers specialising in the A340 family and where in the world expertise is located.3 149.5 232.25 116.5 137 2010 24 82. After this. For years. allowing pilots to transition from one type to another with minimum training time. The type has just four further A340-500s to be delivered.25 129.4 143. due to the cut-off of orders after airlines saw the potential of the 777. which led to Emirates cancelling its $4 billion order for the type in 2006.05 117.25 99.5 139. This left Lufthansa. Some operators have complained in recent years that the A340-600 aircraft cannot cope with the added weight of many modern first and business class seating and technical arrangements. Its -600 variant at 75. leading to significant cost savings. now it is all about the A330.8 275.000 lbs). True to Airbus’s well thought-out family concept.8 134.5 94.75 115.4 222 284. are farther than 60 minutes’ flying time from an emergency or diversion airport. Adding to the advantages of commonality is mixed fleet flying. or on segments far from airports. production is expected to cease. These operators of large A340 fleets are the same today as they have always been. The A340-600’s four engines allow for operations under ETOPS that mean airlines can fly more direct routes over the poles.1 2007 41. Demand for larger aircraft and better passenger yield over the past decade has caused Airbus to stretch the A340 design to its limits. There is no question that the -500 and -600 have both benefited greatly from the in-service experience gained by their older siblings and the large contribution that has been made to their evolved maintenance programmes and longer check intervals. Because the A340 family did not receive the orders the manufacturer expected at the outset.25 103 117 56.65 98 112 126. Twenty-one years after the first flight of the A340.25 136.8 2009 30.3 80.15 136 74. 36 2010 AV 15. Table 1 shows a direct comparison between the investment potential of the 777 against the A340 based on a fiveyear section of purchase values.60 4. Note that a 777300ER approaches annual return rates of between 12–15% sought by investment vehicles such as the Nimrod fund on its A380s on lease for 10 years.88 12. average annual dry lease incomes and residual values at the end of the period for an aircraft around five years’ old.96 12. This chart does not consider the airline.00 4.48 12.08 9. the ease of lease or fuel burn.64 9. This was considered a big step forward at the time because predecessor aircraft such as the A300 and A310 had only basic test equipment to monitor on-board functions and no ground-desk connection to help line maintenance. The A340 Central Mainte- 112 Airline Economics: MRO Global 2011 www.52 3.04 9.00 11. it is a straight investment comparison.36 10.88 10. Iberia Maintenance and SAA Technical. The performance of the aging A340 family as an investment over the five years since the start of the credit crisis has seen both the A340-200 and -300 perform better than their original direct competitors.80 11.28 5.76 10.24 12.00 12.16 10. these maintenance providers 200 Number of aircraft 150 100 50 0 Europe Asia/Pacific Africa Middle East Americas 9 8 7 Number of aircraft 6 5 4 3 2 1 0 Europe Asia/Pacific Africa Middle East Americas are going to be fighting over an everdecreasing slice of business for A340 maintenance over the next 10 years.08 9.A340 MAINTENANCE SHORT-TERM INVESTMENT POTENTIAL OF THE A340 VERSES THE 777 Type 777-300ER 777-200LR 777-200ER A340-600 A340-500 A340-300 777-300 A340-200 777-200 2007 AV 15. The secondary market for the A340 is also looking limited.92 6.80 2008 AV 15. A340 MAINTENANCE CONSIDERATIONS One of the features of early A340s (and A320s) was their central on-board maintenance system.airlineeconomics.24 11.20 12.60 12.60 8. As a result.12 6.72 12. The story is a warning to investors in aircraft that new technology can diminish the prospects and the value of an aircraft very quickly.24 11.64 2011 AV 15.84 5.60 13. The market lead carved out by the 777 against the A340 can be seen in table 1.64 11.88 5.12 9.00 10.16 Philippines.76 7.92 11. the 777-200 and -300.52 7.80 2009 AV 14.68 11.96 8.08 5. rather.co . The A340 global fleet is now at a plateau and will eventually turn into rapid decline over this decade as 787 and A350 deliveries filter through to operators.48 12. 23% –1. while the heavy maintenance check interval was extended from 10 to 12 years.00 37. even with the odd blip here and there for speculation. However.72 55. which were approved by the EASA. in April 2009 an agreement was reached to extend the A-check interval to 800 flight hours.22 19. this all depends on oil prices and with oil being a finite commodity there can be no doubt prices will only go one way.47 –5. The A330 Maintenance Planning Document (MPD) Revision 16 and A340 MPD Revision 17 were also updated.40 78.00 111. the new 12-yearly heavy-check interval will allow operators to synchronise the six-yearly intermediate-check and 12-yearly heavy checks. This means there will be few airlines willing to take on an A340. Now the A340 is reaching the high watermark of its existence in the global fleet.28 24.68% 3.00 98.co Airline Economics: MRO Global 2011 113 . Lufthansa Technik / Lufthansa Technik Philippines (33%) Iberia Maintenance (21%) AFI-KLM E&M (21%) Direct Maintenance (8%) SR Technics (17%) SURVEY RESULTS In a customer satisfaction survey carried out by Airline Economics A340 owners and operators were asked to rate their maintenance providers according to their performance to date.00 135.37% 1.75 64. The results: 1. Airbus could technically justify that checks could be increased to 700 flight-hours. It meant line engineers could test the aircraft systems from a single point in the cockpit. However.83 58.airlineeconomics. while on-board data links allowed in-flight maintenance messages and warnings to be transmitted to the ground in real time and compared against manuals and databases. because in-service experience has led to interval escalations. AFI-KLM E&M 4.62% 0. when C checks were moved to 18-month intervals. The improvements have been incorporated into Revision 11 of the A330 and A340 Maintenance Review Board Reports.00% 3.00 117.65 75. A-checks were increased to 500 flight-hours in 1998 and subsequently increased to 600 flight-hours in 2002. To ease the maintenance planning burden.75 90. Airbus has created a special appendix in the MPD whereby 100% of the tasks are packaged into checks according to the type of aircraft operation.15% 9.43% nance System was the first step toward proactive and preventative maintenance.65 120.40 41. parts for the aircraft type will be much harder to get hold of than for other types of aircraft and will be expensive. increasing aircraft availability. the US Federal Aviation Administration (FAA) and Transport Canada. The revised intervals can result in airframe maintenance cost savings of up to 6%. A-check intervals were set at 400 flight hours with C-check intervals at 15 months. This ranking is there- www.00 18.05 Potential profit margin for investor 79. interval escalations would not have been possible.76 Cost of aircraft at start 143.20 50.04 18. as is happening in today’s current volatile period.39 % return per annum 11.12 32. the next consideration is the supply of parts. The A-check interval increase will result in a reduction from seven to five A-checks a year for a typical use of 4.45 59.88 0.25 126. If it hadn’t performed as it should.52% 0. Parting out A340s could become a lucrative business in future. Direct Maintenance Because the top five maintenance providers on this list were all awarded top marks by owners and operators. but a 40% increase was considered too great for the maintenance board.A340 MAINTENANCE Potential yield 76.30 136.44 46. When the A340 entered service in 1993.44 52.05% 9. Lufthansa Technik/Lufthansa Technik Philippines 2.95 2. leading to a reduction of one heavy check in the aircraft life – a large cost saving.89 7. SR Technics 5. Iberia Maintenance 3. the split was decided by the number of replies received for each.20 63.90 61.400 flight hours per annum. Meanwhile. With a limited A340 fleet size.20 Value of aircraft at end 147.80 112. So has the A340 performed as its design intended? The answer has to be yes.48 60. IBERIA MAINTENANCE nance overhaul Iberia Maintenance is increasingly exploring ways to help customers keep not just costs but also efforts to a minimum on airframe heavy maintenance.airlineeconomics. SRT has been providing maintenance services to customers since the early 1960s as the former maintenance division of Swissair and a founding member of the largest European maintenance consortium. component maintenance and field maintenance. facilitated by sharing technical and operational experience in areas such as operational problems. such as creating improvement processes more efficiently.A340 MAINTENANCE fore an indication that the maintenance providers have the A340 market under control and is an impressive reflection on the work all five perform. Customers in all instances awarded five out of five across the board. interiors. sector-specific services customised to fit client needs and budget. helping its customers to lower maintenance costs through full engineering support. Iberia Maintenance’s 150. Some 4. AFI KLM E&M maintains A340s at three facilities. including JAR 145 and FAR 145 agency Advantages: with lowest downtimes ment. numerous A330/A340 operators regularly meet Airbus with the goal of direct information exchange. marking and labelling. performance data/degradation. The facilities include the necessary back-up shops such as safety equipment. wheels and brakes. repair. In the new aviation environment and with the expanding globalisation of the MRO industry. For that reason AFI KLM E&M is a worldwide leader in A340 components support. and cutting down on logistics and engineering management expenses. line stations and sales offices across the globe.000m2 gives it space to perform a wide range of airframe maintenance. ageing aircraft and corrosion prevention programmes. Under this initiative. 1. logistic centres. With headquarters at Zurich Airport. engine overhaul. Iberia Maintenance has updated its management and technical services. maintenance checks and two dedicated hangars for painting. individual projects and daily back-up ment The Airbus A330/A340 customer community was created by Lufthansa Technik to facilitate communication between operators and the aircraft manufacturer. be it heavy maintenance or line maintenance. original equipment manufacturers or component trading companies. providing such services to more than 150 aircraft around the world. It handles a wide range of temporary and permanent hole and dent repairs on wing and in shop from different composite and metallic parts in fuselage and flight controls. SRT is well positioned to cater fully for the growing demands of airlines in relation to their technical needs.co . of aircraft system and maintenance programme Technical capabilities vices/engineering 2. 114 Airline Economics: MRO Global 2011 www. intensive co-operation within the community is necessary.000 experienced technicians and engineers provide a wide array of MRO solutions. special task forces and retrofit. increasing force effectiveness. SRT offers an extensive network of maintenance facilities. hundreds of hours are dedicated to improving processes. Services are provided either directly to the airline or through other parties such as aircraft leasing companies. and online as well as light maintenance The A330 and A340 families share the same design. the effects of modification campaign/SB implementation and SB evaluation/validation. The community also shares information concerning available capabilities and services such as overhaul. painting. no matter where their networks take them. In every Iberia Maintenance service. It provides essential. It also offers refurbishment. marking and labelling works. reducing TATs. SRT covers every aspect of operation required by an airline and in line with the legal requirements. from delivery of Approvals: sation approvals. structural repair. providing services in material processing for wide and narrow bodies. To achieve this. AFI KLM E&M Air France and KLM operate a combined fleet of 19 A340s. SR TECHNICS SR Technics (SRT) provides technical solutions for airlines on a global basis. Heavy maintenance for long-haul aircraft takes place at Orly. Based on its extensive experience as an operator. AFI KLM E&M has led the field in stretching the maintenance intervals between checks. gearing them towards developing solutions to help customers define maintenance plans and ensure efficiency The installation of the SAP system for complete management has been a big success. LUFTHANSA TECHNIK/LUFTHANSA TECHNIK PHILIPPINES Experience: 3. maintenance and overhaul performance (tooling etc). galleys. Iberia Maintenance offers seven complete production lines for heavy modifications 4. low capacity and improvements to the A340-300.000 nautical miles.A340 MAINTENANCE A340-200 A340-200/300. The addition of the Emirates A340-500. which helped them achieve similar gains in capability as the A340-8000. The main operational line station is at Amsterdam Schiphol Airport in the Netherlands. Direct Maintenance is part of the Direct a market leader in service provisioning to the aviation industry worldwide. The type thrives in many market environments. this version seats a maximum of 313 passengers. allows for a 13% reduction in maintenance costs for operators. reliable and cost-effective operation. base maintenance. and its cabin flexibility enables seat pitch to be adapted in units of one inch – while galleys. Kenya. such as Royal Brunei Airlines. The range for this version is 8. this does not make-up for the losses on fuel costs when compared with the 777 burn rates. from high-comfort premium seating to economy class layouts in seven-.400 nautical miles. With a range of up to 9. Philippine Airlines and Air Bourbon.airlineeconomics. as opposed to two larger power plants as with the 777. The A340-600 has a range of 7. and the largest-capacity member of the A340 family. as operators have found out. Libya. Historically these aircraft were in service with Cathay Pacific. The latest version of the long range A340-600 was the last throw of the dice for Airbus on the A340 family. The new aircraft brought extended range. Saudi Arabia air force. flight frequencies at lower costs. Other operators include Aerolíneas Argentinas (four). SR Technics offers: vices maintenance. On this type they typically use only 56.and nine-abreast layouts. Tanzania.000 lbs of thrust. JUNE 2011 Total orders Total deliveries In operation 246 246 239 Many A340-200s are used by VIPs or the military. Qatar Amiri Flight. and is being extended to include additional widebody aircraft types and to provide services at other European airports as well as additional locations worldwide. A340-200s were later given performance improvement packages (PIPs). aircraft line maintenance is provided to operators of a wide range of Airbus and Boeing aircraft types. resulted in Direct Maintenance being EASA Part 145 approved to perform line maintenance on an impressive number of 40 aircraftengine combinations. Airbus claims the use of four engines. JUNE 2011 Total orders Total deliveries In operation 36 32 32 A340-600 The A340-600 is the longest-fuselage jetliner ever built by Airbus. In addition. Egypt Air (three) and Conviasa (one).000 nautical miles (15. As a flagship with smaller airlines. the -200 proved heavy and unpopular with mainstream airlines.000 lbs of their certified 60. eight. ultralong-haul operations upon introduction. the Egyptian government. The support for Emirates is being provided at Addis Ababa. powered by RR Trent engines. the Hashemite Kingdom of Jordan. groupings and locations. South African Airways is the largest operator. higher gross weight A340-600. It is the only independent widebody line maintenance provider of the Netherlands. Its EASA Part-145 approval covers a total of 39 aircraftengine combinations. holding EASA Part 145 approval and FAA Repair Station approval. operating alongside other A330 or A340 models. Royal Jordanian (five). the French air force and the German government. It has further opened line station locations at airports where demand for its services was needed.co Airline Economics: MRO Global 2011 115 . four engines. as from January 1. Power plants are Rolls-Royce Trent 500 engines. However. In a typical three-class cabin arrangement. Only 28 A340-200s were produced. Japan and the US. aircraft overhaul and additional maintenance services services delivers tailor-made solutions up to and including complete technical outsourcing of all maintenance services for aircraft engines and components. 5.3 metres. Qatar Airways was the first customer to take delivery of this new. These aircraft are labelled A340-213X. www. the A340-500’s large cargo holds accept a full range of freight. greater passenger capacity and overall substantially enhanced productivity for airlines. the A340-300 provides vital long-range links to less populous cities. The forward hold accommodates 18 LD3s or six 96-inch pallets. This aircraft’s optimised 222-inch fuselage cross-section gives airlines the cabin versatility to match market requirements. Ethiopia. JUNE 2011 Total orders Total deliveries In operation 97 97 96 A340-500. with six aircraft. Below the main deck. which should result in reduced engine wear. Airbus’s A340-300 is tailored to meet the needs of the 300-seat long-range market – offering direct point-to-point services and increased the aircraft. while it serves as the most cost-effective 300-seat long-range complement for operators of A320 family aircraft. while the aft hold takes 12 LD3s or four 96-inch pallets. China. to final decommissioning of the aircraft from the fleet. Due to its large wingspan. and often forms a key part of larger international operations with major carriers. through to maintenance to ensure safe. In line with customer requirements. including industry- A340-300 With a service range of more than 7. including direct Singapore-Los Angeles flights of almost 19 hours. A340-600. the A340-500 is operating on some of the world’s longest non-stop routes. Ethiopia. DIRECT MAINTENANCE Direct Maintenance was established in January 2001 and is a certified line maintenance service provider. lavatories and stowage can be located in different numbers.000 km). It also has offices in Ireland. standard LD3 containers in side-by-side loading.900 nautical miles. or 419 in a two-class configuration. With an overall length of 75. a one-off specially configured aircraft for the Sultan of Brunei. it has a seating capacity for 360 passengers in a three-class layout. A340-500 The A340-500 offered highly efficient. DELIVERIES AND OPERATORS OF THE AIRBUS A340 AS OF JUNE 30 Airbus Executive and Private Aviation Aerolíneas Argentinas Afriqiyah Airways Air Canada Air China Air China Southwest Company Air France Air Mauritius Air Namibia Air Tahiti Nui AirAsia X Arik Air Austrian Airlines Cathay Pacific China Airlines China Eastern Airlines Conviasa Egyptair Emirates Airlines Etihad Airways Finnair Flightlease Gulf Air Hainan Airlines HiFly Iberia ILFC Kingfisher Airlines Kuwait Airways LAN Airlines Lufthansa Olympic Airlines Philippine Airlines Qatar Airways Royal Jordanian Sabena Scandinavian Airlines System Singapore Airlines South African Airways SriLankan Airlines Surinam Airways Swiss International Air Lines TAM Linhas Aéreas TAP Portugal Thai Airways International Turkish Airlines Union des Transports Aériens Virgin Atlantic Airways Undisclosed A340-200 Ord Del Opr 6 6 9 4 A340-300 Ord Del Opr 1 1 3 3 1 8 8 3 3 6 3 3 11 11 16 5 5 6 2 4 4 5 2 2 7 6 5 1 3 8 4 2 6 4 2 6 7 4 3 18 16 4 4 28 4 8 4 3 3 2 7 17 6 3 9 4 7 7 7 2 7 17 6 3 9 4 7 7 7 6 5 8 6 1 15 2 4 4 9 14 A340-500 Ord Del Opr 36 32 32 4 14 19 4 4 6 6 6 4 10 7 7 21 4 10 7 7 21 5 5 6 6 9 5 7 22 12 3 9 5 7 22 12 3 9 18 16 4 4 28 4 8 3 19 2 4 5 26 4 4 2 16 13 16 13 17 34 29 2 4 4 59 4 8 4 10 4 10 4 10 4 7 7 7 2 7 6 5 A340-500 Ord Del Opr 7 5 5 A340-600 Ord Del Opr 2 2 2 Ord 16 Total Del Opr 14 19 7 1 10 3 6 3 14 16 5 6 2 4 5 2 2 4 11 14 6 6 10 10 1 3 3 10 18 11 11 4 7 2 6 4 3 5 34 36 29 4 4 59 4 8 4 4 5 50 4 4 4 4 6 5 23 6 1 15 2 4 10 9 25 4 2 2 3 3 10 3 3 14 5 4 2 2 4 2 4 14 6 5 2 5 5 5 2 4 11 6 10 3 10 11 4 2 6 3 3 7 7 24 24 24 4 4 4 6 Totals Backlog A340-200 Ord Del Opr 28 28 27 6 4 A340-300 Ord Del Opr 218 218 212 A340-600 Ord Del Opr 97 97 96 Ord 379 4 Total Del Opr 375 367 116 Airline Economics: MRO Global 2011 www.A340 MAINTENANCE ORDERS.airlineeconomics.co . 2% 5.2% www.airlineeconomics. China.3% 6. The former group also includes successful outposts of European and US MROs that are generally performing well. the most active in the engine market expansion is ST Aerospace (Singapore Technologies Aerospace).2% 7. There are the long-established MRO players such as ST Aerospace.ASIA-PACIFIC ASIA-PACIFIC MRO A s a result of the stronger economic outlook. which are very busy. but the MRO market is still muted in the APAC region by the newer aircraft that will enjoy a maintenance honeymoon.6% Total 6. This taken together with the fact that most of the fleets on order are under OEM aftermarket contracts means there is not at this time or within the next five years a great deal of business to be had in the area outside of OEM joint ventures or existing fleet service requirements. Asia’s fleet and MRO growth outlook is positive. Ameco Beijing and HAECO. Southeast Asia region.3% 4.4% CH 8.7% 5. The new company: ST Aerospace Technologies Company (Statco) has unveiled a new engine MRO facility in Xiamen. AsiaPacific’s fleet and MRO growth outstrips that of other regions as a mad rush to be ready to service the huge fleets on order takes place.0% AP 4. The US$78 million (about S$101 million) facility has a capacity to support up to 300 engines annually.co Airline Economics: MRO Global 2011 117 .8% 9.3% 6. Monarch Aircraft Engineering (MAEL) has outposts in the Maldives and Goa. In the China/India.6% 4. and then there is the substantial investment going into India and China.6% 7.4% 6.0% 8. ST Aerospace entered into a joint venture with Xiamen Aviation Industry (Xaico). The APAC region presents a tale of two sides when considering MRO. The COMPOUND ANNUAL GROWTH RATES Fleet 2011 2016 2021 Total MRO 2011 2016 2021 AP 4.5% 9.9% CH 9. the fleet on order is mainly newly delivered next-generation aircraft. including a line maintenance technical handling agreement with Alitalia to support A330 aircraft operating out of Male airport.7% 8. the money to be made in MRO is in the engine game. The Maldives facility is proving to be a real winner for MAEL. In 2011. Also note that India combined with China has a fleet that will match that of the rest of APAC put together by 2021. China’s growth over the next 10 years makes it formidable in terms of fleet size. Statco has received the Part 145 certification from China Aviation Administration of China (CAAC) and has also received approvals from the US Federal Aviation Administration and Korea’s Ministry of Land. with numerous deals signed during 2011. Of all the MROs in the APAC region. mainly being led by the OEMs.7% 8.3% Total 6.3% 9.1% IN 9. Transport and Maritime Affairs for the maintenance of the CFM56-7B series of engines. As such. It will initially provide MRO and total support for the CFM56-7B and CFM56-5B series of engines.0% 6.8% IN 9. ST Aerospace’s affiliate. ST Aerospace has had a bumper year. Vision Technologies Aerospace.000 9. repair and overhaul. one narrowbody hangar with three bays.GMR Aerospace Engineering (MGAE).ASIA-PACIFIC programme for Tiger Airways. and subsequently A330 and Boeing 777 aircraft. which mainly power narrowbody aircraft such as the Airbus A320 and Boeing 737.566 357 550 833 4. ATR 42/72 and Boeing 737NG. ST Aerospace serviced 70 engines and 13. commented on the deal: “By entering into the aircraft engine leasing business and strengthening our comprehensive range of services to airlines around the world. Thailand has over the past year been hindered by political unrest and is now suffering severe flooding but it has constructed the world’s largest maintenance hangar for three A380 aircraft and has world-class infrastructure in place for repair service investment. Marubeni intends to make a further material contribution to the aviation industry. challenged only by Hong Kong. Beyond that the outlook remains firmly focused on China and India. has entered into an agreement to acquire 100% of the shares of DRB Aviation Consultants to enhance its aircraft interior engineering design capabilities. But government investment agencies acting for Malaysia and Thailand have been encouraging inward investment. CFM56-5B and CFM56-7B engines.000 8.460 3. The location is central.702 sq ft plot of land. but the impact on the market will not be clear until next year at least. including engine technical management and engine maintenance-by-the-hour. MGAE currently has close to 350 employees and the bulk of the manpower is made up of a local ASIA-PACIFIC FLEET FORECASTS 10. and aviation materials and management services such as Total Aviation Support. starting with Airbus A320. The largest MRO players in the region have their headquarters in these two locations. In another development. Total Engine Asset Management (Team). will be equally owned and jointly managed by ST Aerospace and Marubeni.033 billion worth of aviation maintenance contracts signed so far in 2011. The MGAE facility has one widebody hangar. ST Aerospace secured new maintenance contracts worth a total of S$453 million in the third quarter of 2011 alone. The JV plans to invest approximately US$100 million in new assets within the first two years. On capability development. and operates a global MRO network with facilities in the Americas. with equity injection of up to US$40 million.342 Asia-Pacific China India Total 6. with over S$1. Of all the APAC MROs.000 0 2011 2016 2021 2. it is ST Aerospace that is the true global player in the region.635 newly completed facility is located on a 415. Singapore has long enjoyed its position as the APAC aviation hub. while ST Aerospace secured a cabin reconfiguration project for Jet Airways’ Airbus A330. The country is currently widely recognized as one of the foremost aircraft maintenance centres in Asia. MAS. with a global customer base that includes leading airlines.000 7. It is the world’s largest aircraft MRO provider. This joint venture is a third-party airframe MRO facility.000 2. It has the capability to provide base maintenance services. senior operating officer. At the Paris Air Show 2011 it was announced that ST Aerospace and Marubeni Corporation had entered into a joint venture to form an engine leasing company in Singapore.000 3.co .457 2. Team’s initial engine leasing portfolio will include the CFM56-3. and another painting/narrowbody hangar with associated workshops.000 4. airfreight and military operators.000 1. It is possible Team will cause a round of rate decreases in the engine leasing market. The new JV will leverage ST Aerospace’s expertise in total engine support. Besides airframe redeliveries. at Marubeni Corporation. transportation machinery division. near Xiamen Gaoqi International Airport.000 engineers. The new JV company.672 3. its commercial pilot training arm successfully completed Singapore’s first Multi-crew Pilot Licence (MPL) 118 Airline Economics: MRO Global 2011 www. the first of its kind for its scale and is located in the Special Economic Zone at the Rajiv Gandhi International Airport in Hyderabad. Gentaro Toya. and Boeing and Airbus will need to provide their services through bases in the country.000 5.749 1. employing over 8. including airframe.364 4. The key for ST Aerospace is that it is in effect an integrated service provider that offers a spectrum of maintenance and engineering services covering all areas.775 components for both commercial and military customers during the third quarter of 2011. It is the aerospace arm of ST Engineering.” It is hard to see as yet how this JV will affect the engine leasing businesses of firms such as Engine Lease Finance and Willis Lease Finance. a 50/50 joint venture between Malaysian Aerospace Engineering (MAE) and GMR Hyderabad International Airport is now launching.airlineeconomics. alongside Marubeni’s extensive experience in financing and marketing knowledge. MAE is a subsidiary of Malaysia Airlines (MAS) while GMR Hyderabad International is a subsidiary of India-based GMR Infrastructure.000 6. The programme’s six cadet pilots are now under the employment of Tiger Airways and have received their MPL from the Civil Aviation Authority of Singapore. engineering design and technical services.371 8. engine and component maintenance. Asia-Pacific and Europe. During 2011. One of the most recent announcements from Airbus was also one of the most interesting: Pipavav Shipyard. Meanwhile. Qantas chief executive Alan Joyce criticised unions representing its pilots.airlineeconomics. as international traffic expands out of Beijing.7 0 2011 2016 2021 $1. cabin upgrade and modifications. With MROs securing sites at the initial planning stage for airfield expansion. The facility comprises pilots and experts in flight operations.5 10 $7. Indeed. Boeing has opened a new service centre in Beijing to provide enhanced product support to China’s commercial aviation industry. Ameco Beijing has also been providing line maintenance services including aircraft releasing to Singapore Airlines in Beijing.1 $12.co Airline Economics: MRO Global 2011 119 . The main third-party maintenance provider in China is Ameco Beijing. it is the OEMs that are leading the incursion into India and China.0 $0. will hold a 51% stake in the venture that will be used for both civilian and military applications. The ASIA-PACIFIC MRO FORECASTS (US$MILLION) 25 Asia-Pacific China India Total $15. while retired MAS engineers and technicians are also employed at competitive remuneration packages to kick-start operations. after this recent disruption. India’s biggest shipbuilder by market value.7 $9. and that it is seeking a takeover target that already has the customer base and industry experience to combine with Airbus’s technological knowledge. has confirmed it is to form a joint venture with EADS/Airbus and SKIL Infrastructure to set up an aircraft maintenance facility. has cancelled its aircraft maintenance contract with Qantas. and they are building infrastructure at pace. it remains to be seen if all of this investment will pay dividends. India represents a perfect target for MROs. It is not all rosy and good in the APAC region though. engine overhauls and line maintenance for a number of fleets of the major airlines in the region.8 $7. with an increasing number of customers. As planned. Airbus doesn’t want to get into the traditional MRO market. EADS retains an option to further increase the holding to 49%. spare parts and maintenance engineering who are dedicated full-time to serving airlines in China. As mentioned previously. Airbus has openly said it is targeting the aftermarket to offset peaks and troughs in the manufacturing cycle. providing services including airframe overhauls. In the first phase. The future remains fairly secure for MROs in the Southeast Asian region. Pipavav.ASIA-PACIFIC Indian skilled workforce. Ameco Beijing completed Air China’s first A330 aircraft IPTE project that involved the cabin and entertainment system. Ameco Beijing has been successful in market development in North America. In preparation for MGAE’s operations in Hyderabad this year. Aircalin. In recent years. while Qantas’s low-cost subsidiary. In fact Aircalin cancelled its contract for line maintenance on A320s and A330s. the facility and related infrastructure looks set to cost the JV over US$100 million. It is not hard to see that Ameco will need to further expand its Beijing facilities before long to cope with the levels of work that are sure to come over the next decade. based in Gujarat. It is unlikely that Qantas’s MRO arm will see third-party maintenance business for a while. Ameco Beijing’s Guangzhou station added Turkish Airlines as a new line maintenance customer. This was after a previous 2011 agreement with Turkish Airlines to provide line maintenance in Beijing and Shanghai. has been forced to service some of its aircraft overseas.8 5 $3.7 15 $11. Jetstar will now send fleets offshore for maintenance after the ongoing Qantas conflict with the unions caused too much disruption. Qantas has lost a thirdparty maintenance contract. especially with regard to India. MAE has trained 72 Indian engineers hired by MGAE. and would rather focus on component repair and traditional airframe maintenance.0 20 Guangzhou station provides line maintenance and releasing for the carrier’s Boeing 777. Jetstar.8 $4. Generally the pressures for the MRO companies in this region are the same as for those in the US or Europe. The venture. In June. this MRO provider will benefit.1 $1. He revealed that New Caledonia’s international airline. www. Ameco Beijing will perform IPTE for a total of 16 Air China A330 aircraft by the end of this year. but the rush to get a slice of the action by just about every major MRO and OEM could lead to overcapacity before the end of this decade. maintenance engineers and ground handlers for holding the company to ransom. EADS will acquire a 26% stake in the Indian venture. has been quietly building its portfolio during 2011 and. set-up by Lufthansa and Air China some years ago.1 $21. covering an area of more than 600. ST Aerospace consistently invests in new capabilities and expands technical resources to better deliver innovative and integrated solutions. pneumatic and hydraulic workshops. and mechanic. maintenance hall that can accommodate six widebody and four narrowbody aircraft at the same time. as well as equipment calibration and repair. with Air China holding 60% and Lufthansa 40% of the registered capital.000 sqm. ST Aerospace With more than three decades of experience providing quality engine services and managing over 500 engines for a diverse customer base comprising over 80 operators worldwide. washing and painting of any types of aircraft.000 components. is a joint venture between Air China and Lufthansa. and offers repair and overhaul services for almost 10. Ameco Beijing has more than 5. engineering. technical training and logistics services.000 employees and holds 14 certificates issued by airworthiness authorities including the FAA. EASA and CAAC.airlineeconomics.000 sqm. The full-service spectrum includes: Aircraft maintenance maintenance checks installation Asset management Aircraft modifications Technical management Work scoping Off-wing maintenance winglet installation Off-site/aircraft-on-ground (AOG) recovery services management 120 Airline Economics: MRO Global 2011 www.53 million and the joint-venture agreement was signed for 40 years. The maintenance facilities include: floor space. of 20. located at Beijing Capital International Airport. of painting and heavy maintenance can host either one Boeing 747 for painting or one Boeing 747. which can meet the requirements of stripping.ASIA-PACIFIC Ameco Beijing Aircraft Maintenance and Engineering Corporation (Ameco Beijing). Ameco Beijing adjoins No. controlled painting hangar covers an area of 10. Ameco was established in 1989. 3 terminal in the east. repair and overhaul provider in China. including the A380 super-jumbo. The registered capital is US$187. Aircraft painting. 2 terminal of Beijing Capital International Airport in the north and No.000 sqm.000-sqm maintenance hall and shop.co . AIRCRAFT SERVICED Engineering design and development EASA-21 and SAR-21 development and certification On-wing maintenance rectification Engines ST Aerospace offers customised integrated solutions for fleets of engines. In aircraft maintenance. helping clients achieve the longest on-wing time at the lowest lifecycle costs for operations. complete the product portfolio. the company services almost all modern Boeing and Airbus aircraft while Ameco provides engine overhaul on Rolls Royce and Pratt & Whitney products.000 sqm including temperature-controlled avionics and electric workshops. 767 and 737 for heavy maintenance Ameco Beijing is not only the first joint venture in the Chinese aviation sector but also the most powerful maintenance. and an engine test cell cover an area of 26. including a 35. landing gear overhaul shop. airlineeconomics.co Airline Economics: MRO Global 2011 121 .ASIA-PACIFIC MRO Directory: Asia Pacific HEAVY MAINTENANCE DIRECTORY .ASIA PACIFIC REGION 777 www. ASIA-PACIFIC HEAVY MAINTENANCE DIRECTORY .co .airlineeconomics.ASIA PACIFIC REGION 737 757 122 Airline Economics: MRO Global 2011 www. ASIA-PACIFIC HEAVY MAINTENANCE DIRECTORY .ASIA PACIFIC REGION 737 747 767 737 www.co Airline Economics: MRO Global 2011 123 .airlineeconomics. a unique pattern-matching service. Make significant savings with SafTGlo.STG Aerospace unveils the latest innovation in photoluminescent (PL) floorpath marking. stgaerospace.com Emergency Floorpath Evacuation System . airpor t authorities. MRO’s. . OEM’s. cer tification. cost reduction. and investment banks around the world with a focus on strategy. operations improvement. safety. corporate /fractional operators. and supply chain.TeamSAI provides consulting and technical ser vices to aviation industr y clients including airlines. www.com .teamsai.