Airframe OEMs making bigger play for aftermarket support
Even if making money in the airframe maintenance business is hard to do, a lot of companies still want to get into it. The latest entrants are aircraft manufacturers seeking more customers and steadier revenue over the order cycle.
Airframe OEMs may need to offer maintenance services to secure customers, especially the new, smaller, lean airlines that are increasing their share of the market and do not have—and may never want to have—major in-house maintenance departments. Manufacturers also stand to gain from steady maintenance income, in contrast to the wild swings in revenue from new aircraft deliveries.
Maintenance offers naturally started among manufacturers of smaller aircraft, whose business charter or regional airline customers did not have the maintenance resources of major airlines. These OEMs are now expanding their offerings. And the comprehensive support approach has spread toand , which are now selling much more complex aircraft to airlines that are small, cost-conscious or just not eager to get into the MRO business.
has provided parts under cost-per-hour (CPH) agreements for business jets for a quarter-century and now supports 1,200 business aircraft from 10 part depots on five continents. The program has been highly popular and is offered to commercial airlines. “We have a lot more experience than other airframe OEMs,” emphasizes Gary Martin, vice president of sales, marketing and service programs.
Parts support is offered for the Dash-8, and Martin says Bombardier is winning the majority of support deals against MRO competition. A total of 80 Q400s are now enrolled, by carriers such as SpiceJet, Luxair, Republic and Jazz. Poland's Eurolot recently exercised options on parts for six Q400s.
Bombardier's part business has quadrupled in the last 12 months. It is offering airframe maintenance as well and has a new MRO center in Singapore. “We are receiving more and more requests for this and are now discussing it for all platforms, includingand ,” Martin notes.
One difference for the CSeries is that Bombardier is getting in front of leasing companies and airlines early, before aircraft are delivered or support agreements are made with MROs. Both parts and heavy maintenance will be offered on a CPH basis for the CSeries.
also has been in the support business for quite a while, and on a very broad front. It offers line and heavy airframe maintenance, support for both expendable and rotable parts and, for ERJ 145s, even engine overhaul.
Luiz Hamilton Lima, vice president for services and support, says nearly one-third of customers choose Embraer airframe maintenance, while rotable management is used by three-quarters of customers. The company expects the growing E-Jet fleet will expand support opportunities, as airlines increasingly seek outsourcing to cut investment and focus on core businesses.
Lima acknowledges that ERJ operation is being challenged by high fuel prices. Nevertheless, he believes aging ERJ fleets and their transfer to small operators with little in-house capability will create some opportunities for support by Embraer.
also has had a support program for two decades, its Global Maintenance Agreement. GMA can include line-replaceable unit (LRU) repair and pools, airframe maintenance and propeller, landing gear and engine overhaul.
Luigi Mollo, vice president for vendor management and maintenance economics, says the most popular GMA offering is LRU repair and stocks. ATR integrates these services, seeking repairs from either component OEMs or third-party shops, based on price and quality bids. Part stocks are maintained in Paris, Kuala Lumpur, Singapore, Miami and Christchurch, New Zealand.
Most GMAs are CPH, but time-and-material pricing is available if a customer does not want a long-term agreement. ATR gives customers catalogue prices and then may discount these at year-end based on volume.
GMAs now covers one-third of ATRs in service, or about 300 aircraft. All GMAs include components, about 80% cover propellers, and many cover landing gear. Few now cover engines. “We did that at first, but it was very costly,” Mollo notes.
He expects the GMA share to grow, noting that carriers now care intensely about future MRO costs when they order aircraft. He says this tendency is strongest for new models such as the-600, which has so much new technology. MRO providers such as Industries, Sabena Technics and AAR provide support for many ATRs, but ATR GMAs cover all the long-term maintenance agreements now in place on -600.
ATR's commitment to the GMA approach is growing, and it is establishing a network of heavy-airframe maintenance shops. ATR has already designated an airframe facility in Singapore, and the next parts of the network will be in Africa and Europe. A line maintenance offering is under review.
The success of and need for long-term support for small aircraft is now finding its counterpart in mainline jets built by Airbus and Boeing.
The big-jet manufactures are making much more complicated aircraft, which require more expensive equipment to maintain, equipment that may be used less frequently if reliability forecasts hold up. The combination of more expensive infrastructure used less frequently argues for centralizing maintenance to economize on capital costs. In addition, mainline jets are being sold to smaller airlines or to majors that are severely pressed for capital. So, Airbus and Boeing have jumped into the support game wholeheartedly.
Airbus Flight Hour Services (FHS) includes a variety of programs, from component services to a Tailored Support Package (TSP) that includes line and base maintenance. FHS-Components guarantees part availability, while TSP can guarantee availability of the entire aircraft.
FHS-Components covers spares and repairs with on-site stocks and pool access for LRUs. Critical parts are stocked at airline bases and selected outstations. Pools replenish airline stocks and Airbus manages repairs, guaranteeing lead times of 4 hr. for AOGs and five days for routine items. The OEM can recommend optimized spares, guarantee state-of-the-art repairs and provide reliability engineering. It can also recommend solutions for high-value components like nacelles, landing gear and APUs.
The much broader TSP combines component solutions with engineering, airframe maintenance and information systems. Airbus runs the maintenance program using MRO partners that have been selected based on capabilities, price and customer preferences.
Airbus says FHS programs minimize up-front investment and provide predictable MRO costs over the long term. The aim is minimizing all maintenance costs, including indirect, logistics and administration. Further repairs are done by OEMs and at the latest standards. An Airbus team of 70 manages suppliers, monitoring and optimizing their capabilities for top performance.
So far, the program is small but growing. FHS has pool assets in Kuala Lumpur, Singapore and. Services capabilities have been developed for the Airbus , and . Four customers have selected FHS to cover 42 A380s. Almost 60 A330s and A340s are covered, including aircraft flown by Vietnam Airlines and .
Boeing is moving in much the same direction, but a little differently. The Boeing Edge offers an array of services under four primary areas: material services, flight services, information services, integrated services and customer support. Customers can choose which services they want under each area and make their packages as comprehensive, or singular, as desired.
Under Edge (formerly GoldCare), Boeing integrates rather than provides maintenance. It already has selected a number of Edge partners around the world and has three customers under CPH agreements:for , SIA Cargo for freighters and TUI Travel for 787 material management. Fourteen other customers have contracts for the much less comprehensive fleet technical management.
Bernard Hensey, Boeing's vice president for fleet management, argues that the company's knowledge of its own aircraft gives it a decided advantage over MROs in providing support. And Boeing's capital strength enables it to make investments necessary for best-practice maintenance, something not always possible for MROs and airlines.
“One of key things that has changed is the amount of data coming off aircraft, that and the infrastructure to disseminate the data,” Hensey notes. Operators need to figure out their data strategy—including which services they want to perform themselves and what they want to outsource. Also, understanding the costs and return on investment associated with that strategy is important.
Indeed, better data, its dissemination and analysis are probably preconditions to Boeing and other OEMs playing a stronger role in maintenance. In prior, less-digital days, often only airlines knew enough about the big jets to optimize maintenance. Better data and its dissemination are expanding the MRO choices as well as the competition.
Increasingly, aircraft-specific data could be the crucial question for airlines, which need maintenance options that are both efficient and competitive. Centralizing maintenance through outsourcing provides efficiency, since expensive equipment is not lying idle in airline hangars. OEM design knowledge can no doubt enable smarter maintenance decisions.
But for these advantages to benefit airlines, they must be offered by several companies, not monopolized by just one airframe OEM. And that means all the data, OEM, airline and shop, must somehow be shared among maintenance stakeholders. How to accomplish that sharing will remain a huge challenge as the maintenance landscape is reshaped.