IATA, Rolls-Royce Deal Adds To Independent-MRO Momentum
IATA and Rolls-Royce on July 1 unveiled their aftermarket-competitiveness agreement, adding momentum to the alternative-parts and repairs push.
The deal, months in the making and first reported by Aviation Week, is based on four “principles,” the organizations said in a joint statement. Rolls pledged to not “prevent” suppliers from developing alternative parts or repairs; it will sell its parts on a non-discriminatory basis; it will not penalize customers that use alternative parts and repairs; and it will not force customers to buy its aftermarket services.
The principles, backed by a five-page detailed statement, reflect market reality. Rolls would struggle to maintain policies that counter them without running afoul of antitrust laws. The biggest effect is likely to be the shift in perception triggered by one of the big three engine makers publicly acknowledging that alternative options, notably parts manufacturer approval (PMA) parts, are acceptable options.
“These agreements don’t change anything in terms of what’s allowed and what’s not,” an executive from a large PMA supplier told Aviation Week. “The fact that you have Rolls-Royce saying that PMA and [alternative] repairs are okay—that’s a big deal, perception-wise.”
Rolls’ agreement with IATA comes three years after a similar agreement between IATA and CFM International. GE Aviation, a 50/50 partner in CFM with France’s Safran, said the new policies would apply to all of its engines. IATA is also working with other large suppliers including Honeywell to secure similar public agreements.
“Rolls-Royce has taken a proactive approach in working with us on this commitment that will stimulate a more open MRO industry and have a long-lasting impact in the market,” IATA CEO Willie Walsh said. “Competition spurs innovation and creativity while typically driving down costs, helping to keep air travel affordable. We look forward to other OEMs making similar commitments.”
PMA parts represented about 1% of the $47 billion annual spare parts market before the downturn, consultancy Naveo calculates. But as airlines seek to keep costs low during the recovery, they may gain momentum as options for lowering total costs because they are cheaper or improve reliability, which reduces maintenance costs. The IATA agreements help clear up questions around PMA usage, such as their effects on warranties.
PMA usage is widely accepted by airlines around the world, though not for all applications. Interior parts are common, while those for engines are less so—particularly in the critical sections such as the high-pressure turbine (HPT) and low-pressure turbine (LPT). Global acceptance is no longer an issue—no global regulator bans PMAs completely, though some ask for more documentation or data before approving parts.
Since engine MRO is the largest share of the global commercial aftermarket, IATA sought to target some engine suppliers—including Honeywell and its auxiliary power units—and ensure they were not enacting policies to discourage PMA parts. With airlines looking to keep aftermarket costs low and some of the biggest PMA opponents acknowledging the parts are commercially acceptable, PMA usage appears poised to grow.
“I do see a growing acceptance of PMAs going forward, particularly in critical HPT material and LPT material as well,” MTU Americas senior sales director Les Cronin told Aviation Week’s AeroEngines Americas attendees. “I do see it increasing.”