Data Dilemma For Engine Lessors

Keeping an eye on utilization data can tell a lessor when an engine comes off wing.
Credit: Rolls-Royce

As airlines prepare to weather a period of lower demand in the aftermath of the COVID-19 pandemic, analysis of aircraft-generated data and other technologies that promote maintenance efficiencies—and lower costs—will become increasingly important. At the same time, the debate about who has access to operating and maintenance data is likely to intensify, with OEMs, MRO providers and airlines all pressing their respective claims.

The value of such data and its analytics for each of the above parties has been well-documented, but less discussed is how aircraft and engine lessors fit into the picture—something of an anomaly, given that they own a large chunk of the global aircraft and spare engine fleet.

Maintenance Data

As the owners of their equipment, aircraft and engine lessors are clearly entitled to all of the operating and maintenance data that it generates. Indeed, accurate maintenance and life-cycle records are a crucial part of asset management both in the highly technical sphere of spare engine leasing and for aircraft lessors since the value of aircraft as they age is increasingly tied to that of their engines. And within the engines, much of the value is in their life-limited parts (LLP) and, crucially, in the proof of those parts’ histories.

Accordingly, aircraft and engine lessors usually will conduct periodic on-site checks to ensure customers are keeping up to date with their maintenance records, to inspect maintenance planning documents and to coach them about return conditions. In addition to the physical status of the aircraft, these will also cover and require well-organized and complete maintenance and modification histories as well as back-to-birth traceability for valuable LLPs.

“During a lease, it’s our policy to visit our operators once every two years,” says Justin Phelan, vice president of marketing for Engine Lease Finance (ELF), one of the largest independent engine lessors. “We look at the LLP sheet, SBs [service bulletins], ADs [airworthiness directives], state of the engine trends and the last borescope [inspection]; and if there was any intervening maintenance work done, we would seek that data to review it.”

Engine lessors often struggle to access trend-monitoring data before the end of lease. Credit: Lufthansa Technik

In most cases, engine lessors have little trouble seeing maintenance records since their leases expressly allow for it. However, Phelan notes that problems sometimes arise when the lessor wants to verify, for example, that no parts manufacturer approval (PMA) parts or designated engineering representative (DER) repairs were used during the overhaul—as this can affect asset value and transferability—and asks to see the “dirty fingerprint” records for parts taken off and installed on the engine.

“At the time of the shop visit, the operator may not have requested a copy of all the dirty-fingerprint records they are entitled to, and at a later date some MROs will charge to take that information out of deep storage,” he says.

Phelan adds that one “large” engine MRO provider tried to refuse access to such records citing inspector confidentiality, “even though for the vast majority you can’t recognize the person because it is a coded number.”

Operating Data

Unlike maintenance records, operating data is generated on a daily basis (at least in normal times) and as a result presents different access challenges. For while most lessors are able to see basic utilization data that shows when their equipment is burning cycles, more detailed information from engine and aircraft sensors is often not so readily available.

“Our leases provide that we get a copy of all data generated by our engines, so strictly speaking we are entitled to see the engine trend monitoring . . . . And in theory we would be able to get in on a near real-time basis. But in most cases it doesn’t happen like that . . . and that’s a function of the operator not giving the OEM the green light to provide that information to us,” says Phelan.

Such information might include reports on exhaust gas termperature (EGT) margins, fan speeds and fuel flow, inputs that form a crucial part of engine trend and health monitoring. It also feeds into predictive maintenance models and would allow lessors to conduct more in-depth asset management with better projections, says Phelan.

“You may be approaching a shop visit where you would like to swap out an engine; you may like to avoid a shop visit but take back the engine early,” he adds.

And while the lessor can receive all the trend-monitoring data at lease-end, during the lease—when it would be most useful—airlines can be averse to providing it, citing their right to data exclusivity.

“We’ve been working with airlines on a case-by-case basis to get better access to that data, but some are not forthcoming and say, ‘We have the right to quiet enjoyment of the engine, and we can’t always push the button that easily and give you the data,’” says Phelan.

Nonetheless, lessors can still glean key insights from the utilization data that is readily available. For example, an engine that suddenly came off wing would suggest a maintenance event that the asset owner would want to follow up on.

“You can do quite a lot that with utilization data—you can make general assumptions—but you can get very bespoke and very granular when you get the precise details,” says Phelan.

Sharing and Collaboration

Many aftermarket companies now try to digitize maintenance histories and parts records, either through entering the data into a bespoke platform or simply by scanning paper documents into a PDF format.

ELF uses the latter method, having gone largely paperless about five years ago in favor of a searchable internal database of PDF records than can be accessed via a web portal. Phelan describes the system as “effective and very user-friendly,” adding that “nothing we have seen on the market has made our system obsolete yet.”  

Similar sentiments are expressed often by other players in the aftermarket, but while internal systems can work smoothly for their users, the huge variety of formats and software used by different companies creates headaches when it comes to sharing data.

Gil Krazier, director for engine lease and trade at Israel Aerospace Industries (IAI), told Inside MRO last year that “there is still no clear way to share documents in this industry; each lessor, airline and MRO holds its own solution for documentation, and it can be difficult to access these.”

Reconciling data in the format of one platform with that of another can prove to be a considerable administrative burden, even though the data itself is identical. The burden may sometimes be enough to push airlines to stick with a particular maintenance provider or OEM service because of the weight of accumulated data residing with it and the desire to preserve the integrity of that information. However, if that data is accurate and readily available to all parties, it might reduce barriers to entry for other MRO providers-—and thereby increase competition.

The solution to this problem may involve blockchain technology and the provision of a single, immutable source of equipment and parts histories via a distributed ledger that is accessible to anyone with the appropriate permission. In fact, lessors comprise a particularly appropriate use case for blockchain, given their need for trusted data, their need to audit that data and the existence of multiple actors across their networks.

“I do think blockchain has a lot of merit in it,” says Phelan. “If there is one universally accepted system for the whole industry, that makes things very simple.”

Phelan suggests that a big organization such as a Tier 1 OEM should take the lead in developing such a system, adding that it would probably need the support of the International Air Transport Association, the International Civil Aviation Organization, all the OEMs and many of the larger airlines. In fact, the benefits of blockchain are most evident at scale, although adding more participants may create other difficulties. One is gaining the approvals and agreement on how to structure and launch the system; another is the technology challenge of dynamic security access, since certain parties to a distributed ledger may not always be entitled to view some or all of the information in it.

One way to speed up development of blockchain solutions for life-cycle tracking is to start on a smaller scale than the one envisaged by Phelan. For example, GE and a small number of industry partners are developing a distributed ledger to track the parts in its engines. Given the OEM’s market share, this is a significant development, and some industry observers believe there is still value in setting up initially limited ledgers, as they have the potential to grow organically.

Phelan also notes that broad acceptance has proved to be enough for industry collaborations in the past, such as the incident/accident clearance statement that affirms that a part has not been involved in an accident or subject to certain harmful conditions.

“That’s an example from the past where experts have got together—it isn’t accepted by everybody but it’s by a large swathe; so nothing is perfect, but that’s an example of how you might do it in the future,” he says.

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.