Middle Eastern Airlines Consider More Maintenance Insourcing

Since the outbreak of COVID-19 three years ago, many sectors of the aviation industry have had to recalibrate both their day-to-day operations and long-term strategies. This is especially the case for airlines that are revisiting their long-term business models, including maintenance arrangements.

Cash-conscious carriers implemented short-term strategies such as deferring, renegotiating or even canceling scheduled maintenance. These costs have been reevaluated for the long term, particularly as airlines reactivate more of their fleets. While the expectation has been for carriers to outsource additional maintenance tasks, some have chosen to bring more services in-house, given the lingering supply chain problems resulting in longer turnaround times.

In the Middle East, even before the pandemic, airlines were bucking some Western trends by insourcing capabilities, mostly owing to the growth in domestic and cross-border travel in the region. The Middle East’s three large flag carriers—Emirates, Etihad Airways and Qatar Airways—typically work with a large network of partners and use their in-house affiliated MRO units to carry out most services while also growing as third-party MRO providers. Generally, all three carriers outsource engine overhauls.

Outside of the bubble of state-backed carriers, some airline-affiliated MRO providers in the region have sought to add further capabilities not only to support their airline operations but also to accommodate third-party customers. This includes Egyptair, which operates its Egyptair Maintenance & Engineering division from its main base in Cairo.

Yehia Zakaria, chairman and CEO of Egyptair Maintenance & Engineering, told Inside MRO in the summer of 2022 that he estimates third-party business accounts for almost 30% of its operating revenue, with plans to increase that to 40% soon. The airline MRO outsources around 50% of its engine maintenance requirements. Recent capability additions include light and heavy maintenance services as well as aircraft painting. Line maintenance capability additions include the Airbus A320neo, A350 and A380 with Pratt & Whitney engines.

Partly due to inflation, airline MRO costs also are escalating in the region. While airlines in the Middle East have not been affected by inflation to the same degree as in Europe, independent MRO providers and airline maintenance units are seeing price increases in the market related to the tight aftermarket supply chain.

“For parts and materials cost, there is a noticeable increase in price and lack of availability in the market,” says Shaune du Plessis, director of maintenance operations at Bahrain-based cargo airline Texel Air. He identifies one issue specific to his experience at the cargo carrier: “Lead times on repairs and overhauls have blown out, for example, on hydromechanical units for fuel on the CFM56-7B engines,” he says. “These are in short supply, with units taking 6-8 weeks to be ready now, with even the workshops struggling to get parts to repair from the OEM.” Du Plessis adds that prices have risen 50-70%, while lead times have increased by 50%.

Also seeing pricing pressures and supply chain constraints is Raghed Al Kaasamani, head of engineering at Kuwait-based Jazeera Airways. During the early part of the pandemic, the airline paused its long-term maintenance strategies and witnessed the impact on its maintenance and materials supply chain partners due to the shortage of labor, longer lead times related to parts repair and overhauls, and shortages of specific materials such as battery cells.

Since Russia’s invasion of Ukraine in February 2022, Jazeera Airways has faced further hurdles. “The Ukraine war added additional challenges to the availability of raw materials such as cabin parts, which are mainly made from polymers, in addition to other materials such as engine oil,” Al Kaasamani explains.

This year, he expects the ability of suppliers to support market demand will be a primary challenge. “This is in addition to logistics, as these sectors have not yet fully recovered since COVID, as demand has increased. But we are working on different contingency plans to absorb these challenges,” he says.

Despite these headwinds, Jazeera Airways is among the region’s airlines seeking to insource MRO services where appropriate. The low-cost carrier estimates that maintenance represents around 40% of its cost structure.

“Due to the increase of new aircraft system complexity and new technology, greater technical maintenance expertise is needed along with sophisticated and expensive test equipment that requires high investments and large maintenance facilities,” Al Kaasamani says. “Specific maintenance functions such as engine repair, overhaul or system component repair are a huge project and require a large investment.”

Jazeera operates 19 Airbus A320-family aircraft, including eight A320-200s and 11 A320neos, but it is planning to grow the fleet to 36 aircraft over the next four years. “Approximately 50% of our maintenance requirements are outsourced, while we insource the daily maintenance requirements up to light checks,” he says. Al Kaasamani notes that all the airline’s required heavy maintenance checks, repair and overhaul and off-wing engine maintenance are outsourced to third parties.

But Jazeera will seek to insource some maintenance services in a move driven by the airline’s fleet expansion plans. “We are carefully considering the services which we will bring in house to maintain safety and sustainability. For 2023, we are working to have our own battery shop as well a wheels and brakes shop,” Al Kaasamani says.

For Texel Air, most maintenance on its relatively small fleet, which includes five Boeing 737 freighter variants, is performed in-house. The carrier chooses to outsource heavy structural inspections requiring specialized nondestructive testing techniques or if there is a high risk of major repairs being needed.

“We are trying to get to a position of almost all maintenance done in-house,” du Plessis says. “Currently, I would estimate that around 80% is being completed in-house by our own team. We are focusing on a progressive maintenance plan so that we can accommodate the airline within the ground times to accomplish maintenance tasks.

“The key for us is to control the workflow and quality of the product and utilize the [Maintenance Steering Group-3 document from ATA] to work around a flexible schedule by cutting tasks short if needed to accomplish a set amount of flying program,” he continues. The document is intended to help air carriers prioritize maintenance tasks.

When considering which MRO services could be beneficial to insource, du Plessis says Texel Air naturally has cost considerations but would prefer to bring work in house rather than use contractors and subcontractors on-site. “Some services, although handy to have in the long run, are a sunk cost if you are unable to utilize and maintain productivity in that department,” he adds.