Boeing designed the 787 to do many things, but boosting revenues for aftermarket providers is not one of them.
The airframer’s stated targets for 787 MRO center on a 30% reduction in airframe and systems maintenance costs once full check-interval escalations are reached. The primary driver is composites, which make up more than 50% of the airframe’s weight and, says Boeing, should reduce worker hours 20% on a per-heavy-check basis.
Before the 787 entered service, Boeing’s most composite-centric airframe design was the 777, at about 12% of airframe weight; Airbus had the A380’s airframe at about 25% composite. (The A350, which followed the 787 into service, is about 53% composite.)
Boeing’s thumbnail cost projections, provided in its latest Aircraft Economics Handbook, illustrate how far aircraft design has come in improving MRO efficiency. The original equipment manufacturer’s (OEM) example of monthly maintenance costs for 787-9 airframe work are about $10,700, or $300 less than projected costs for the 737-900ER.
Aviation Week’s latest Commercial Fleet & MRO Forecast data puts the financial ramifications of the 787’s advanced design in perspective. Projected total airframe maintenance costs for the entire 787 family for 2016-25 are just under $1.5 billion—a minuscule 3% of the $44.6 billion in total MRO costs in the 10-year period. Component maintenance is projected to be $15.6 billion—the largest share of the 787 aftermarket pie—at 35%. Line maintenance, at $14.0 billion, is a close second, at 31%. Engine work is expected to set operators back $9.9 billion, or 22% of the total, while modifications will account for $3.8 billion, or 2%.
The market is set to mushroom as 787s continue to enter service, bolstered by planned production ramp-ups that will take monthly rates from the current 10 to 14 by the end of the decade. The 787’s 2016 MRO market is projected to be $1.1 billion. In 2025, the figure is forecast to swell to $8.3 billion, nearly 20% of the total for the entire decade.
While composites are praised for their lighter weight and imperviousness to costly corrosion compared to metal, they also bring new inspection and repair procedures. Cognizant of the need to keep aircraft flying following ramp rash and other minor dings, Boeing’s special “quick repair” kit enables certain types of damage to be fixed outside the hangar. The kit includes 10 types of adhesives, various patches, sanding disks and special protective gear.
As manufacturers design models with an eye toward trimming maintenance costs, the battle for aftermarket dollars is intensifying. Components—growing more sophisticated, reliable and expensive—are a particularly competitive market, in part because of OEM interest.
Boeing’s deal with Oman Air, announced in July, is typical of agreements manufacturers are landing. The carrier will tap Boeing’s Component Services parts exchange program, loadable software airplane parts, and condition monitoring through airplane health management for its 787 fleet. The carrier has six GE-powered 787s, a mix of -8s, and -9s. The first is slated to enter service in late October.
Boeing has targeted its high-margin services work—everything from pilot training to MRO support—as a growth opportunity. Its estimated annual aftermarket revenue, which it does not break out, is $6.5-7 billion, or 8-10% of its total commercial revenue.
Its GoldCare deals play a role in boosting aftermarket growth—more than 60 customers and 2,100 aircraft use some type of GoldCare suite offering.
The 787’s ramp-up should help boost these figures. At the end of September, Boeing had delivered 329 787s. Aviation Week figures project another 1,743 from 2016-25, factoring in anticipated production ramp-ups and continued “catch-up” deliveries that have seen Boeing’s delivery numbers exceed monthly production numbers.
After an inauspicious in-service start that included dispatch reliability problems and the infamous four-month grounding in early 2013 while a portion of the aircraft’s battery system was redesigned, the aircraft’s reliability has steadily improved. By mid-2014, dispatch reliability was at 98.5% on a three-month moving average, and was pushing 99% by mid-2015.