DHL Supply Chain has begun managing all of Cathay Pacific Airways' and Cathay Dragon's aircraft maintenance, repair and overhaul logistics activities at their Hong Kong International Airport home base, under a 10-year contract signed earlier this year.
The agreement calls for DHL Supply Chain to manage the storage, warehousing and domestic transportation within Hong Kong of all aircraft parts for Cathay Pacific and Cathay Dragon's aircraft maintenance operations at HKIA.
This means DHL Supply Chain will take overall responsibility for supply logistics for 80,000 specific aviation part numbers, components and equipment required to maintain Cathay Pacific's and Cathay Dragon's combined fleet of 180 aircraft.
DHL Supply Chain will also work with Hong Kong-based aircraft maintenance provider HAECO – which, like Cathay Pacific Airways, is majority-owned by the Swire Group but its shares are traded publicly on the Hong Kong Stock Exchange – to provide additional services, including parts inspection and airside operations.
“DHL has an excellent reputation and is tasked to perform safe and efficient supply chain management and handling in extremely complex environments, which adheres to Cathay Pacific's rigorous compliance requirements and operational standards,” says Neil Glenn, Cathay Pacific' director, engineering.
“The arrangement that we now have in place allows all three parties to concentrate on their specific core capabilities, namely: airline management (Cathay Pacific), aircraft maintenance (HAECO) and now, DHL will be responsible for the maintenance, repair and overhaul supply-chain management,” adds Glenn.
In order to begin managing Cathay Pacific Airways' and Cathay Dragon's aircraft maintenance, repair and overhaul logistics activities, DHL Supply Chain had to obtain regulatory approval from the Hong Kong Civil Aviation Department.
The parts supply-chain management contract also required employees from DHL Supply Chain, Cathay Pacific and HAECO to undergo nearly four months of intensive familiarization and training.
To manage the two airlines' aircraft maintenance, repair and overhaul logistics, a core staff of 120 DHL Supply Chain specialists will operate on a 24/7/365 basis to process approximately 1 million spares transactions annually.
The task involves the DHL Supply Chain personnel managing more than 90,000 square feet of warehousing space and offering round-the-clock transport delivery, as well as providing spares reporting and governance procedures.
In the initial phase of the Cathay Pacific/Cathay Dragon contract, DHL Supply Chain will begin introducing process improvements and will implement new supply-chain systems within the carriers' MRO logistics activities.
“DHL Supply Chain has invested heavily in building up its capabilities to service the aviation industry's exacting safety and compliance needs. With Hong Kong taking the lead, we are looking at extending this capability in the Greater China region, particularly mainland China and Taiwan,” says Yin Zou, CEO of DHL Supply Chain Greater China.
“This new deal makes Cathay Pacific both the top customer for DHL Supply Chain in Hong Kong, as well as a global pioneer in adopting third-party logistics for aviation maintenance, repair and overhaul,” says Jez McQueen, managing director of DHL Supply Chain Hong Kong and Macau.
“The airline and MRO world is rapidly changing, which means that the supply chain now has a very important role to help organizations meet both their customer promises as well as the financial returns that investors require,” adds McQueen.
What isn't yet clear is how DHL Supply Chain's new 10-year spares logistics contract with Cathay Pacific integrates with the airline's contract with Satair Group, signed in July 2016, to provide a complete end-to-end service for expendables and consumables on the carrier’s fleet of 48 Airbus A350 XWBs.
That contract saw Cathay Pacific become the first customer for Satair's new Integrated Material Services (IMS) contracting construct.
According to Satair Group CEO Mikkel Bardram, the IMS contract required Satair to provide all the procurement planning and inventory holding for Cathay Pacific's A350 XWB consumable and expendable parts.