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New Generation – New MRO Landscape?

If new generation entrants alter the MRO market as expected and lead to less shop visits, this could see providers alter their strategies.

The influx of new generation aircraft and engines remains very much in full swing this year, with Bombardier’s CSeries becoming the latest in-service jet this summer, while CFM’s LEAP-1A engines made its debut in 2016 with Turkey’s Pegasus, with the -1B option anticipated for 2017. Pratt & Whitney’s PW1000G has also gradually grown its market presence this year after being delivered to Lufthansa in January to power its A320neo aircraft.

But as ever, with new products come new maintenance demands. If new generation entrants alter the MRO market as expected and lead to less shop visits, this could see providers alter their strategies. There are also other considerations, such as are OEMs offering the right level of support for MROs on their new products?

At Aero Engines Europe in Lisbon this week, these issues were discussed by a panel comprised of representatives from OEMs, MROs and airlines who shared their views on the impact of new generation products on everything from more consolidations and joint ventures to areas such as maintenance reserve rates.

With profitability among the key drivers of the industry, the economics surrounding new engine types was among the dominant topics, with the often turbulent OEM-independent MRO relationship forming the backdrop to this.

On this issue, Klaus-Peter Leinauer, regional vice-president Europe and CIS at Swiss MRO SR Technics, predicted a mixed outlook for costs associated with newer engines.

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“New generation engines will be more efficient, the customer will see an advantage in terms of reduced fuel burn and less cost, but I believe overall cost will be more expensive,” he said.

Giving the OEM perspective, Andy MacTaggart, marketing manager of the commercial engines and aftermarket division of Pratt & Whitney, said that while its GTF engine was designed with maintainability in mind – characterized by 2,000 less airfoils and no life limited parts in the fan drive geared system, he expects maintenance costs will be “in line with today’s conventional engines.” 

“From a total cost of ownership standpoint, the next generation engines will be driven by reductions in fuel efficiency by 16 per cent, a 75 per cent noise reduction and emissions down 50 per cent,” MacTaggart added.

Pressed on whether the cost of ownership on a LEAP engine will exceed that of its CFM56 predecessor following concerns from lessors and financiers, Jean-Thomas Rey, marketing manager commercial engine services at Safran Aircraft Engines, said a long-term view is required with the OEM looking to stimulate innovation and choice to create a more open MRO network for the LEAP engine.

“Right now we have around 30 providers and 45 shops servicing the CFM56 engine – we may not have the same for the LEAP but we at least want to give customers choice as this is good for airlines and competition,” he said, adding that like with the CFM56, he expects airlines to move to fixed price, time and materials contracts for the LEAP. This was reinforiced by Pratt’s MacTaggart, who said the engine manufacturer currently has around 80 per cent of its GTF customer based signed up to flight agreements on a choice basis. 

However, the notion that an OEM like Safran was opening the market was challenged by SR Technics’ Leinauer, who cited his firm’s frustrations at being unable to obtain licenses for both the LEAP and GTF engines.

“Despite opening the market the OEMs are still limiting the shops and heavily controlling the aftermarket, which from my point of view as an independent MRO provider, is a concern,” he said.

An in-depth write-up of Aero Engines Europe will feature in the October edition of Inside MRO.

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