The Rolls-Royce Trent 700 entered service 20 years ago, but the popularity of its platform—the Airbus A330—means the program has lots of life left, especially in the aftermarket. But shifting market dynamics—and the engine manufacturer’s increasing awareness of them—mean the future of Trent 700 maintenance will look much different.
Rolls is the OEM leader in capturing its products’ aftermarket. About 90% of Trent engines go out the door with a long-term Total Care agreement attached. While some span an engine’s entire service life, most are for 10-15-years. Those dynamics mean most Trent 700s in service are still under an initial agreement, which, in Rolls’s view, has minimized demand for more flexible aftermarket alternatives.
The Trent 700 program includes more than 1,500 engines delivered or on order—enough for a 58% share of the A330 market. Enough Trent 700s have finished their first service agreements to help form a picture of demand during the program’s mature phase, and operators are looking for more flexibility than Total Care was built to offer.
“There is always a second-tier opportunity, and we are typically contracting for between five and seven years for the second-tier operator of those aircraft,” Rolls President-Aerospace Tony Wood said at the company’s investor day in June 2014. It is after these second-tier deals that operators and Rolls often begin to have divergent goals.
Total Care’s goal is to offer predictable costs in exchange for a long-term agreement that helps Rolls cash in on product development. Rolls knows aftermarket revenue is worth at least four times the net price of a new engine. With a core set of offerings in a Total Care package, Rolls gains some control over aftermarket costs and a guaranteed revenue stream.
Core Total Care offerings include services like overhauls. But they also have elements such as reliability improvements and health monitoring focused on maximizing on-wing time and minimizing the risk of unscheduled issues. Add-ons such as spare-engine support provide customization opportunities, but the core elements are always the same, and are focused on the OEM’s main aftermarket goal.
“The most powerful determinant of cost in a service and support contract under Total Care is time on-wing,” Wood said.
The operator’s product development has followed the same philosophy, Wood noted, pointing out that improvements have doubled the Trent 700’s time-on-wing since it entered service.
Such focus pays off in predictable overhaul schedules. Rolls says 92% of Trent 700s stay on-wing until reaching the projected overhaul point, when a life-limited part needs replacement.
But as engines age and operators become more savvy, maximizing time on wing does not always trump all other variables. This is one reason that GE is industry’s biggest consumer of used serviceable material (USM). Used parts not only drive down overhaul costs, but they can help fine-tune a workscoping package that delivers a certain amount of time on wing.
As the Trent 700 fleet matures, operators are seeking more flexibility, and Rolls is rising to the challenge. Central to its strategy is Total Care Flex, the modified support program it has been piloting for more than a year that has landed at least one unannounced customer.
The pilot program’s main focus worked to reduce costs on Trent 500s that power Airbus A340-500s and -600s. While the program’s elements are still being finalized, it is expected to incorporate core engine maintenance cost-reduction elements, including USM, custom workscopes and repairs.
“This is about developing workscopes which fundamentally work to a different horizon,” James Barry, Rolls senior vice president for customer strategy and marketing, said at a conference earlier this year. “The risk-transfer balance is changing
. . . One customer may want a Total Care Life or Term solution, while other customers may want something different that allows them to plan over a shorter horizon.”
Barry emphasized that the evolution will include more independent shop work. “We expect choice in the MRO marketplace to increase,” he said. “The growth in the Trent fleet demands more capacity, and we expect independent shops to provide that capacity.”
While many see Rolls’s aftermarket network as a closed one dominated by the manufacturer, Barry noted that third-party providers including Egyptair, Emirates, Thai Airways and ADAT offer various levels of Trent 700 capability—a trend he expects to gain momentum.
“I think you’re going to see more T&M [time-and-materials] demand. I think you’re going to see all shops engaged in T&M on the Trent aftermarket,” Barry said. “You’re going to see the trading of assets. You’re going to see the breaking up of assets. You’re going to see [USM] coming out. Rolls-Royce is going to be very engaged in buying, distributing and managing used material, and I think other parties will be as well.”