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Airline MRO Priorities In 2018: Satisfy Carriers And Passengers

With equipment utilization increasing and fare pressures ongoing, how carriers are keeping up with innovation and MRO cost pressures.

Printed headline: More for Less

The No. 1 maintenance priority for airlines in 2018 will be a product that no MRO can provide directly: satisfied passengers.

After all, people who fly are the ultimate consumers. Passengers take the convenience hit from technical delays. The fares they pay cover airline operating costs and determine how much airlines can afford for MRO services.

In the words of Wal-Mart founder Sam Walton: “There is only one boss. The customer. And he can fire everybody in the company, from the chairman on down, simply by spending money somewhere else.”

Airlines are making passenger satisfaction a responsibility for MROs, looking for end results on top of a business-to-business relationship. To succeed, MROs need to focus on delivering passenger benefits such as competitive pricing and reliable, on-time departures supporting a dependable airline brand.

COST AND RELIABILITY

TAP Maintenance & Engineering

TAP Maintenance & Engineering is rolling out a web portal where MRO customers can track the progress of their assets.

The problem is that passengers want low fares and robust schedules, but low MRO costs and high-quality work do not necessarily go hand in hand. Trying to strike a balance between those conflicting demands is a challenge for the industry.

“The pressure on efficiency and cost savings is very significant,” says Nikita Babkin, engine services director at S7 Group’s Engineering division. “Utilization rates are going up for the airlines in Russia—everybody is maximizing the use of their aircraft assets—that’s why the ability to quickly support and react to AOG [aircraft-on-ground] situations is very important.”

Turkish Technic’s senior vice president for aircraft maintenance, Birkan Guneralp, is seeing the same trend. “For a legacy airline like Turkish Airlines, aircraft availability is the most important priority. Demand is getting greater and greater. Every day airlines are trying to put their aircraft in operation as much as possible,” he says.

Increasingly, carriers are also expecting MROs to send people and equipment to the airline’s site and to work on their schedule. “They are expecting not only on-wing work but also hospital-maintenance work at their bases to further reduce their off-wing time,” Babkin says.

There is ongoing pressure to minimize overhead, putting “luxuries” like spare engines under the spotlight and an equally strong push to fix issues immediately. “Having spare engines sitting there at all times is an expensive way of operating an airline. The rationale is somewhere in the middle; you’ve got to get it right,” Babkin explains.

Alongside the tangible costs of a delay—such as schedule disruption, hotel bills and passenger compensation—there is also an intangible price to pay. “How do you measure customer dissatisfaction? The brand damage is very difficult to quantify, but it’s huge,” notes TAP Maintenance & Engineering vice president for innovation and development, Filipe Morais de Almeida.

PREDICTIVE AND PREVENTIVE MAINTENANCE

Predictive and preventive maintenance could be the answer to reducing unscheduled events, but the consensus is that this field is still young, and airlines are still in the wait-and-see mode.

Turkish Technik

Turkish Technik is increasingly seeing that customers want the MRO provider to come to them, not the other way around.

“Everyone is talking about predictive maintenance, but I believe we are still at an early stage. It’s not something everybody is using on a daily basis. It is a very good new approach that touches the limits of our knowledge, but I believe we need to wait a couple of years until we have some consistent output from all these innovations,” Morais de Almeida says.

That said, he sees significant potential benefits once these technologies are fully mature: “In my view, that will pay off, because the figures that we are talking about, the tangible figures, are huge. I think it’s worth the investment in this innovation. It’s not just fashionable and sexy—there is a real need to have better systems and to improve aircraft reliability.”

This creates another dilemma for airlines—whether it is worth spending money up front to minimize potential disruptions later.

“Naturally, airlines question whether they have to pay the money now, when they are only dealing with a risk, so the assessment of the risk is very important,” Babkin says. “We are seeing a change in the way airlines think. We do see people coming in and wanting to do preventive maintenance, but I wouldn’t say it’s the majority of customers. More work needs to be done jointly, by the MRO providers like ourselves and the airlines, to convince people to do that, but we definitely see traction from airline customers toward that. One year from now, there’s going to be a different answer.”

CABINS AND IFE

Another trend, highlighted by both TAP Maintenance & Engineering and Turkish Technic, is the push toward cabin upgrades.

Inflight Canada

Cabin upgrades are increasingly become important to customer satisfaction.

“There are a lot of modifications right now in terms of passenger satisfaction, like connectivity and better inflight entertainment (IFE). Right now, the IFE world is really evolving,” Guneralp from Turkish Technic says. He added that Turkish Airlines is performing a cabin interior and IFE modification program on its Airbus A330-200s, involving around 20,000 labor hours.

Morais de Almeida says TAP’s new management is also very focused on operations and customer satisfaction. “What we are feeling right now is that there is a change in the need for cabin interior modifications,” he says. We did a big retrofit on our entire fleet. We are also phasing in new aircraft, so from the maintenance side we need to have more flexibility to phase aircraft in and out quicker; but there is a big focus on the interior cabin refurbishments at this stage.”

SIMPLE, CLEAR AND FLEXIBLE CONTRACTS

Just as passengers want clarity and simplicity, airlines are demanding the same of their maintenance providers. They are looking for predictability, clear communication about the whole maintenance process, smooth transitions and greater flexibility.

With that in mind, TAP Maintenance & Engineering is rolling out a new web portal, where airlines can track the status of aircraft during checks and see cost estimates for any work that is required, in real time.

“Our focus is customer satisfaction; that is our goal,” Morais de Almeida says. “Through a web-based system, customers can approve all the additional work that needs to be done to the aircraft. It started with invoicing; that was the first idea because our invoicing took too long. But we picked up on a lot of things, and we are now trialing a platform where the customer can follow all the information from the inspection online and in real time. We have a test customer and, hopefully, next year this will be live as standard.”

EasyJet

Guneralp from Turkish Technic agrees that clear and realistic communication is a key concern for airlines. “Airlines are always looking for good planning. They want to know what will happen to their aircraft once it enters maintenance.” This is where experience comes in, because MROs with a long track record are able to better predict work and communicate this to the airline ahead of time. “If an MRO knows that there will be major outcomes and if it’s not shared with the customer, this is not a good way of doing business,” he says.

Time is a precious commodity for airlines, which must be budgeted. “The No. 1 thing they ask for is time,” chairman and consultant for Egyptair Maintenance and Engineering Hisham Hassan Nasser says. “Airlines want to know exactly how long the work will take. To meet this, you have to deploy a large amount of manpower to give them the required time they need.”

However, manpower is under pressure because of the skills shortage, and work done under time pressure can result in warranty issues. “It’s all about negotiating quality, turnaround time and pricing, so there has to be a balance somehow,” Nasser says. “If you have strong engineering and history, you can minimize the slot without compromising quality.”

VOLUME

For UK-based low-cost carrier (LCC) EasyJet, managing the sheer volume of its 280-aircraft fleet and reliably putting aircraft back into service is the focus for 2018. This will become an increasingly important priority, because by 2022 EasyJet’s fleet will grow to 360-370 aircraft.

“That’s a fairly big challenge, just the significant volume of maintenance demand and finding suppliers who can deliver on that volume reliably,” says EasyJet’s head of engineering, Gary Smith.

Wizz Air

He explains that airlines with smaller fleets can be more tactical with their MRO planning, but this option diminishes as the fleet increases in size. “As you get more volume—and you’re trying to plan out a whole year’s worth of programming—you need suppliers who can deliver. This is the value of a partnership with someone who can actually do what they say they will do.”

EasyJet partnered with Lufthansa Technik at London Gatwick Airport on a maintenance hangar that opened in May 2016 and is now looking quite closely at what work to outsource or keep in-house.  Before 2010, the airline outsourced everything. “I think we’ve got a good balance at the moment. Every situation we find ourselves in, every contract that comes up for renewal, every time we have more maintenance or a new program, we evaluate it on its own terms,” Smith says.

Maintenance makes up about 6% of EasyJet’s costs, or around £237 million ($314 million) of the total, but surprisingly for a low-cost carrier, the focus is not entirely on cost.

“It depends what the value is. It’s about what a supplier brings to the table; what is their core competency? Their core competency is in delivering maintenance, whereas we run the airline. What systems do people bring? What technology do they bring? For example, there’s a massive amount of intellectual property in engine maintenance, the test cells, the equipment, the process, the spares, so you need to know who’s got that value,” Smith says.

Innovation is a big theme for EasyJet, which is working on a number of advanced technologies, ranging from ash detection and drone-enabled inspections to predictive maintenance via Airbus’ new Skywise product. The airline is also rolling out an electronic sign-off for maintenance documentation, called e-sign.

But not every airline is pursuing its own MRO innovations and, once again, the parallel with the passenger is clear. Innovation is simply expected. “Airlines expect us to always come up with something that helps them to keep their aircraft flying as much as possible and minimize ground time,” says Hassan Nasser from EgyptAir.

The problem is that things are moving so quickly that the industry is struggling to keep pace, and there is a big question about whether technologies like predictive maintenance, smart sensors and drones will be sufficiently mature before the shortage of skilled workers really begins to bite.

“Aircraft designed in 2017 are being maintained by systems designed in 1970, and it’s starting to show,” Oliver Wyman Vice President Tom Cooper says. “The rate of technological change is accelerating so fast that it has risen above the average rate at which our industry can adapt to change, preventing us from benefiting from all of the new technologies that come along. We’re already behind the curve, and it’s only going to get worse”

While customer satisfaction is undoubtedly the top airline priority for 2018, this is likely to be an ongoing objective for many years. As Xerox Managing Director Vernon Zelmer says: “Satisfying the customer is a race without a finish.”

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