The stresses in engine markets coming from new engine problems has highlighted a major MRO cost driver, even if OEMs have borne much of the cost rise. But long-term, airlines and lessors still have an intense interest in managing engine MRO as tightly as they can.
Fortunately, modern aircraft engines are magnificent equipment that generally becomes extraordinarily reliable over the years. “With the latest technology in materials, part modelling and manufacturing, most engines will operate for a long time before their first maintenance event, and degradation will occur from normal wear and tear rather than manufacturing problems or incorrect maintenance,” explains Miguel Martins, general manager of maintenance and engineering sales for TAP Air Portugal.
Nevertheless, because financial risks are extremely high, engine managers must at all stages carefully track applicable warranties and understand exactly which risks are covered by warranties. “This is particularly relevant for new engine types that are still undergoing entry into service, when possible problems need to be corrected under an OEM warranty,” Martins says.
Common sense urges warranty terms must be well known to operators. But warranty terms are very complicated and expressed in long and intricate legal paragraphs. So Martins recommends creation of dedicated, multidisciplinary teams of legal, technical and financial experts to keep a close watch on warranties and ensure that conditions required by warranties are maintained.
Another advantage of this team approach is that the warranty team can control other items, those excluded from OEM warranties. For example, OEMs generally provide warranties during initial engine life, but MRO suppliers provide varying levels of coverage for new and repaired materials incorporated into the engine, plus a regular workmanship warranty. These protections need to be understood, tracked and enforced as well.
And even non-warranty parts should be subject to strong controls because, apart from consumable or expendable materials, engine parts are very costly, and the costs of these parts show up during maintenance events. A portion of these costs are expected, based on fleet history and life limited parts, while the rest occur due to the specific condition of an engine, discoverable only during maintenance.
Expected costs can be minimized by anticipating requirements and getting the best alternative markets offer. But Martins says most operators have difficulty anticipating even known shop-visit requirements and initiating parts procurement. They thus miss the benefits of volume discounts, bundling opportunities and other supply-chain advantages. In principle, early procurement can be done by either operator or a well-informed maintenance supplier. And apart from cost saving, early procurement is needed to avoid disruption and delays in engine repair.