Airlines always expect service centers and OEMs of rotable components to make a reasonable effort to stand behind their products or repairs, as stated in the written warranties. But as customers are learning, “some restrictions may apply.”
Warranty claim denials are not uncommon. The issue was raised by several international airlines and included in the program of the inaugural ARINC Mechanical Maintenance Conference (MMC), held Nov. 7-9 in Cleveland.
In the conference’s program, KLM states that it has long experienced warranty repair denials from OEM or other repair shops on the basis of claimed “customer-induced damage” (CID) or similar reasons or that damage found by the repair facility was “not normal wear and tear” (NNWT). KLM argues that such reasons for denials are not always substantiated.
“KLM’s opinion is that when a warranty is denied, the denying party (NOT the operator!) must provide solid proof of CID or NNWT, supported by clear pictures and explanations. And if in any doubt, the repair station should grant (the) warranty or, in some cases, come to some sort of agreement with the operator.” KLM also suggests that a formal NNWT definition/regulations document should be published and available globally. KLM did not respond to requests for comment.
Yann Cambier, senior manager at ICF in London, points out that a warranty claim may be turned down when the repair facility or OEM believes the unit’s failure is due to misuse, customer-induced damage or if the unit has been used outside of its operating envelope.
“For example, if an avionics box has failed due to a power surge, or if there is visible damage such as a dent, the OEM may deny warranty,” Cambier explains. “But if the unit has been operated normally, then the warranty should be honored.”
Jonathan Berger, managing director of Alton Aviation Consultancy in New York, says warranty disputes are a fairly systemic issue involving “a significant number of carriers,” especially those that have underfunded warranties management.
“The warranty management function is generally part of an airline’s engineering, maintenance or supply chain group, which are overhead-generating functions,” says Berger. “In times of cost-cutting, warranty management tends to be among the first areas to be cut back.”
Also affecting warranty management, says Berger, are the carrier’s information technology (IT) systems.
“Many large and small carriers are still using older IT systems that may not have the capability to flag a failed part or component that is still under warranty,” he says. “Or they might have this capability but could be unable to generate the documentation needed for a successful warranty claim.”
ICF’s Cambier says that “the more repair history traceability information airlines and MROs have in their system, the more they are able to detect if a specific unit should have been covered” under a new aircraft or repair warranty.
“A good detection system also enables airlines and MROs to focus on the suspicious warranty denials and therefore contest effectively the relevant cases,” Cambier remarks. “When challenging a case, it is important to compare the reason for denial versus the data available and see if the reason provided is valid or factual, or not.”
According to Sarah McLeod, executive director of the Aeronautical Repair Station Association (ARSA), among the major reasons why a repair warranty claim may be denied is that the claim itself may be unrelated to the work specifically described in the work scope. “There are warranties that are very specific to the actual workmanship,” she says.
A claim, she reports, may also not be honored because the warranty’s effective time period has expired. “For example, a repair done on a component may be warrantied for six months, but following the repair work, [the component] was put back in the airline’s stock and not installed on the airplane for another two years,” McLeod says. “If the part fails, then the shop can claim that the warranty long ago expired.”
She adds that in cases of that kind, some allowances may be made, especially if the airline is considered “an exceptionally good client” and the shop is convinced that the part was only recently put on the aircraft.
Because of the complexities involved, McLeod advises that people carefully read the warranty information, along with any disclaimers spelled out in the repair contract. “Often this comes down to what are the reasonable expectations of the customer and the limitations of the part’s design,” she says.
This, McLeod stresses, is why when a claim is made, it is essential to determine what caused the component’s failure: “Was it workmanship? Was it the parts used to make the repair, and did those parts cause the rest of the unit to fail?”
Craig Bries, senior director for customer support at Rockwell Collins’ Commercial Systems reports the No. 1 reason for warranty claim rejections is that the product is out of production warranty.
“The product warranty date is foremost when determining if a claim is valid,” says Bries. “The key to a warranty claim is if the verified failure occurred during the warranty period.”
In that regard, Bries points out that extensive documentation from the customer should be in hand. That should include a description and substantiation of the defect, equipment part number, equipment nomenclature, quantity of products claimed to be defective, along with serial number(s) and flight hours. In addition, the documentation must include the identification and delivery date of the aircraft on which the product was installed as original equipment, or—if purchased as a spare—the product delivery date, along with the date the claimed defect was discovered.
“If the correction [repair] was performed by the customer, the claim should be documented with the date the correction was completed, and an itemized account of the direct labor and direct materials used,” says Bries.
Southwest Airlines sees four common reasons for denial of warranty claims, says Kelly Greeninger, manager for fleet warranty.
“No fault found [NFF] ranks first, but that does not represent the highest cost to us when it comes to making repairs not covered,” she says. “Most costly is when a warranty is denied because of ‘customer-induced damage,’ which is the second-most common justification given for denials.” That, she notes, is followed by “malfunctions determined not to be related to a previous repair,” which she states “is nearly as costly as customer-induced damage.” At Southwest, warranty expiration ranks fourth, she adds.
“If a warranty claim is denied, we ask for a detailed teardown report from the OEM or other repair facility, as well as photos that were used to determine why the warranty did not apply,” Greeninger says. “We also ask the repair source to provide a quote to do the repair.”