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Airbus Internally Split on Royalty Fee Plan

It appears there was not consensus between the OEM’s customer support and services organization on the controversial fees.

LONDON--Airbus seems to be a house divided when it comes to its proposed controversial royalty fees on MRO invoices. It appears that people within the OEM’s aftermarket customer support organization supported the fee to offset significant costs the group incurs for updating the data, while many in the Airbus Services group opposed it.

The royalty fee proposal has alarmed MROs and airlines and “was the elephant in the room” at Aviation Week’s MRO Europe, says Jonas Murby, an AeroDynamic Advisory principal.

Airbus recently notified MROs that provide third-party Airbus maintenance services and use AirbusWorld, its online portal for data and drawings used for maintenance, that it intends to charge a 1.5% royalty fee on MROs’ gross invoices—including labor, parts and services. The royalty fee, which would start in 2020, is in addition to the annual fee that MROs pay to access the technical data.

The driver behind the move is an internal push by the aftermarket support group to offset costs for updating technical data. More than a year ago, Airbus’ technical data department, which is a cost center, wanted to become a profit center, but to do that needed $100 million to balance the budget, a source close to Airbus tells Aviation Week. “It costs a lot to update technical data” and other digital drawings used in maintenance, says the source.

An Airbus spokesman declined to verify the figure and said the company does not discuss “internal confidential matters.”

After assessing the market, part of the Airbus support team determined that maintenance organizations use the Airbus data to generate more benefits, so they should be charged for that, say sources.

This aligns with a statement Airbus gave Aviation Week in late September, when it said, “Airbus is investing significantly in the data updates, data upgrades and most importantly in the digital solutions for the benefit of the MRO organizations.” Airbus also said the new royalty fee initiative “is designed to collect remuneration for the usage of its IP by the users and the MRO organizations, which are the main beneficiaries of its IP.”

Despite pushback from the services organization, the customer support organization proceeded with its plan, and notified MROs via letters.

The customer support organization is now faced with angry airlines and MROs. At least one MRO is considering whether to leave the Airbus MRO Alliance over the royalty fee.

Several airlines have expressed their concern to Airbus but have not received responses. As one airline executive says, “We don’t see it (the fee) as appropriate because as an operator, we already have paid fees” for maintenance data.

IATA says Airbus’ royalty fee plan is “of great concern to IATA in that it will lead to cost increases impacting the industry’s operations and efficiency.”

MROs have several complaints about the proposed royalty fee and sources say they do not intend to sign the Airbus agreement by the Oct. 31 deadline.

What happens after Oct. 31 is not yet clear.

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