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Airbus May Rescind Royalties Proposal For MRO Invoices

Airline and MRO sources from around the world expect Airbus to retract royalty fee proposal before Oct. 31 deadline.

Airline and MRO industry sources say Airbus plans to rescind its unpopular proposal to charge royalties on MRO invoices.

The deadline for MROs to sign the agreement accepting the royalties’ policy is Oct. 31, with industry sources saying most do not plan to sign it.

This puts Airbus in an uncomfortable place—it angered airline customers, jeopardized the aftermarket business that it is trying to expand and instigated mistrust in part of the aftermarket community about the OEM’s Skywise platform, which is a key part of Airbus’ aftermarket solutions that it is trying to grow.

The controversial proposal started because Airbus was concerned that MROs performing third-party maintenance on its aircraft and using technical documentation in AirbusWorld were not paying enough for its intellectual property (IP). 

Airbus notified MROs via letter that it planned to start charging a royalty fee of 0.5% on total gross invoices in 2019, retroactive to Aug. 1. Due to short notice, however, the OEM decided not to charge in 2019 and instead impose a 1.25% fee in 2020 (instead of the original 1.0%), 1.5% in 2021 and “to be determined” in 2022.

Airbus told Aviation Week on Sept. 25 that “Airbus’ strategy is to collect remuneration for the usage of its IP by the users and the MRO organizations that are the main beneficiaries of its IP,” in which it invests significantly.

Airline and MRO sources say they have not received official communication from Airbus about the rescinded royalties policy, but several say they expect to receive the letter “imminently” or in the next couple days.

Airbus is not confirming that it is backtracking on the royalties policy.

However, it did tell Aviation Week on Oct. 24 that “Airbus is in discussions with MROs and airlines about our technical data policy. The content of these discussions is confidential.”

MROs are alarmed by the proposal on many fronts—from being double billed for parts it buys from Airbus to the auditing process—but they could not speak publicly without potential recourse from the OEM.

Airlines from around the world also expressed their concerns about the royalties to Airbus. Operators already pay to access necessary maintenance data and know MROs would have to pass on the royalty charge to them to cover the cost. As one major airline said, “We don’t see the fees as appropriate.” Another said Airbus “handled [the situation] very poorly.”

Throughout this process, Airbus has not clearly communicated its royalty fees proposal to the industry, which has fueled resistance by airlines and MROs.

Even if Airbus tables its royalties proposal for now, do not expect the issue to be resolved permanently.

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