A recently enacted agreement between IATA and CFM International tailored to ensure the manufacturer is not forcing its customers to use its parts and services has not changed much for the narrowbody engine supplier, executives at CFM partner GE Aviation confirm.
“There’s no material impact on our services business as a result of the agreement,” GE Aviation Services president and CEO Jean Lydon-Rogers said at an investor briefing held during the Paris Air Show. “The opportunity to work with IATA relative to this complaint was truly an opportunity to listen to our customers, and what it did was allow us to have a lot more transparency about our practices and a confirmation that we do support an open and competitive MRO market.”
The agreement, reached in 2018 and put into effect at the end of February, codified policies that CFM has in place for supporting its customers. While it contained a few new items, the policies—spelled out by CFM and published on its website—largely document existing standards and practices.
The move may not lead to wholesale changes, such as a surge in parts manufacturer approval (PMA) and other alternative parts usage, but the policies provide clear guidance on what customers can and cannot do with their engines. They also spell out what ramifications—if any—their actions may have in areas such as OEM warranties.
“The rules and regulations around PMA have been the same forever,” GE Aviation president and CEO David Joyce said. “Folks can come in and they can certify components to put inside the engines ... our job is to create a value proposition for original equipment parts that is better than the value proposition for PMA.
“I would say that the agreement we reached with IATA was more to ensure that, as you saw as that services market continues to be as big as it is in CFM, IATA wants to make sure that that market stays open,” he added.
GE and CFM co-partner Safran are riding a surge in CFM56 overhauls to record services revenues. The venerable engine model boasts some 28,000 in-service engines—most of them CFM56-5Bs and -7Bs that power some Airbus A320ceos and all Boeing 737NGs. Worldwide shop visits of the two models are approaching 3,000 and are not expected to peak until the middle of the next decade. By then, the first CFM LEAPs will be approaching shop visits, helping GE keep its aftermarket momentum going.
“We just went through a five-year plan with [Lydon-Rogers] a couple of weeks ago. I’m probably more bullish now than I was before we got together,” Joyce said. “We thought we would get [total GE and CFM] worldwide shop visits to 5,500 by 2020. We’ll actually hit that [in 2019], and we’re talking north of 5,600 by next year. And if we cast that out to 2025, it’s growing every year.”
While the CFM franchise is a primary driver, GE’s services business boasts diversity across thrust classes.
“We actually see growth in ... the GE90 and the CF34 through the next decade,” Lydon-Rogers said, referring to GE’s venerable widebody and regional-jet engine models. “So those have not even seen their peak yet. And it’s interesting to note that about 63% of our engines have had one or fewer shop visits to this point in their life. So there are quite a bit of shop visits ahead for us.”