Multiple Ways Irish MROs Find Service Niches

Ireland-based independent MROs, with the benefit of low costs and proximity to Europe, are strong competitors in many service areas, notably leasing support.

Ireland’s dominance of aviation leasing has attracted strong support from a variety of small, highly skilled technical companies.

For example, Fergal Whelan-Porter, CEO of Aeolus Engine Services, came from maintenance positions at Pratt & Whitney, SR Technics and Chromalloy. “Aeolus manages engines as assets from both the technical and commercial side for the whole life-cycle,” he explains.

Aeolus has entered engine leasing in a minor way, with two owned engines and 20 engine leases under management, to support its main business of helping with engine maintenance. It focuses on legacy CFM56s, whose support OEMs do not dominate as they do new powerplants. “The -7B has another 20 years,” Whelan-Porter predicts. “The -3B is in sunset, but I believe there is a resurgence as airlines go from MD-80s to 737s.”

For these veteran engines, Aeolus aims for “maintenance with a purpose,” doing just the right on- and off-wing work to preserve performance and value. Whelan-Porter argues Aeolus has “a dying expertise” that many airlines no longer possess. The company has Continuing Airworthiness Management Organization (CAMO) approval from the European Aviation Safety Agency (EASA) and charges a fixed monthly price for tracking life-limited parts (LLP), service bulletins and airworthiness directives, troubleshooting on-wing problems and recommending shop work-scopes. Whelan-Porter says he can save 30% on maintenance spending while improving performance, time-on-wing and fuel efficiency.

The company downloads engine alerts using the Aircraft Communications and Reporting System (ACARS) or via Iridium satellite, then its software reports on engine conditions. “We know everything about clients’ engines, we monitor every flight cycle, know what’s been changed,” he stresses.  “We schedule and work-scope maintenance and see operations. We are more in touch with client engines than OEMs.”

Aeolus can be a de facto power department for the 80% of airlines that cannot perform this function in-house. It specializes in servicing small fleets that do not attract sufficient attention from major MROs. Whelan-Porter says few independent providers offer such comprehensive engine services.

The company advises on 70 engines now, and expects to be helping on more than 200 by the end of 2016.

The Aeolus CEO sees engine-leasing companies bearing extra cost burdens in three areas. First, regulatory disharmony, on which he sees little progress. Second, the industry needs to standardize lease terms. Third, lessors need to move to digital record-keeping and away from paper. Aeolus will release software to digitally track LLPs in 2016.

Other technical service companies cover the entire aircraft, but focus on helping lessors. For example, Acumen Aviation’s head office is located in Bangalore, but it also has offices in China, Dublin and the U.S., notes vice president-business development Martin Corcoran, who came from a maintenance background at Team Aer Lingus and SR Technics. The company chiefly helps leasing companies manage aircraft assets. This includes doing 2- or three-hr. walk-around inspections of aircraft in mid-lease, plus inspecting aircraft records, electronically whenever possible. Acumen also does the more exhaustive inspections at lease end.

To help ease the burdens of record review, Acumen developed its Adept software to scan and digitize paper records six years ago. COO Patrick Toner says Adept is among the top five record-digitizing products, with “somewhere below a thousand aircraft,” on the system. He estimates a sizeable portion of the global fleet now has digital records, a percentage that is growing but still restrained by some regulators. Toner acknowledges regulatory disharmony remains a leasing problem, but believes it is easing.

Irish MRO shops are very important to Acumen, and 70% of Acumen’s leasing clients have work done in Ireland. “There are lots of skilled engineers in Ireland, and it’s very efficient to deal with local maintenance shops. They have good skills, competitive costs for Europe, and English is the main language.” Acumen clients have used Dublin Aerospace and Shannon Aerospace, and Toner is looking forward to new providers and OEM investment to provide more local support.

Acumen is also looking at acquiring similar companies, seeking more customers in the Middle East and Africa, and expanding its offices in the U.S. and China. Most Acumen software is now developed in India, but Ireland also has skilled IT talent, Toner notes.

Another Irish company works on engines, but chiefly for lessors. The 11-year-old Aero Inspection International (Aii) has grown to 14 full-time employees, four part-timers and varying numbers of outside contractors. While it has a small battery shop in Dublin, Aii’s core business has been borescope inspections and on-wing boroblend repairs, explains CEO Liam Bagnell.

Aii inspects leased engines just before transfer to operators and just after return to lessors. Airlines could do this, but banks and lessors want independent evaluations. Aii also does emergency inspections for airlines, for example after bird strikes.

The company performs a couple hundred such inspections a year, mostly around the world and not in Ireland. Fortunately, modern 3-D, high-definition borescope gear is now compact enough to fit in overhead bins. Each engine takes a day to inspect, plus two days for travel. The company works across the globe, most frequently in Europe, Asia and Africa.

It’s not a sedentary business. To cut down on travel burdens and support Asian customers, Aii opened a Singapore office in 2014. It is starting to manage heavy checks and is managing heavy visits for two Boeing 747s in Singapore. Bagnell wants to diversify his business in the future: His son just earned an MBA in aircraft leasing and finance from the University of Limerick.

Strength in leasing and services helps Irish MROs, but they must still compete vigorously. Touch labor is cheaper in nearby Eastern Europe, and OEMs prefer keeping component stocks in the Paris-Brussels-Amsterdam triangle for quick shipment around the world.

Nevertheless, Irish shops are busy in several areas. For example, Dublin Aerospace is small but growing and supports landing gear and auxiliary power units (APU). Shannon Aerospace is another major facility on the West Coast of Ireland. It has five bays for checks, solid airframe back shops and the advantage of belonging to the Lufthansa Technik network. LHT closed its Irish engine shop, but Vortex Aviation, a U.S.-based engine services company, is setting up a 25,000-sq. ft. facility at the Shannon Airport to do aircraft-on-ground and light engine work.

Meanwhile, other Irish MROs are adapting. Patrick Jordan built a very successful non-aviation business, which he grew significantly each year. In April he bought a 50-year old Shannon MRO that had been owned by Transaero. “It is a good sector, and the company has a good reputation,” Jordan explains. He aims to make the renamed Atlantic Aviation Group, “20% better this year.” The MRO shed a hangar and 30 employees during financial stress in 2014. Its two-bay hangar is sufficient for two Boeing 767s, and Atlantic now has more than 200 employees. The company works through D checks on 737s, 757s, and 767s. Back shops include machine, structures, composites, battery, paint and heat-treatment.

Atlantic is busy and profitable now, Jordan says, doing checks and avionics upgrades. It has worked for Star Air, TUI Fly, ASL Aviation, Gecas, Aercap and many VIP operators.

The shop’s workforce is highly experienced, and Atlantic has won a global competition for the best maintenance apprentice two years in a row. Each year, it picks about a dozen apprentices from 400 applicants for a four-year training program.

Jordan wants to expand Atlantic, and nothing is off the table. Possible growth areas include Part 21 Design, Part M CAMO, and potentially the Airbus market.

The new owner has appointed a new CEO, Connor Flanagan, and argues that an owner-managed shop can be more responsive to customers. He plans to invest in Atlantic and own it for quite a while. The MRO now uses ADT’s Wings software, and Jordan would like to beef up his IT tools, or at least exploit them more fully.

Also in the west is Eirtech Aviation, with paint shops in Shannon, Dublin, Prague and Rome, it is now part of International Aerospace Coatings (IAC). Eirtech Aviation Services remains independent, offering high-value engineering, parts manufacture and asset-management services.

Group Resources Director Ben Whelan estimates IAC has about 1,000 employees and $100 million in annual revenue. “A big network can be very flexible in finding shops to match customer requirements. And we can integrate best practices across the network.”

Whelan expects IAC to open a paint shop in Asia in a few months. It is already one of the biggest independent shops for the painting tasks most airlines want to outsource now. IAC paints for premium customers like Boeing, Lufthansa, Qatar, United Airlines and Southwest Airlines.

But aircraft utilization is key in painting, and it’s a challenge to stay busy in summer. Nevertheless, Whelan says IAC may build a hangar for the Airbus A380. Its biggest European hangars in Dublin and Rome can work on Boeing 747s.

The group is spreading best practices. Whelan wants to reduce turnaround times—now 10 days for widebody aircraft and six to seven days for narrowbodies—without diminishing the quality that has earned 95% customer satisfaction. IAC has its own 24/7 graphics shop in Dublin, which speeds things up, and European painting facilities are available 362 days per year with two 10-hr. shifts.  

Eirtech’s asset-management business employs 50 to 60 specialists doing $20 million in annual revenue. It has design and production approvals and is a CAMO under EASA regulations. It chiefly advises clients—about three-fourths of which are aircraft lessors— on how to maximize their assets’ value, especially at transition time. Eirtech engineers also came up with a cabin-pressurization system that saved Southwest substantial expenditures. Now Eirtech engineers are focusing on Wi-Fi, in-seat power and iPad systems.

Irish experience, education and income levels favor leasing and technical services much more than touch labor for airframe checks and painting. The country’s shops will have to find very specific niches and exploit their proximity to technical experts and markets to compete with lower-cost labor to the east and south. 

TAGS: Europe
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