IATA CFM.jpg CFM International

PMA and DER Use Depend On Airline Actions

Lessors will follow lead of airlines and regulators.

August's CFMI-IATA settlement on PMAs and DER repairs announcement has left many in the industry unsure of its long-term impact. “It is too early to tell at this point,” says Brian Hole, president of engine lessor and asset manager Willis Lease Finance. “This settlement will only have a meaningful impact if customers, the airlines predominantly, demand competition and refuse, in every case, to accept an OEM-only solution.”

Hole says that, whether it is a question of spare parts, maintenance costs, spare-engine requirements sourcing alternatives or any item that affects cost of ownership, the engine buyer’s only real chance to insist on change is during discussions of new engine purchases. “If airlines are not willing to negotiate around alternative solutions then, there will never be an open market in real terms.”

The Willis CEO adds that it is difficult to assess the impact of the CFMI-IATA settlement on other OEMs’ policies because it is unclear what the results of the settlement really are.

Might leasing companies and asset managers increase their acceptance of engine PMAs and DERS due to the settlement? Hole says “putting any technical issues aside, PMAs and DERs are an issue for leasing companies for two main reasons.” First, OEMs say PMAs and DERs affect the quality of engines and engine parts, reducing residual values. Second, many airlines are not unwilling to accept engines with PMAs and DERs, due to either OEM or reliability concerns.

“The settlement suggests that at least GE and CFM are changing their view on the first point,” Hole says. “But their actions will speak louder than words.”

On the second point, Hole doubts lessors will change their view on PMAs and DERs until both OEMs and operators demonstrate unfettered acceptance of these options.

This wariness persists despite Hole’s generally favorable view of less-expensive support alternatives. “If authorities and customers believe PMAs and DERs can lower the cost of maintenance in a reliable and safe way, why shouldn't they be considered?” he asks.

Hole argues the same kind of approach should be taken to spare engines. “Customers ask why they have to purchase so many new spare engines when they can obtain the same operational support from a reliable, alternative source like our guaranteed availability service. We believe cost of ownership will go down if all viable options are permitted."

TAGS: Components
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