Sometimes, engine OEMs that secure long-term support contracts when selling their engines will end up lifting important burdens from the customers when market pressures develop. That seems to be a least partially the case now in stressed-out engine overhaul markets.
“We’ve been talking about the engine shop visit bow wave for a number of years,” notes Richard Brown, managing director of Naveo Consultancy. “It has finally arrived.” But who gets hit with the wave’s financial consequences very much depends on the type of engine and support contract.
Engine shops are now full of engines such as V2500-A5s and CFM56-5B and -7Bs delivered over the past decade, while also busy with mature engines such as CF6-80s and PW4000s. At the same time, teething problems with GTFs, LEAPs, GEnxs and Trent 1000s are causing hospital visits to suck up shop visit slots. With parts scarce scare, as well, because engine OEMs and their suppliers can’t keep up with ramp-ups, retrofits and supporting the in-service fleets, it's a tight market. “So V2500s and CFM56s face part shortages, which lengthen shop visits,” Brown observes.
Parts are in short supply due to reduced aircraft retirements, especially for aircraft like the Boeing 767 in both cargo and passenger roles. Availability of both green-time engines and leased engines has fallen. “Operators such as Delta, United and British Airways have embraced bringing in used aircraft,” Brown says.
But airlines are often not the victim of these problems, due to the shift in engine-support terms. “One of the benefits of dollar-per-hour engine maintenance programs is that risk is transferred from the operator to the MRO provider,” Brown stresses. “Most new engines have been on some kind of flight-hour program with the OEM or their partners. Consequently, the OEM has compensated operators.”
These dollar-per-hour contracts have two clear advantages for airlines: first, better protection against in-service issues; and second, finding engine slot is the responsibility of the aftermarket contractor.
So the burden of tight engine capacity falls mostly on OEMs and major MROs that provide dollar-per-hour support for newer engines and more on airlines and lessors for mature engines, which tend not to be covered by dollar-per-hour programs. Mid-life engines such as CFM56s have a mix of contract types and thus mixed financial consequences.
Brown sees two other forms of possible relief. PMA providers with sufficient engineering talent might be tapped as an option by OEMs. And repairs can extend the life of parts and relieve new part supply chain. Finally, there has been one accidental solution. “The grounding of the MAX and any changes in production rates will allow the part supply chain, particularly castings and forgings, to catch its breath,” Brown says. “That can’t be a bad thing.”