Printed headline: European LCCs
While European low-cost carriers might offer a similar product to passengers, beneath the surface their maintenance needs can be very different. Maintenance strategies, it seems, depend less on an airline’s business model and more on its stage of development.
“We do 90% of our maintenance in-house,” says Michael O’Leary, CEO of Ryanair. “We have big MRO centers in London Stansted, Glasgow Prestwick, Dublin and Frankfurt Hahn. We contract out some of the MRO work, but typically less than 5-10% of our fixed-base maintenance and usually only to vendors that offer a low-cost option.”
Icelandic low-cost carrier Wow Air has the exact opposite approach. “We outsource most of our maintenance, and I don’t see that changing,” says Ragnhildur Geirsdottir, chief operating officer at Wow Air.
Why do two airlines, operating on the same continent with similar business models, follow such different strategies? “As airlines mature and gain experience, their maintenance strategies evolve,” says Richard Brown, principal at ICF. “Their fleet size typically grows, and what was suitable for a startup with a smaller fleet may no longer be appropriate and cost-effective for a larger fleet.” Ryanair is a low-cost veteran with more than 440 aircraft, while Wow Air is just seven years old and has 20 aircraft.
Con Korfiatis has been involved in several start-up airlines and is currently CEO of Saudi Arabian low-cost carrier Flyadeal, which launched in September 2017. “Not surprisingly, no low-cost airline starts operations and sets up their own maintenance organization. We’re no different in that respect; we look for outsourcing options,” he says. “That’s an easy thing to say, but putting it into practice takes a bit of work. It just depends what options are available in the jurisdiction that you’re in.”
Choice is a luxury that is not always available—there is one MRO in Saudi Arabia. Fortunately, that sole provider is one of Flyadeal’s Saudia Group sister companies, but Korfiatis is still working to drive efficiencies and keep costs down.
Airlines battle for survival in an ultra-competitive market, and they want to see suppliers come under the same pressure to perform. “We want the supplier side to be just as rigorous. Unfortunately, with the nature of how capital-intensive this [MRO] industry is, it’s not happening,” says Korfiatis. “[MRO facilities] take massive capital investment. You need economies of scale to make them work.”
Wow Air has experienced similar problems and may be forced to look beyond its home market for maintenance suppliers. “We have a hub in Keflavik, and we do our own line maintenance there. We don’t do our heavy maintenance in Iceland, because nobody [independent] really does heavy maintenance in Iceland, so we fly to Eastern Europe to do it,” says Geirsdottir.
Ferrying goes against the low-cost business model because it costs money and affects aircraft utilization. This is something that Central and Eastern European low-cost carrier Wizz Air is trying to address by regionalizing its maintenance strategy.
Wizz Air, which has been flying for 15 years and has a fleet of more than 100 aircraft, retains maintenance planning in-house but divides its line maintenance into four large regions that are put out to tender. One lead supplier has responsibility for all the bases in its region, which can total 20-40 aircraft, and they are given autonomy to handle situations as they emerge. “It’s your aircraft. Make sure you can recover this,” says Heiko Holm, chief technical officer at Wizz Air. “How you do it is up to you.”
The northern region is one of the biggest, mainly handling Poland. The central region covers Hungary, Romania and Moldova. The southern region handles the Balkans, all non-EU states and Bulgaria, while the eastern region spans Lithuania, Latvia and Georgia.
In Wizz Air’s younger days, the work was done locally, but each package covered just three or four aircraft. Nowadays, Wizz Air needs to work with companies that can handle the pressure of a large and rapidly growing fleet. “The key thing is we work as partners; it is not a customer/supplier relationship. We need a reliable partner,” Holm says. “Through these partnerships, Wizz Air hopes the local MROs will grow their capabilities.
“We believe the local maintenance environment still needs to be developed further. Eastern Europe has some good areas, but it also has some weak areas,” he adds.
Despite this bottleneck, Wizz Air has no immediate plans to open up its own MRO facility, because it would face the same skills shortage as existing providers. “Short-haul maintenance technicians and hangarage are not something that can be developed overnight, so we have to have a joint approach with maintenance providers,” Holm says.
Partnerships are a key theme in Wizz’s maintenance strategy. Lufthansa Technik is one of the airline’s “backbone” providers, along with a range of other suppliers, including OEMs. All of Wizz’s work is tendered out.
“We are an ultra-low-cost carrier. Ultra-low-cost does not mean cheap,” Holm says. “We have high-end maintenance providers in our portfolio because we rely on their services; we believe in their processes and their structures. We still have the same requirements from an aviation-authority perspective, and we expect high utilization and high reliability.”
Every 3-5 years, the airline’s needs change and supplier capabilities move on, so even the backbone contracts are retendered. Holm wants to make sure the MROs stay alert and on top of their game. “We believe in competition, not only for pricing but also for innovation. If you are within your boundaries and don’t have to do anything else to refresh your boundaries, you are not developing anymore. It can’t be healthy,” he says.
Holm wants MRO providers to offer a sustainable product, be innovative and anticipate the airline’s individual needs. “You expect them to look ahead, to see what will help the operator achieve their goals. Service orientation is the key word here,” he says. He believes predictive maintenance will create a “step change” in reliability and planning, helping soften the impact of the skills shortage, but he also has concerns over the role of the OEMs. “It has to be very clear from the beginning who owns the data provided by the aircraft. What we don’t want, and what we cannot accept, is an automated data feed from the aircraft into Airbus.”
Wizz Air is not alone in this view. Christian Langer, chief digital officer at Lufthansa, believes airlines should be able to choose whether connected-aircraft data is shared with the OEMs. “This is something we want to change. We want to have control of this data immediately,” he said.
Lufthansa’s own low-cost carrier, Eurowings, unsurprisingly uses Lufthansa Technik as its main supplier. “Our strategy firmly aligns with the strategy of the Lufthansa Group as a whole,” says Hannes Pferdekamper, Eurowings head of technical strategy and reporting. The group pools its maintenance requirements and is “constantly” putting work out to tender.
“As our main fleet is based in Germany, the line maintenance is done there. For base maintenance events, we are using providers all over Europe, especially in Eastern Europe. As we are operating mainly a short-haul fleet, base maintenance in Asia is not relevant for our business due to the extensive ferry costs in comparison to the workload. Engine and component maintenance is carried out in Europe as well, due to the latest tender results,” says Pferdekamper.
Like Wizz Air, Eurowings prizes relationships. “In times of massive growth, reliable and flexible partners are key,” Pferdekamper says. He wants to see MROs better integrate with airline IT systems, improve their customer focus and be more innovative.
Other low-cost carriers change their maintenance approach because of a business model shift. “Running a short-haul fleet with a traditional structure is one thing when it comes to maintenance—you can have maintenance from one or two hubs—but when you fly across the world, it’s different,” says Tore Ostby, executive vice president of strategic development at Norwegian, which added long-haul operations in 2013. “We have a different strategy, when flying within Europe and to the U.S. That’s why we worked with [Rolls-Royce] TotalCare and [Boeing] Goldcare agreements. I think you will see more of that in the future. We still do most of our maintenance in our short-haul operation locally.”
The common need among all low-cost carriers, regardless of size, is schedule reliability. “Predictability, that’s No. 1,” says Geirsdottir from Wow Air, which uses Airbus’ Skywise product. “We have to keep reliability as high as possible, so it doesn’t affect our on-time and operational performance. We are trying to collect more of the information from the aircraft so we can be preventative.”
Johan Lundgren, CEO of EasyJet, concurs. “The biggest cost issue we have is the cost of disruption, delays and cancellations. [Those consist] of hundreds of small elements, so you need to identify what those elements really are and then apply the data to solve that.”
EasyJet has been working on maintenance innovations ranging from ash-detection technologies and drone-based inspections to software to cut the cost of fan blade replacements and predictive maintenance through Airbus’ Skywise. Lundgren says 130 aircraft have now been equipped with sensors.
“We look at individual aircraft performance and compare it with twin aircraft that have done a similar thing. When the aircraft comes in for its normal check, you’re replacing parts that actually look OK, but you know that in three months the likeliness is that they will fail. Then you would have a problem with the program,” says Lundgren.
This is just one part of EasyJet’s evolution to a fleet of more than 300 aircraft over the past 23 years. “Pre-2010, we outsourced everything, but we very quickly realized we needed to build up intelligence in-house, so we have steadily done that and have a very good Part M operation, which is fully functional now,” says Swaran Sidhu, head of fleet technical services at EasyJet.
Low-cost carriers may not have the same maintenance approach, but they have the same core needs. They are looking for reliable, competitive, innovative suppliers—in-house or external—rather than the cheapest option. Their goal is schedule reliability, and whoever delivers that will, ultimately, be the lowest-cost option.