Aircraft maintenance usually slows during the traffic peak of summer, but maintenance news was plentiful in July at Farnborough. At times, the airshow looked like a maintenance conference, so fast did the aftermarket press releases fly.
Maybe that is appropriate. Commercial aircraft maintenance is now a $66-billion-a year business, and it is changing just as fast as new aircraft. Airframe, engine and component OEMs continue to increase their roles in maintenance, or asset management, as it is now called because of the wider responsibilities for pools and parts suppliers take on. The much-discussed move to predictive maintenance through more data and smarter analytics is picking up real momentum as more firms compete to do the job. Other innovations such as inspections by robots and unmanned aircraft and additively manufactured repairs are beginning to happen, though without much economic impact so far.
What does it all mean for airlines? OEMs say they are designing more durable, less maintenance-hungry equipment and their flight-hour programs will save airlines money. But evidence is mixed so far.
Start with the OEMs. GE Aviation was busy at Farnborough, bringing 1,400 Southwest Airlines CFM56s, 28 more Turkish Airlines CF6s, Emirates’ 54 GE90s, TUI’s GEnxs, Austrian Airlines’ 10 GE90s, Thomas Cook’s CF6s and EgyptAir under various TrueChoice agreements, the engine-maker’s new, flexible program for providing support, provided the right parts are used. CFM International finalized a 12-year services agreement with LATAM Airlines Group for 35 CFM56s. Air Canada signed a services agreement with Pratt & Whitney for maintenance of PW1500Gs on 45 to 75 Bombardier CSeries aircraft for 15 years.
Even for the aircraft manufacturers, the bigger news was on the maintenance side. Boeing got the largest service contract in its history when Norwegian Air agreed to put up to 200 737 MAXs, plus its 787s, under GoldCare. Airbus’s Satair Group will provide Integrated Material Services on 15,000 part numbers for Cathay Pacific Airways’ 48 A350 XWBs, while Azul Brazilian Airlines signed a 12-year contract with Airbus for flight-hour component support on A320s. Bombardier’s Smart Parts program will support components of airBaltic’s 20 CSeries aircraft for at least the first five years of operation. And ATR joined its fellow regional aircraft OEMs by announcing it will also go into the maintenance business, although not in too big a way at first. Mitsubishi Aircraft Corp. has already started to name its preferred maintenance providers for the MRJ. And component manufacturer UTC Aerospace signed Asiana Airlines and Copa Airlines up for landing gear and AirAsia for nacelle support.
Outsourcing of maintenance and asset management is not confined to OEMs, or at least OEMs alone. Lufthansa Technik uses its airline buying power, maintenance expertise and logistics network to partner with OEMs for many customers. It has signed new long-term agreements for maintenance on GE9Xs and GEnxs, will become a member of Pratt & Whitney’s Geared Turbofan maintenance network, and will do mobile maintenance on several Pratt engines. LHT is now opening a new warehouse for components on A320s and A330s at London Heathrow. AFI-KLM E&M will support Thai Airways components on A350s.
Partnerships in maintenance sometimes lead to complete mergers, some successful others not. It should not be surprising that the organization of the aftermarket continually shifts. In 2016, ST Aerospace shed half its equity stake in aircraft lessor Keystone Holdings, and SIA Engineering Company shed its smaller shares in Hong Kong Aero Engine Services and Singapore Aero Engine Services. Rolls-Royce took complete control of Spain’s engine maintenance and manufacturing company ITP. Rolls and Mubadala Development Co. are planning a maintenance and manufacturing center in the Emirates, and Mubadala is selling 80% of its stake in SR Technics to China’s HNA Aviation. $40 oil has consequences.
Part of the OEM pitch for flight-hour deals is that they know their products, and part is that they can gather more fleet-wide data and interpret it better than anyone else. Here too, GE is being aggressive. It is building on its expertise in aircraft and other engines to develop Predix, a cloud platform for gathering and analyzing engine and any other data airlines may choose to collect. By August, data on 35,000 engines and more than a hundred apps were running on the new system.
Other OEMs are joining the Big Data evolution, though in different ways. Boeing announced it will provide six customers with advanced analytics on more than 500 aircraft. And perhaps looking toward even more ambitious data-crunching, Boeing and IT giant IBM have partnered to build a new platform, to run on Microsoft’s Azure cloud, for commercial aviation analytics. Airbus has enhanced its AIRMAN system with an Expert module to help airline staff troubleshoot inflight problems and has developed a new tool, Prognostics and Risk Management, to analyze trends that could indicate problems ahead. It too is working with IBM’s data scientists.
Regional aircraft OEMs are on the same path. The new Embraer E-Jets and Bombardier’s CSeries will generate significantly more performance data than their predecessors. Oliver Wyman consultants predict that commercial aircraft will be generating 98 exabytes of data by 2026. They note OEMs are ahead in interpreting all this data, and urge airlines to concentrate on high-return analytic projects.
Most of these efforts will exploit the increasingly rich data generated and partially analyzed onboard by each new generation of aircraft. For older aircraft with less abundant data capabilities, UTC Aerospace Systems is introducing Pulse, an aircraft health management system that can exploit older sensors, get the data off aircraft and analyze it for airlines or simply pass it on for airline analysis.
Related to, but different from data analytics, is the continued push to modernize maintenance management systems. Mxi Technologies’ Maintenix seems to be snagging the biggest fleets recently, but Commsoft, AMOS and a host of other, sometimes specialized applications are also gaining new customers. The aftermarket is steadily moving toward digitizing as much of its administrative, execution, planning and trading activities as is practical and affordable. Short-term, digitization saves clerical efforts, time and errors. Long-term, it leads to smarter maintenance.
NextGen avionics installations are another multi-billion dollar retrofit activity. Aircraft connectivity is also a major retrofit drive, as carriers see revenue benefits in cabin connectivity and operating benefits in cockpit links.
Geographically, Chinese and Asian MROs are seeing the most growth, reflecting faster traffic growth. But the Middle East is starting to flourish as well, with joint ventures between regional and global MROs underway, in development or planned. And Eastern Europe and Russia are the homes of some very busy young firms like Magnetic MRO and Volga-Dnepr.
Robots at work
Technical innovations are picking up speed. Unmanned aircraft and robots will soon do fuselage inspections better and more safely than humans on 20-foot scaffolds. OEMs have long printed plastic parts for aircraft interiors, but airlines and MROs are now starting to print plastic trays and tables rather than wait for sluggish deliveries. 3D metal printing is tougher, but engine OEMs are now doing it, and aftermarket printing may not lag far behind.
Sometime progress comes from smart low-tech. One remedy for pricy OEM replacement parts has been a burgeoning trade in used but serviceable parts, 12% of part sales in 2013 and growing at 5.6% a year, according to ICF International. Dealers in these money-savers have been acquiring or setting up their own tear-down facilities to keep supplies flowing. But OEMs are also moving aggressively into the used-part market, seeking to regain control of aftermarket pricing.
What has all this change in maintenance performance, technology, organization, analytics and digitization, and scrapping bought airlines so far? It depends on what data are used. US carriers cut maintenance cost per flight hour dramatically in the four years after the 9/11 terrorist attacks, about 23% in constant dollars. That makes sense as airlines shed old, maintenance-hungry jets, outsourced heavy work and put severe pressure on in-house shops.
Then flight-hour maintenance costs drifted up, nearly reaching their 2001 levels by 2013. Easing up on labor austerity, doing deferred maintenance and newer jets getting a little older might explain that. But in the past two years, unit MRO costs have come down again. Are these savings solely because of to new-gen aircraft, or are more durable cost-saving moves beginning to pay off?
Very limited data on global maintenance costs tell a slightly different story. IATA has consistent data on direct maintenance spending of 23 airlines from 2010 to 2014. The association reports that direct maintenance cost per flight hour increased 12% in nominal terms over these four years, which works out to 4% in real terms over a span in which US costs were essentially flat.
These are both crude comparisons. They ignore changes in aircraft age and size, average stage length and other factors. They do not count gains that might be purchased by more maintenance spending, such as improved reliability and better fuel efficiency. And a focus on MRO spending ignores the possibility that OEMs might be discounting initial sales to lock in long-term support deals.