Notes on SMI Future MRO Conference 29th and 30th Jan 2007.
Introduction:
About 100 industry people attended this year’s MRO Conference at SMI in London entitled “Future MRO in Civil Aviation”
IFA attended as observer and as exhibitor. It also provided a Workshop on Error Management following the main conference.
The speakers fell into the following categories:
Academia / 2Airframe Manufacturer / 1
Airlines / 7
Consulting Companies / 1
IT System Integrators / 1
MRO providers / 3
Regulators / 2
Trade Body / 1
(It should be noted that some MRO presentations were given by airlines supporting their claim to be third party providers.)
Almost all presentations and speaker details are on the SMI CD.
Day 1
Chairman Steffen Harpøth SHC Company
Steffen commented on the overall CAT growth rate which he believes is 5-6% and that MRO growth in the year will be half that. He did say however that outsourcing will continue thus providing better than average growth for third party MRO providers.
First Speaker Bruce Hunter BA “Current Position”
Bruce clearly showed how much BA maintenance policy has changed in recent years. He stressed the change to the MPD schedule away from highly customised schedules. He also stressed that BA now performs only mandatory modifications and avoids customised aircraft quoting the difficulty of the end of lease process. New technology aircraft also figured highly in the improvements in productivity.
BA are no longer providing third party MRO and have done a great deal of work on EASA Part 66 licences.
One slide showed the reduction in the size of BA’s maintenance base.
He also prophesised that A380 C or D Checks would never occur in Europe. Another quote was that he did not believe BA would buy another engine that was not “power by the hour”.
Other notable figures are on the CD.
Second Speaker David Stewart AeroStrategy “Evolving MRO Market”
David presented the annual report of his company’s view on the future of MRO. The facts are provided on the CD but some headlines are:-
- 2005/6 provided $39Bn in MRO revenue.
- Overall MRO Activity is 53% outsourced.
- Vast majority (85%) of line activity is in-house.
- By 2015 outsourced MRO will have reached 65%.
- Fleet growth this year is 4.1%
- Fleet utilisation is up by 5% per annum
- Engine growth is always above airframe growth.
- Airframe heavy maintenance declining but still showing +3% this year.
Major consolidation is going on in the MRO industry such as Boeing’s involvement and purchase of smaller avionic companies by large ones. He was also convinced that PMA parts are here to stay. He commented on P & W recent statements on this subject.
Finally he commented that there remains an oversupply of hangars! Apparently large constructions continue in the Middle East Region.
Third Speaker Peter Ellison Technical Director easyJet
Peter spent some time depicting EZY’s strategy and market position in particular rapid growth to a fleet of 121 aircraft.
He expressed concern that although he was happy with his MRO supplier he found that having no maintenance capacity with such a fleet was concerning.
- In the 1970’s airlines did their own work.
- In the 1980’s it was a seller’s market.
- In the 1990’s there was overcapacity in maintenance and falling rates.
- After 9/11 more downturn followed but LCC’s still grew.
- He was concerned that with projected growth EZY could outgrow its MRO provider.
- One quote was that “when one customer exceeds 50% of the capacity of its MRO there is risk”.
The message from the presentation was that EZY could decide to form a Technical Services Department.
Fourth Speaker Ron Elvidge VP Air Canada Technical Services “Emerging Trends”
The presentation was largely aimed at operators seeking a complete package of services including technical services, maintenance and end of lease management.
He commented that the Airbus MRO “Network” was aimed at keeping tabs on the fleet operating history.
Some interesting charts were shown comparing AC’s maintenance cycles and base visit periodicity. Some time was spent describing the CRJ maintenance, a type not widespread in MRO circles probably due to its low maintenance and, as yet, small fleets.
AC provides a good deal of its capacity to military work.
There was a guarded comment that AC Technical Services foresees problems as regulators costs cut and close smaller regional offices!
Fifth Speaker Mike McMenemy Senior Surveyor UK CAA “EU Common Rules for Commercial Air Transport CAT”
Mike spent some time covering recent legislation changes and the mandatory and non mandatory sources for EASA legislation. He also gave dates for final compliance with the new ARC (Airworthiness Review Certificate) how it would be issued and decreasing regulatory involvement – a major departure from traditional oversight by some authorities.
There was also clarification of who may hold and under what context Subpart G and I of EASA Part M.
It appears that all C of A’s will have expired (or will expire) on the 28 September 2007 to be replaced by the ARC. He also expanded on how individuals will qualify for ARC renewal.
It was pointed out that considerable opposition has come from the light end of the business in the application of EASA rules to GA. Something known as “MDM032” is underway to try to resolve the matter. (A description is available on the EASA Web site).
Mike gave a warning of a recent ruling that while national requirements for licences are acceptable for use within the country of issue, they are not valid for certification under that EASA pat 145 outside of the country of issue. This drew questions from several non EASA attendees.
Other questions followed from the decision to allow Subpart F organisations to release parts on an EASA Form 1 which while acceptable on non commercial aircraft are not eligible for installation on CAT.
Sixth Speaker John Milewski FAA National Policy Manager “PMA”
This presentation added to the knowledge of policy on PMA and certainly showed that PMA is alive and well in the USA. It appears (as mentioned by David Stewart) that a policy by PW will extend the scope of PMA providers.
The FAA stated that from an airworthiness position a PMA part is treated no differently from an OEM part. Other speakers identified a desire to use more PMA including BA.
Without a licence agreement from the OEM the PMA applicant must prove identicality. There are currently 500,00o parts holding PMA Approval. Apparently the marking requirement “FAA/PMA” on such items is to disappear.
The FAA expects the PMA provider to be responsible for continuous airworthiness data and support for the life of the part just as is an OEM. There is a slide coving these FAA requirements on the CD.
A panel discussion followed with Robert Avery (Boeing) Peter van de Pas (KLM) and Steve Morris (MXI Software) taking part.
Boeing used this opportunity to present “The B787 and Gold care” and how banks and leasing companies appear to be endorsing it as a value retainer for their assets.
As the Boeing facts emphasised the large reduction of maintenance many MRO industry attendees were attentive to Bob Avery.
As part of the Gold Care programme involved Boeing taking over “Maintenance Control” from the airline customer to Seattle some attendees expressed scepticism. Shannon Aerospace complained of timely Boeing response and questioned if a centralised control centre would be any more responsive.
Seventh Speaker Vanja Roller VP Croatia Airline Technical Services “Long Term Partnerships”
Vanja questioned the value of long term partnerships and appeared to direct his concern at mounting costs. His airline is relatively new and small but is proving that as it grows it is becoming increasingly concerned of the cost of what was probably the only solution to its MRO needs when it commenced operations.
A question from the session chairman asked if in-house capability was a way of precluding exposure to a high cost MRO outsource.
The answer from Vanja was non committal.
Eighth Speaker Bill Norman SVP United Airlines Services “In-House v Outsourcing”
Bill’s presentation is to be compared with that of Delta, NW and AA during MRO 2006.
UAL is 75 years old and facing Chapter 11. The creditors asked “why not outsource everything?” UA is therefore outsourcing about 50% of its MRO in terms of staff numbers. It continues to trim costs, seeks efficiencies and takes on third party work. It falls rather well in to the position taken by Delta last year. (IFA members may compare how Delta has fared since while NW, who outsourced almost everything, has done over 12 months.)
Day 2
Chairman Ian Harbison Editor MRO Management
First speaker Robert Avery VP 787 Services and Support BCA. “A New Airplane and a New business Model”
Bob opened his presentation by describing a Boeing policy decision that the 787 which is assembled in Seattle from components outsourced around the world will have all large items transported by air. To this end a number of B747’s are being converted to the “Dream Lifter” configuration.
This provides for the addition of an outsized section to the main fuselage and as a result this aircraft breaks a few records in total capacity and capability. Bob made no bones about the ungraceful shape, describing the first aircraft to receive its corporate paint scheme as “like putting lip-stick on a pig, its still a pig”
The main purpose of the presentation was two fold. To give critical MRO people an insight into the new product and to give Gold Care an early public showing.
So far as the 787 is concerned, Boeing has made a huge effort to provide a leap forward in costs, efficiency, maintainability and reliability. The presentation in this respect was convincing. (IFA readers should take the opportunity to review the CD.)
The matter of Gold Care has yet to prove that it can match up to its aims and undoubtedly carries a cost on those purchasers who take along with the new aircraft. It is a unique offering which Boeing is taking to the MRO industry alongside airline customers. It was announced by Bob that SR Technics has been appointed the first Gold Care Partner MRO in the world. There will be initially two more, one in North America and one in Asia.
The CD shows how the new organisation will take over much of the airlines maintenance organisation and it is recommended that IFA studies it. It crosses many hitherto boundaries in airlines, MRO’s, regulatory oversight and OEM involvement. It was not said how many 787 customers have taken up the programme.
Boeing believes banks and leasing companies favour Gold Care for its forecast value retention.
One questioner asked if full support for the new technology in the design would be forthcoming even if Gold Care was not taken up. Boeing confirmed it would.
Second Speaker Adrian Ionascu TAROM Technical Contracts “Low cost Maintenance Providers in Europe.”
The speaker provided facts and background to TAROM and its history. With Romanian entry to the EU, TAROM and others are clearly keen to win more western work. Man-hour rates are still a selling point but questions afterwards queried how compliance with EU rules would affect these.
Some intriguing figures were shown on the highly detailed slides.
Third Speaker Sukru Can Maint Director Turkish Airlines Technic “Evolving Maintenance Issues.”
Sukru was able to present complex issues in an engaging and light hearted manner. He was able to show clearly how culture change in THY has been an issue in the transition from a state carrier with few cost constraints to modern MRO. He was placed in several projects which were daunting to overcome.
Moreover recent Turkish legislation, no doubt with EU candidate status in mind, has introduced open skies within the country leading to numerous start up carriers. This has brought attendant challenges to MRO providers such as THY.
Several of the charts were very complex and not easily digested during the presentation.
Finally mention was made of a new THY MRO facility to be built soon.
Fourth Speaker Chris Markou Asst. Director Ops for IATA. “Airline Maintenance Costs Drivers, Benchmarking and Reporting”.
A very good presentation particularly for pie charts showing airline cost breakdown. Any organisation hoping to start up in Flight Operation or MRO would do well to study them.
The figures given are compared to 2005 and show clearly the huge impact of fuel price escalation. The down trend in some other costs was explained as merely comparisons with the rise in fuel as a proportion of the whole not actual reductions.
Chris outlined numerous areas where IATA members can use information on cost savings including maintenance from within IATA itself.
Interestingly IATA will provide advice on SB embodiment policy stressing its data on other member’s experience.
IATA found that legacy carriers carried more than double holdings of spares compared to LCC. No doubt some of this is due to the larger MRO’s holding stock not seen by IATA. Chris also mentioned the impact PMA is having.
Fifth Speaker Anders Engstrom Dir. Tech Ops Novair. “Using the internet for keeping control of aircraft records.”
This was an intriguing presentation which refreshingly made no sales pitch. Novair is a relatively small Swedish operator with a five Airbus aircraft fleet of two models.
The essence of the presentation was the way Novair had virtually instant status of all of its maintenance and operational records. This was demonstrated live on screen to the meeting. All records are held on a net based server and updated in real time by automatic capture of takeoffs and landings. Maintenance performed is entered via laptops by mechanics as the complete tasks. Certification is by encrypted electronic signature.
Management and crews etc can actually check on aircraft status before they leave home for work if they desire!
Anders stated that he had actually carried out a lease between two countries while the aircraft was still in the air due entirely to the confidence in his records.
Altogether a view into the near future!
Sixth Speaker Steve Morris Director Aviation, MXI Technologies. “Information Technology in MRO”
Steve gave an excellent presentation. (Unfortunately the CD does not have a copy loaded on it. For those IFA members who may wish to see the presentation it is possible to download it from SMI using the automatic links on the CD’s index.)
The MXI system is obviously complex and all embracing. Many companies are trying to promote their products to MRO’s and airlines alike.
Seventh Speaker Johan Bank KLM Engineering .”Lean and Six Sigma Techniques.”
“Lean” was the buzz word of the conference. Johan’s presentation was not an outright sales effort but took pains to describe how KLM Eng had overcome two particular production bottlenecks. The first was the production of overhauled wheels and the second that of mod kit assembly. The second being a most touchy and common problem in many companies.
Johan confirmed that in a people process, logic and management skills utilising teamwork does solve problems many of which emanate from “that was some one else’s fault” In KLM’s case Six Sigma was the tool.
Eighth Speaker Amir Ali Chief Engineer Development PIA. “Lean MRO”
This presentation showed figures of a large loss in the last year in the business.
Amir Ali gave a good performance though using in some cases overcomplicated slides which were not easy to interpret.
PIA has also embraced LEAN and Six Sigma and the example shown was dealing with the problem of maintaining a large fleet of wide bodies at numerous line stations worldwide during overnights.
Waste control has been an issue and LEAN techniques have helped. Considerable efforts were made to explain LEAN in the MRO environment.
Ninth Speaker. Dr Nick McDonald Trinity College Dublin “Human Factors”
In all respects a smooth and polished presentation. Exceedingly interesting for IFA as major points crossed over with those in IFA’s own workshop held the following day.
A new set of acronyms appeared such as HILAS and TATEM to prove that the Human Factors Industry is alive and well and living in Brussels.
Risk assessment was well covered and IFA found itself in accord with one position taken by Nick. That was the HF training alone will not counter human error.
Many more points made by Nick are worthy of further study by any concerned with human performance in maintenance.
Tenth Speaker Albert Boquet Chair Embry-Riddle University “Leadership and Training”
This was also a compelling presentation delivered professionally.
The slides moved close to airworthiness and air safety directly comparing outsourcing with safety incidents. The maintenance caused accident statistics were very different from IFA in that they included US GA accidents and fatalities compared to the IFA/Boeing base of ‘Hull Loss’.
For the first time, studies were presented on unsafe acts classed as deliberate violations as compared to ‘human mistakes’.
In all a thought provoking presentation.
A copy of the CD will be available through IFA but if any members do not have access please contact the writer and individual presentations will be forwarded by E Mail.
Phil Hosey
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