Delta Air Lines' maintenance division transformed itself following the post-9/11 recession which pushed the carrier close to financial meltdown. Airframe heavy maintenance was entirely subcontracted when it was found that doing so could bring a 34% cost saving, while component and engine maintenance were targeted as the areas in which Delta TechOps could be price competitive.
With recession again looming, there can be no room for complacency. "I have been in this industry for a lot of years [and] the current economic and industry climate now is in my estimation one of the most challenging for our airline customers," says Delta TechOps' president Tony Charaf, who started his aviation career with Pacific Airmotive in 1979, joined Delta in 1996 and was promoted to his current position in March 2008.
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"Our strategy from the start was to outsource heavy maintenance to airframe providers," he says. "I don't do heavy maintenance in my shops. We went after what I call a niche market in the airframe business, because airframe is labour intensive. The margins in airframe, at heavy maintenance level, are not comparable to what you could do in component maintenance or engine maintenance. You come to us and say: 'I need this and this done to my aircraft can you help me with that?' and we do that on a flat-rate basis. We don't go time and materials. That has been very successful for us."
Airlines have naturally been reducing capacity in response to economic hard times, and this has brought a decline in Delta TechOps' by-the-hour engine maintenance business. To compensate, it has sought to increase the business it wins from leasing companies. "We're doing quite a bit of work for ILFC," says Charaf. "They are repackaging some aircraft and engines - they took it from one lessee now they have to repackage it and give it to another lessee - and we come into the picture heavily. Our intention is to continue to grow our relationship with lessors because that's a business that we can support better than anyone, because we can offer them what we call the 'fleet complete'. They give us an aircraft and say: 'Will you please make it serviceable? This is what we want - and, by the way, overhaul the engines while you're at it.' We can do nose-to-tail for them and that is a very attractive value proposition for the lessors."
Delta's merger with Northwest Airlines has brought an increase in maintenance capacity, though Charaf does not consider there to be overcapacity as the two companies' maintenance product ranges are complementary. "We are continuing to grow now," he says. "I have enough footprint right now in Atlanta [Delta Air Lines' base] and by the time we finalise the merger we are going to have additional hangars that we will definitely consider should we need that capacity going forward. We definitely have been aligned with the Boeing products [737NGs and 777s]. The merger with Northwest, when it's completed, will give us opportunities to expand our portfolio of services to include Airbus products under the TechOps umbrella."
The company has deployed lean manufacturing principles and the Six Sigma management strategy as part of its drive for cost competitiveness, but Charaf is emphatic that a non-unionised workforce is also essential to achieving his goals. "Being non-union, our people follow the work, and they give us a tremendous advantage when it comes to cost," he says. "I've managed shops in both environments [union and non-union], and I will tell you that if people say there is no difference, they don't know what they're talking about."
Engine maintenance volume is expected to total 650 engines this year, with around 50% contributed by external customers, in what Charaf characterises as a "huge departure" from the days of parent airline dominance. "It is a legitimate business that's here to stay," he says. "By the end of September, we surpassed what we did in totality in 2007 and added $25 million. It should tell you that our growth is phenomenal year over year."
Source: Flight International
