Manufacturers are taking on the third party MRO providers to get a bigger share of the auxiliary power unit maintenance and repair business
Auxiliary power units may once have been "out of sight, out of mind" for commercial airlines, up there in the aircraft's tailcone that ran on the ground to cool the cabin and start up the engines. But that changed with the growth of extended twin operations, for which the APU is an essential safety back-up, and the increasing focus on costs, noise and emissions.
For airlines, the cost of operating, maintaining and repairing APUs has taken on greater significance. Manufacturers are responding by finding ways to make APUs more efficient and reliable to operate, while easier and cheaper to maintain. They are facing competition in this from third-party replacement parts producers and component repair developers.
In terms of commercial aircraft maintenance, repair and overhaul, the APU is the third most costly system behind the engines and wheels and brakes and ahead of the avionics, says Hamilton Sundstrand Power Systems, one of only two manufacturers of APUs for Western commercial aircraft. The other is Honeywell Aerospace, the market leader.
"After the engine, the APU comes up on the radar next," says Paul David, director technical sales for Honeywell. "At a catalogue price of $500,000 to $1.3 million it's an expensive piece of equipment that can run from 5,000-6,000h to 10,000-13,000h between failures."
APUs account for 14% of the component MRO market, consultancy AeroStrategy says. Already worth more than $1 billion annually and growing, the business is split between the manufacturers, airline repair shops and third-party maintenance providers. Honeywell dominates the market, but data from Flight's ACAS shows the top providers include airline operations like Lufthansa Technik and independents like Chromalloy.
The just-announced acquisition of Chromalloy's parent company Sequa by The Carlyle Group, a US private-equity firm that already owns leading third-party turbine MRO provider Standard Aero, will strengthen theindependents at a time when airlines are outsourcing engine and APU maintenance to reduce costs. About 65% of APU repairs are outsourced, says Hamilton Sundstrand, which expects this to rise to 75% by 2010 compared with 85% for main engine repairs.
"We have to continuously improve the product," says David, citing the improved 131-9(A) APU developed by Honeywell for the Airbus A320. This is derated from the original 131-9 to lower emissions and reduce fuel burn by about 5%, while the exhaust ducting is redesigned to reduce noise. The changes can be retrofitted to fielded units, but operators can retain the option to use full power for air conditioning in high temperatures or engine starting at high altitudes.
With pressure on costs, some airlines are trying to use their APUs as little as possible to reduce fuel consumption. "We are working with operators to find ways to reduce utilisation," David says. "But reducing utilisation means starting and stopping more frequently, which adds cycles. Heating and cooling the internal hardware more often risks shortening its life." As a result, Honeywell is working on replacement rotors for existing APUs to increase their efficiency and reliability on shorter cycles.
The OEMs are increasingly working with airlines under long-term agreements that encourage the insertion of technology into fielded APUs to improve reliability and maintainability - helping to counter competition from third-party MRO providers.
Competition
OEMs face tough competition to provide spares and repairs from independents and airlines with parts manufacturer approval (PMA) or designated engineering representative (DER) certification from the airworthiness authorities. "There is a lot of PMA and DER in this market," says David. "It is hard for us to understand as we met the specification that Airbus or Boeing produced, and if you change a component you cannot know the effect downstream, but we have to get creative in how we compete."
Honeywell and Hamilton Sundstrand put heavy emphasis on the support they can provide as original manufacturers, but they have had to become more flexible in support agreements they offer. "In the last five to seven years we have got a lot better and more flexible at working with customers to co-develop work scopes." Some airlines will pay more to ensure the APU stays "on wing", while others lack the cashflow to invest in spares so need access to a pool of inventory. Airlines in China and India want to use their own labour, he says, "so we facilitise them to do their own repairs and work an agreement on the materials side".
The OEMs have also expanded globally to compete locally. Honeywell has major APU overhaul centres in the USA, Germany and Singapore, but also two repair shops in China, David says. Hamilton Sundstrand is looking at a location in China, and in Europe is growing its Revima APU MRO joint-venture with EADS Sogerma. Formed in 2004 and located in Caudebec-en-Caux, France, Revima can repair a range of Hamilton Sundstrand and Honeywell APUs and is adding the capability to support those for the Airbus A380 and Boeing 787 as well as regional aircraft.
But the competition is also expanding. SR Technics has invested �3 million ($4.13 million) in its service centre in Dublin, Ireland to move into the later APUs for the Next Generation 737 and Airbus A330/A340. Leslie Lacey, vice-president component, materials and facilities services, says the business overhauls around 200 APUs a year and plans to double this, with 50% coming under "total care" agreements and 50% performed on an ad hoc basis when an APU becomes unserviceable.
Technology developments are strengthening the OEMs' hand, however, particularly the trend towards greater integration of aircraft systems. For the 787, in addition to the APU, Hamilton Sundstrand supplies the environmental control, electric power generation and start, power distribution, emergency power, nitrogen generation and electric pump systems. The company is part of Boeing's GoldCare life-cycle management service for the aircraft, providing support on a per-flight-hour basis. The APS 5000 APU for the more-electric 787 also raises the technology bar, further strengthening the OEM's position.
Having lost out on the 787, Honeywell is looking to the next generation of narrowbodies. "It is critical to become a larger systems integrator," says David, and the company has invested more than $40 million in a systems integration laboratory to meet that requirement. Studies of bleed-air versus more-electric architectures continue. "Until the fuel cell is ready, which is way downstream, we have to get more efficiency out of the gas turbine."
Major drivers for the future will be weight, fuel burn, emissions and overall cost of ownership, says David. Near term, Honeywell is looking at better ways of routing the exhaust eductor that cools the APU to funnel unburned fuel back through the engine to cut emissions. Honeywell has also field-tested ceramic technology in APUs to extend component life, he says.
"Fuel cells are a great technology that eventually Airbus and Boeing will look at," says David. Hamilton Sundstrand agrees, pointing to proof-of-concept demonstrations now getting under way, but the company sees the need for pure hydrogen fuel as a major hurdle, and while fuel-cell APUs would eliminate emissions they are expected to be heavier and more expensive than today's gas turbines. Those are trends that airlines are not expected to welcome as they focus on operating costs.
Source: Flight International
