New work practices, technology and alliances are helping maintenance companies to meet the upsurge in demand
Doug Birch/LONDON
As the airline industry continues to become more efficient, the pressure on maintenance, repair and overhaul (MRO) contractors to increase productivity and keep bottom line costs to a minimum is intensifying. To meet these demands, the implementation of new, innovative, highly competitive work practices is now an everyday occurrence.
Prominent among these have been the formation of global alliances between MRO providers and/or the establishment of joint venture companies between independent third-party contractors and original equipment manufacturers (OEMs). These groupings bring economy of scale and allow just-in-time practices to be implemented.
Benoit Gosset, senior vice president and chief executive (CEO) for Messier Services, sees globalisation as the door to continued growth and profitability. "MRO is no longer a national, but an international industry," he says. "Messier Services can only reach critical size and strengthen its market position by involving itself in alliances and joint ventures."
Other European maintenance providers continue to pursue the global acquisition trail. The most pro-active of all MROs, Lufthansa Technik (LHT) recently established Lufthansa Technique Philippines (LTP), a joint venture with LHT (51%) and MacroAsia (49%). LHT executive board chairman Wolfgang Mayrhubber says: "This facility is a crucial step in establishing our global network."
SR Technics America, a subsidiary of SR Technics, is a prime example of MRO provider/OEM co-operation. Working in conjunction with Boeing Airplane Services (BAS) on an established MD-11 passenger-to-freighter conversion programme, SR Technics president and CEO Hans Ulrich Beyeler, SR Technics' president and CEO, sees SR Technics America as another base from which to offer its maintenance services to a global audience. Bedek Aviation Group, part of Israel Aircraft Industries, and Italian MRO Aeronavali are also involved in the BAS MD-11 conversion programme.
Overseas expansion
Overseas expansion is not confined to mainstream maintenance contractors. One example is the recent acquisition by Netherlands-based paint OEM Akzo Nobel of the surface coatings business of US-based Dexter.
Considered opinion among many top airline executives is that Europe leads the field in the advancement of MRO practices and procedures, particularly with new cost-efficient maintenance programmes.
Stephen Henderson, president and CEO of FLS Aerospace, says: "Change programmes help keep a company profitable. MRO providers have to adapt and utilise new initiatives to meet airline customer requirements; any company that ignores this...does so at its own peril."
FLS Aerospace launched its Formula One project this year with impressive results. Aimed at reducing heavy maintenance turnover times by 50% and delivering the final invoice and completed work package onboard the finished aircraft, the first two projects turned heads within the industry after the first DC-10 C check was completed in 9.5 days and a Boeing 737-500 D check in 18 days.
Air France Industries (AFI), in conjunction with Boeing, launched the Boeing 777 Fleet Team Resolution Process (FTRP). This allows operators to pool experience, recommendations and best practices. AFI, like other leading MROs, has embraced Six Sigma in its quest to improve quality, while Pratt & Whitney International (Ireland) and PWES Norway Engine Center employ both Six Sigma and ACE (Achieving Competitive Excellence). P&W's own Kaizan based efficiency programme, PWES Norway Engine Center, ruffled CFM engine MRO feathers during the year when it announced, after taking over the Braathens facility, that it would only overhaul CFM-56 products.
Unique solutions
Cashflow problems in the CIS have led MRO contractors to unique solutions: with inflation rising by over 20% each month and banks taking a long time to process cash, Bykovo Aviation Services (BASCO), in partnership with some industrial companies, has established its own bank, reducing cash transfer times. Another initiative established by BASCO was the formation of its own airline, REMEX. After completing MRO work for clients who cannot pay their bills, REMEX operates the aircraft on behalf of BASCO until the debts are cleared.
Following the pattern of Western OEMs some CIS manufacturers are undertaking MRO work - needless to say, the more traditional third-party maintainers such as Sibir Airlines in Siberia are aggrieved by these moves.
As Western-built aircraft penetrate the CIS, companies such as AFI have contracted with Aeroflot to provide on-the-job training for mechanics assigned to servicing their Boeing 767s. Some European MRO providers have representatives in the CIS who are actively seeking new business in what is regarded as a volatile, but growth market.
Business to business (b2b) e-commerce is establishing itself as an integral part of MRO development as companies move to take advantage of the potentially immense cost savings offered by this technology revolution.
KLM, Lufthansa, Scandinavian Airlines System and Austrian Airlines feature prominently among the 13 airlines responsible for forming the world's largest b2b e-commerce exchange. Designated Aeroexchange, this will offer the most comprehensive selection of aircraft technical parts, services and general supplies to airlines. KLM chief financial officer Rob Abrahamsen said, "We expect to save at least c15 million [$13 million] annually as a result of electronic procurement."
E-business moves
OEMs are also becoming deeply involved in e-commerce. Rolls-Royce has launched the first trial of its new e-portal, Aeromanager, which aims to provide airlines with internet access to a wide range of engine aftermarket services, while BAE Systems is deploying Aspect E-Source, a strategic sourcing solution, to help consolidate its global spend across all businesses.
Lufthansa Technik surveyed its customers to gauge e-business services' importance and found broad-based agreement that the availability of online information reduced costs and offered faster access to required data.
Running almost parallel to b2b is the surge of interest in the IT software solutions being marketed which covers all conceivable applications, from supply chain management, repair manuals, procedural guides, inventory management, material control, automated shop floor data collection techniques, security systems and availability. These software systems are rapidly becoming a 'must have' for MRO management.
British Airways Engineering recently selected the XelusPlan inventory planning solution; SR Technics, P/ALM software that supports MRO core processes, and British International, the UK's largest helicopter operator, the Russell Adams inventory management integration software system.
The face of MRO is changing drastically and its willingness to incorporate new practices and technology is helping meet the forecast upsurge in MRO business in cost-effective and profitable style. Statistics published by Boeing's Current Market Outlook 2000 show that airline operating costs in 1999 were $330 billion of which the MRO share was 11.4%, a figure representing a cash value in excess of $37.6 billion. Over the period 2000-2019 heavy maintenance, excluding line maintenance and engine and component overhaul, is set to produce over $588 billion in revenues, or an annual figure of $43 billion. For the forward-thinking MRO provider, business could be very good indeed.
Source: Flight International
