MICHAEL PHELAN / LONDON
The European maintenance sector has yet to see the predicted spate of formal mergers. Yet there is a growing trend towards co-operation, or a kind of consolidation by the back door
In spite of tough market conditions, the expected consolidation in the European maintenance, repair and overhaul (MRO) sector has not materialised in the last year. But greater co-operation between former rivals may be an adequate substitute for the time being.
At the forefront of the major tie-ups announced in the sector was that of Rolls-Royce and Lufthansa Technik. The two companies launched N3 Engine Overhaul in February, following the selection of the UK manufacturer's Trent engines for Lufthansa's fleet of Airbus A330s, A340-600s and A380s.
Targeting the African, Latin American and European Trent overhaul markets from 2007, the tie-up brings to Europe an R-R strategy already tried and tested in Asia with Hong Kong Aero Engine Services and Singapore Aero Engine Services, and in the USA with Texas Aero Engine Services. R-R is keen to keep the maintenance of its products close to hand, and already about half of its production engines are covered by "power-by-the-hour" maintenance plans.
Meanwhile, FLS Aerospace, based at London Stansted airport and with major facilities at Dublin, Ireland and Manchester, was widely tipped to be the prime take-over target in Europe this year, but, as yet, no buyer has emerged.
EasyJet recently handed its initial Airbus A319 work at Geneva to SR Technics when the local base of the company's EasyTech joint venture with FLS might have been considered a more obvious choice. SR Technics, the now-independent maintenance division of the former Swissair, is one of several companies that have evaluated FLS - but any other potential purchase still seems a distant prospect.
Another form of pseudo-consolidation occurs when airline alliances share work between their maintenance divisions. Skyteam giants Air France and Delta Air Lines are prime examples, with their roughly equally-sized maintenance arms setting up complementary type-specific shops each side of the Atlantic. Air France Industries will specialise in Airbus and Boeing 747/777 types at Paris Orly, while Boeing 737/757/767 work will be performed by Delta TechOps in Atlanta, Georgia.
Common standard
The year has been busy for the Joint Aviation Authorities, with the first award of JAR 66/145 maintenance training certification, and the continued growth of JAR 21 design organisation approval (DOA).
Since April, European maintenance organisations have been eligible for JAR 66 status, allowing them to train staff to the common JAR 147 standard. The legislation is designed to ensure an internationally common level of technical training for aircraft mechanics, and will be universally required within the JAA's jurisdiction by mid-2011.
The DOA is the result of a concerted effort by the JAA and European industry, and is intended to rival the US Federal Aviation Administration's supplemental type certificate as a globally recognised certification standard. The DOA's status, and that of the European companies which hold it, should be further strengthened with the advent of the JAA-wide European Aviation Safety Agency.
A certification issue that the JAA is unlikely to be able to avoid confronting for much longer is that of parts manufacturer approval (PMA) spares. PMA parts reduce costs and increase flexibility, and have the support of major MRO providers such as Lufthansa Technik, despite that company's parallel arrangements with original equipment manufacturers (OEMs) such as R-R.
A survey released in May suggested that by 2015 over one-fifth of aero engine spare parts could be made by PMA manufacturers despite opposition from OEMs who express concerns over the thoroughness of the design process. With PMA already recognised by the FAA, the view of the JAA will be critical for the shaping of the European MRO industry.
Despite current harsh market conditions, the European MRO industry is expected to outstrip the global growth rate over the next decade, with analysts expecting the sector to grow by 38%, compared with 33% globally. Consolidation cannot be avoided, however, as those same analysts see room for only "four or five publicly listed global MRO providers" in the same period.
Source: Flight International
