Notes on “Future MRO” Conference 28th and 29th Jan 2008 SMI London
Around 95 delegates attended this year’s conference with a speaker breakdown as follows:-
Academy / 1 / Industry Forecast Consulting / 1Air Transport Body / 1 / Materiel OEM / 1
Airframe OEM / 1 / Airframe MRO / 1
Airline though also in MRO guise / 9 / Regulator / 1
Engine MRO / 1 / Software Provider / 2
Most speakers emphasised two factors affecting the industry above all, first fuel price and second the upward trends in aircraft deliveries. A few mentioned current gloomy economic concerns but these were in the minority. Shortage of qualified staff was a factor but MRO’s appeared to be overcoming this in general. A small number of slides are included in this note but all the presentations excepting that of Migel Vaz Pinto are on the CD.
Session One - Chairman Steffen Harpøth SHC and IFA Member
Steffen mentioned that the airlines and the sub-prime affair in the US have things in common. Neither sub prime lenders nor airlines (in the US) had stock market ratings. He urged MRO providers to help airlines in the time ahead.
Paper 1 Maintenance Issues and Future Goals - Bruce Hunter GM Ops Maintenance BA
Bruce had, as a theme, the necessity for MRO’s not to think in terms of man-hours any more but to add value for the customer. When seen against the BA model of newer fleets with the B787 as the supreme example of reduced airframe maintenance, the position he took could be understood. He quoted that world airline profit is in the region of 10% of that needed to fund the huge orders placed in the last two years. It was also quoted that maintenance cost is a barely considered factor in fleet decisions. Fuel cost overrides all else. He was also not an advocate of 6 Sigma “because of the lack of repeatability in maintenance” The B787 will have very long intervals between C and D Checks which the speaker believes will be used to permit scheduling of packages of small work to be done at any convenient time and location. For example the D Check comes after 144 months and consumes but 7500 man-hours.
PMA has become a preferred option in BA whenever possible. One criticism was levelled at IFE electronics which continues to be a major service concern. This was an altogether an excellent portrayal of the larger airline MRO operation.
Paper 2 Challenges, Trends and Issues for MRO – David Stewart Principal, AeroStrategy
David Stewart gave his usual comprehensive forecast of the MRO industry in light of the changes and growth of civil air transport in general. A website contains much of what AeroStrategy provided. He is continuing to echo others who see long term decline in heavy aircraft airframe work but at the same time has set a limit on how far narrow body aircraft will fly for C and D Checks.
Paper 3. From Legacy Carrier to Maintenance Provider – John Healey MD Line, American Airlines.
John Healey spent a little time explaining why, amongst all the US Majors, American Airlines (AA) is the only one retaining full in house capability.
Amongst other reasons, the large state tax rebate it enjoys in some States was a major factor in not reducing headcount. Furthermore AA is facing a very serious problem of fleet replacement exacerbated by fuel costs. It has some 300 DC9/MD83 still in service and no firm orders yet placed!
Paper 4 Steering Maintenance through Change - Migel Vaz Pinto Director
M & E Portugalia. An unusual subject covering the life and rebirth of a very small niche carrier based in Portugal.
It shows how a much larger carrier has affected its MRO activity. The airline which has contracted out much of its maintenance was faced with a takeover by Swiss which then failed to happen, then only a short time later be absorbed into Air Portugal. The speaker made plain the manifest difficulties this presented a small M & E division.
Paper 5 Overview of the Eastern European Market - Pavel Prhavc VP M & E Adria.
Pavel made some interesting comments when describing the work ethic in Adria Maintenance. “Staff is not so driven to follow all the working regulations” by which I presumed work and time rules, not maintenance standards. Several other east Europe MRO’s were at pains to assure us that flexibility was a given in these workforces. The geographic location of Slovenia was a great asset for covering west and east Europe. The current workforce has been arrived at after the airline directed that Adria M & E must reduce numbers to cope only with the in-house work. This might have meant a 60% reduction but Pavel and his team took another view and the entire work force addressed third party work to their benefit.
As an example of efficiency Adria now turn a CRJ200 in a 40% shorter time. He also believes that growth “in the eastern part of the EU is now faster than in the west”.
Paper 6. The Future for a Low Cost Regional Carrier – Marshall Barrand FlyBe Engineering.
Marshall went over the recent history of the airline and how a couple of major milestones have affected the M & E Department. Most notably has been the takeover of BA Connect in a very short time span. This led to a large increase in fleet size, a new aircraft type, several new line stations and staff training. FlyBe has made large investments in Exeter which remains well away from the normal aerospace manpower catchment area. Thus it has restarted large scale apprenticeships albeit with a more media catching title!
Paper 7 MRO Issues and Lesson Learned for a LC Long Haul Operator – Richard Dauncey Director Engineering Oasis Hong Kong.
Richard, in presenting his paper made us all aware of who and what Oasis is. It is in fact the first Long Haul LCC, based in Hong Kong with daily services to London (LGW) and Vancouver. It currently has 5 B744 aircraft and expects to increase this to 10+ in a year or so.
The most significant aspect from an MRO/Continuing Airworthiness aspect is that this airline runs its M & E affairs entirely through a very small staff with two major contracts outsourced to:-
1.HAECO as the PMO.
2.LHT for all engine support
While the fleet is regulated by the HK CAD this arrangement is clearly accepted. Looking, by comparison, at the larger LCC’s in the EASA zone, most have seen fit to have at least a limited Part 145 approval and a technical support team. A long haul operator often needs support at remote locations. It remains to be seen how Oasis will respond to the oversight issues as it doubles in size.
Paper 8 Can Small Be Beautiful - Innovation in Aerospace – Peter Stokes CEO STG Aerospace.
STG Aerospace is perhaps better known by its original name “SAF-T-Glo”. It was the first supplier to seek out a solution to the floor level emergency lighting requirement following the August 1985 B737 fire at Manchester.
The original concept [and still largely the same] is a self powered light emitting plastic. The company has developed, improved, marketed and patent protected its product since then and now achieves OEM installation and after market sales for over 4000 aircraft. Applications are predominantly floor level exit path marking but numerous other innovations have been produced. The product is widely used in maritime and public building applications.
The equipment displayed at the seminar is very new technology and it is recommended that those in IFA so minded, take a chance to see it demonstrated. It is marketed as WEPPS [wireless emergency primary power system.] It is powered by the latest standard batteries needing no maintenance or testing for 3-5 years. All other day to day test functions are powered through the aircraft’s own electrics.
Peter strongly advocates “small is beautiful” in the case of STG at least. The innovation shown over the years, he believes, would not have been possible in a large organisation.
Paper 9 Streamlining MRO through Automation – Les Hine Mxi Technologies.
This paper updates earlier ones on large and all embracing ERP [IT] systems tailored specifically for airline and particularly MRO operation. Several large customers have now installed the system.
Any such system would have a profound effect on the organisation which selects it and many such organisations could testify to the diligence and resolve to master the introduction.
Paper 10 The Electronic Tech Log (ETL) Key to Future Maintenance Efficiencies – Nick Godwin Marketing Director Data Systems and Solutions.
Nick explained that the ETL is indispensible to airlines wishing to fully integrate flight and ground operations. Data Systems and Solutions is a subsidiary of Rolls Royce and Nick made the point that Rolls Royce were able to provide the UK AAIB with engine data on the BA 777 accident 2 hours before the QAR had been removed from the Heathrow accident aircraft.
The difference between Level 1, 2 and 3 ETL’s was explained:-
Level 1 being a stand alone on board tablet PC which transmits data entered by the crew via Wi-Fi back to base.
Level 2 somewhat the same but captures some data from its integration with aircraft systems.
Level 3 is completely integrated at aircraft build and not amenable to installation at a later date.
Electronic Tech Logs are gaining wide acceptance and are likely to capture much of the market. Much of the traditional paperwork between crew, line maintenance and technical records will be changed forever. Some regulators have yet to give a final verdict on retention of “dirty fingerprint records” but it seems likely that experience [of ETL] will overcome eventually.
Session 2 Chairman Ian Harbison Editor MRO Management
Paper 11 LEAN as an Essential Integrated Module in MRO – Amir Ali CE MRO Business PIA
PIA has run a programme of LEAN MRO for some time in parallel with the introduction of an ERP system. (Definition of ERP = Enterprise Resource Planning). An attempt to integrate all data and processes of an organization into a unified system. Amir gave a frank and detailed description with numerous examples.
He stated that it proved better in view of the high cost of fuel to build a remote maintenance base rather than fly aircraft to Karachi. This surely put paid to the idea that an airline must make savings by consolidating all work in one place. Fuel cost is the topmost concern to all airlines.
Paper 12 LEAN for MRO– Dr. Valerie Crute University of Bath School of Management.
Valerie used experience from running LEAN in the automotive industry in her presentation. The use of LEAN and “just in time” in car manufacture led to the so called “three day car” programme. In particular Japan and Toyota lead the world in this respect. Not only is time and cost reduced but quality [defined as absence of defects] improved.
Some delegates questioned the use of such techniques on aircraft maintenance because of variables not present in manufacture but the speaker argued that few if any processes cannot be improved by the systematic introduction of LEAN. She did concede that some companies had started but failed to complete the process. It was also noted how reduction in man-hours accompanied reduction in time to produce an article.
In response to questions on MRO applicability she covered activity in the Dowty Propeller shop which out of 104 repair types only 7 occurred regularly. This would lead to adaptation to ease work on those jobs done frequently.
Paper 13 Requirements for the MRO Industry - Francois-Xavier Hussenet Marketing Manager SNECMA.
Francois, while supporting green environmental methods in SNECMA’s overhaul processes also recognised that much they do is constrained due to the persistence of many parts in high technology engines to resist recycling. He pointed out several mundane yet vital ways in which airlines and MRO’s can improve environmental aspects of engine overhaul.
Paper 14 Aviation Regulation – Latest Developments and Impact for Industry – Neil Williams Chief Surveyor’s Office UK CAA.
Neil gave a presentation of numerous changes working there way through the system principally in EASA rules. He also quoted from his “crystal ball” of some likely changes resulting from delays in implementation of others. It has also been necessary to introduce UK only regulation where State Aircraft are involved and no EASA regulation is appropriate.
The changes are many and all IFA members will benefit by studying the slides from this presentation.
Paper 15 Aviation Regulation – Latest Developments and Impact for Industry – Dr. Chris Markou, Assistant Director Engineering and Environment IATA.
Chris Markou has laid out a possible way out of the vexatious subject of audits across industry. His opening point was well received. He pointed out various types of audits.
- Regulator of another regulator.
- Regulator of an operator.
- Regulator of an approved organisation.
- Approved organisation of a supplier.
- Operator of a supplier.
- Standards Organisation of an applicant for registration.
- Bank/Leasing company of a customer airline.
- Bank/Leasing company of a supplier e.g. MRO to a customer airline.
- Insurance/finance house of an organisation.
The paper went on to attempt to cost this plethora of cross auditing. Perhaps most interestingly Chris proposed an IATA coordinated programme using the resources of major players. One commenter thought this a very ambitious project.
Paper 16. The MRO Market– Jeremy Chan Deputy President Marketing Singapore Technologies Aerospace (ST).
ST Aerospace is perhaps the largest and most global of all the Independent MRO’s. It is present on most continents with large undertakings in Asia, Europe and North America.
The growth in China has led to a massive ST involvement although a rather smaller one in the UK was closed in December 2006. Only Africa and South America has yet to be exploited by ST. In fact Jeremy announced that on the opening day of MRO 2008, ST Aerospace had concluded the takeover of SAS Components. The ability to finance such growth was the critical factor according to Jeremy Chan.
Paper 17 The Role of Aircraft Manufacturers in Future MRO – Dr. Wolfgang Kortas, Senior Director, MRO Support, Airbus.
Dr Kortas presented the major order book of Airbus and in relation to MRO, the massive task facing operators. The A350 alone [now some years from first flight and 8 years from service] has 600 commitments. Wolfgang explained how Airbus had moved from the “Airbus Network” model first mentioned at this conference in 2006 to the full involvement of today - much nearer the Boeing “Gold Care” programme. The catalyst appears to be the huge order by Skybus of Columbus OH. Apparently it was a condition of the order [67 A320’s so far] that Airbus took complete management of the technical operation. This is performed via US certificated organisations but very much under the supervision of AI. In a second case AI is supplying very considerable support to the initial Singapore Airlines A380 operation. It was noted of course that it is not uncommon for an OEM to flood an operator of a brand new type with support though no more operation can have been under the spotlight than the A380!
Paper 18 Manpower Demand to Maintain the Civil Jet Aircraft Fleet in the Future – Klaus Schmidt-Klyk LHT Training.
Perhaps of all the week’s presentations this one came closest to acknowledging that a human resource crisis is approaching. With huge order books, skyrocketing fuel prices and economic jitters in the markets of the world it may be too much to expect a spotlight to be turned on a looming technician famine. This is exactly what Klaus and LHT have done! It is urged that IFA readers study all the charts prepared by Klaus Scmidt-Klyk and after stripping away the marketing the very real problem can be seen. One is forced to wonder how many other organisations in the west [including the USA] are as far seeing as Lufthansa.
Paper 19 MRO Development in the New EU Member Countries and the CEE Region – Konstantin Essler MD Austrian Airlines Technik
This final paper had some intriguing points most particularly surrounding an insight into the human resources in a western MRO of long standing (Austrian) which has expanded into the new East Europe market. The difference in work ethic, skills and remuneration between old and new EU countries is far from clear according to Konstantin. While flexibility, low cost and membership of the Euro Zone are obvious benefits, it was pointed out that workers lacked language skills, have poor decision making qualities and have company loyalty only while it pays more than neighbouring employers. An unusual comment was that he has to pay employees “only” 12 months salary per year instead of 14, implying that some countries have a much more generous arrangement covering leave etc.
He also believed however that more MRO facilities were needed in Eastern Europe to cope with the growth of fleets.
Summary
As normal, there were several excellent sessions with real oversight into current trends. Other papers were novel and an explanation into new technical developments.
Automation, electronics and enterprise systems continue to grow in the larger companies with, no doubt, very large introduction costs. It is difficult to see the smaller organisations ever matching up to the major global players in this respect.