Mark Winzar, JSSI senior vice president of business development for EMEA & APAC tells Satu Dahl how a flexible approach to maintenance can save airlines money.
It’s evident 2020 has certainly been challenging for airlines, with more than two thirds of the global passenger fleet grounded at the height of the pandemic according to travel industry data and analytics provider Cirium. Now, outstanding aircraft maintenance tasks are mounting up. In this time of tightened budgets, how can carriers be savvier with their MRO spend? Mark Winzar, JSSI’s senior vice president of business development for EMEA & APAC notes the industry is quickly running short of cash. “At the virtual World Aviation Festival in September, IATA’s payment programme director, Thierry Stucker, warned that the world’s airlines only have a six-month median supply of cash left to survive in the wake of the coronavirus pandemic.
“As airline executives look to make crucial decisions to ensure the survivability of their fleets, many are undertaking a detailed review of how they manage the costs of operating and maintaining their fleets. Unexpected events are inevitable during the lifetime of an aircraft and, over time, maintenance accounts for as much as 35 per cent of an aircraft’s annual operating budget.”
Spreading the costs
Airlines often have to fork out large upfront payments to ensure they have 100 per cent coverage for all aircraft maintenance events, says Winzar. In a post-Covid-19 world, where budgets are tight and cash flow is carefully monitored, a more flexible approach is needed.
“Low-cost carriers and regional airlines are starting to take the lead of their long-haul cousins by exploring hourly cost maintenance programmes (HCMPs)”, Winzar reveals. “Their objective – to improve efficiency, maximise aircraft availability and ensure maintenance is a more predictable expense.
“With zero upfront payment, the operator pays an hourly rate then, at the time of a maintenance event, the HCMP provider and the customer each pay a pro rata share of the total event cost. These programmes protect airlines and present a clearer picture so they can better predict cash flows.”
Winzar says that, when margins are thin, this concept is especially important and provides greater economic flexibility, budget stability and more control. “An HCMP offers protection against unplanned maintenance event costs, which means an airline can focus its time and resources on planning ahead rather than worrying about financing unexpected maintenance costs or ensuring maintenance can be performed in a timely manner.”
When it comes to managing engine events, operators are increasingly looking for options. For smaller airlines, opting for an independent HCMP provider can offer enhanced support in addition to financial stability. “They act as your advocate during each maintenance event, closely managing shop visits and supporting with rentals or exchange engines. This offers an alternative to going straight to the OEM MROs for new parts, keeping costs down and minimising downtime”, Winzar notes.
Driven by data
Data transparency will help the entire aviation industry during Covid-19 recovery. Large airlines and long-haul carriers have historically used data analytics with good effect to predict and manage maintenance events, but smaller operators may not always have had the bandwidth to do this, says Winzar. “Selecting an HCMP that has a global reach and offers technical support is therefore important because it enables smaller airlines to tap into data reserves and predict upcoming events with their aircraft engines or parts.”
Sharing data enables operators to have more control over their maintenance and support partners, driving reduced costs. “The rewards can ultimately reach passengers too, as data transparency helps increase aircraft availability and gives airlines an opportunity to pass on any cost savings to the end consumer.”
Every airline is unique
No airline business model is the same, particularly in the fast-changing world of Covid-19 and Winzar explains that some airlines opt for an HCMP focused on scheduled shop visits, service bulletins and catastrophic engine failure, while others want cover to include replacement for life-limited components, engine removal and reinstallation, or labour for routine inspections.
“Because there is no ‘one-size-fits-all’ approach, an HCMP and support should be tailored around specific needs. Having a flexible enough approach to meet an individual airline’s detailed requirements is key.”