Chap 4 Aircraft maintenance costs trends

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Aircraft Maintenance

Management Module

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Aircraft Maintenance

Costs Trends

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Current Maintenance Cost

(MC)trends in the Industry

The Maintenance cost plays a significant role in the airline direct operating costs especially during the maturity and aging stage. It is quite evident that as aircraft delivered they hardly need any maintenance apart from routine lube and tune up, this is often referred to in the industry as the newness effect. If the aircraft needs some maintenance during that initial 4-5 years since aircraft entry into service, then aircraft would be rectified under warranty with almost

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MC Trends

Boeing states that during maturity and aging period major structural work is required and components must be replaced. As the airplane starts up the aging portion of the maintenance life-cycle, the cost of maintaining the airplane would represent one of the largest expenditures for an airline over time, over 20% of the total life-cycle costs.

Apart from the Engines which comprise more than 50% of total aircraft maintenance costs, the airframe main maintenance costs drivers are as listed in figure (7) below and must be analyzed by the airline accurately as part of optimization endeavors.

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To further understand the implication of maintenance costs trends, the Boeing B777-300ER aircraft latest figures will be reviewed.

The B777 Aircraft heavy maintenance (D- check) cost is approx US$1,834,926, Aircraft (C-check) costs approx

US$593,342 and Aircraft (A- check) cost approx US$

18,317 per Aircraft. These trends provide useful input to the airlines when it comes to conducing optimisation process and assist them to streamline focus on the main cost driver containment.

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Aircraft Operation trends and

DMC economics

Boeing’s Airline marketing Dept (2009) states that economic analysis is valuable in balancing the revenue equation for a particular airplane type in a particular application.

The right Aircraft type should prove superior in the equation with careful consideration of all the components of cost. Therefore, variability of maintenance costs creates the most dynamic cost element in an analysis and is susceptible to interpretation error.

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The way the aircraft is operated and flight hours/cycles ratio greatly impact the maintenance costs of the aircraft where the trip cost will be the sum of aircraft cycle cost plus the variable sector length flight hour costs(Boeing:2009). For example as shown in figures (6.5-

6.6) below, the B777-300ER airframe cost approx

US$1000 for the initial first hour and a little under US$500 for the trip reminder flight hours. While figure (11) below depicts Engine cost approx US$ 2000 for the initial first hour and under US$ 1000 for the trip remainder flight hours.

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On the other hand and as a general trend for trip cost, the shorter the flight stage length, the higher the maintenance costs due to the cycle/flight hour effect where the aircraft will be technically subjected to more stresses during the takeoffs/landings flight phase as compared to cruise flight phase which means more deterioration of aircraft wheels tires, brakes, engine hot section parts, etc; subsequently a higher maintenance and servicing requirements.

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In service maintenance costs in relation to Fleet Planning

In service maintenance reporting activities, whether routine or non routine, starts from aircraft delivery (i.e. during reported anomalies in the acquisition process). If a certain aircraft type fleet continuously cause operational inconvenience to the airline due solely to technical reasons and repeated Maintenance grounding activities, then such detailed data would act as a useful feed back to the fleet planning and Projects Departments in case of new deliveries or evaluation to acquire new fleet types.

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It is quite common in the industry that during aircraft sales evaluation campaigns, manufacturers might provide unrealistic DMC costing; hence it is essential to report back the adjusted actual DMC cost per aircraft back to

Management board and fleet planning in order to carry out accurate analysis.

During new Aircraft fleet induction, the Airline often rely on Airframe Manufacturers’ DMC projections for maintenance planning and budgeting purposes as such

DMC guarantees are offered prior to fleet decision making.

As with regard to Engines, manufacturers often make adjustments on such guarantees based on environment operating conditions and required thrust ratings.

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Besides the manufacturers’ reference figures and airline own DMC reported data, other sources are available as

IATA generates reports based on all ATA airline regular inputs.

Basically all consumed labour and materials per aircraft tail number must be collated by the airline at a specific interval, and then analysed post accounting of warranty, guarantee and discounted incentives effect.

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This way, an accurate report is utilised by all concerned airline department to either target cost improvement to existing fleet or evaluate alternative fleets based on economies of scale and incurred Maintenance costs levels.

Finally and during Fleet evaluation process, the airline must not only consider the initial investment cost but also review the entire life cycle costs projections of the maintenance costs as certain aircraft systems or Engines initial costing might be lucrative but airlines are expected to plan very high budget during the course of life cycle maintenance.

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Maintenance Labour burden and efficiency introduction

As shown in figure (12) below, the labour man hours comprise around 40-50% of the total maintenance cost.

The actual labour cost is the sum of direct elapse time consumed on a maintenance activity multiplied by an adjustment factor to account for overhead, often referred to as labour burden, of not only maintenance Department by other support services departments such as records keeping and maintenance planning.

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The labour efficiency and operational effectiveness is often referred as the ratio of actual labour to complete a task as compared to the industry standard times. The standard manufacturer’s labour times are in most cases very hard to achieve in a real scenarios due to operational pressures, skilled resources, lack of training to new comers, wrong troubleshooting, plus many other reasons. Hence, the labour efficiency factors must be used to budget labour requirement accurately. There are a number of elements that influence the labour efficiency and as such must be looked at closely when reviewing effectiveness of maintenance costs.

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The main element is maintenance work distribution amongst teams with balanced and suitable technical skills to ensure proper troubleshooting and correction of faults using minimum labour hours.

Use of fault diagnosis efficiency tools; the technology complexity of systems introduced more difficulty of effective and timely fault diagnosis, thus contributing to the problems of system maintainability.

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The labour efficiency can be further improved by adopting lean processes to improve the utilised time of employees, learning curves and parts/tools waiting fetching time. Thus the work processes must be reviewed thoroughly to envisage improvement to allocated times; i.e. working smarter versus working harder.

In view of the current global downturn and lower achieved yields, more pressure put on working HR Resources, hence it is quite essential to introduce more work efficiencies especially when new HR recruitment encounter a freeze but airline growth plans are not disturbed, as the case of Emirates airline.

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Role of Productivity in Engg processes improvement

The Productivity Dept normally is established within the airline to ensure that business processes are conducted efficiently in the most economical fashion.

Therefore, Performance Development (PD) department should provide a range of business transformation and performance excellence services to address strategic and operational growth challenges in terms of efficiency and effectiveness of organization and processes

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A major part of these services is related to manpower productivity and organization design. This addresses assessment of business value chain and performing necessary organization design to produce an effective organization structure. Also, it addresses assessment of resource requirements to address workload growth while targeting efficiency improvement.

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Whilst managing cost optimisation, PD will need to addresses unit cost management through establishing and monitoring trends of key cost metrics for engineering and maintenance processes. If required, PD representative visits the work place and review how processes are conducted, monitor time wastes and subsequently proposes alternative more lean processes.

On the other hand PD will be involved in addressing operational excellence, i.e. Address opportunities through utilizing professional tool kit comprising of world class tools and techniques e.g. six sigma, lean, BPR, Business Process

Simulation and Operations.

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Maintenance Strategy and glimpse of Optimisation Methodology

In view of the aforementioned and as we have understood the Maintenance costs drivers, breakdown of the direct and indirect costs and the influencing factor such costs, it is will then be useful to introduce efficiencies and improvements into the workplace for the purpose of optimising the overall maintenance costs.

The harmonisation between Finance and Maintenance

Engineering teams is critical to the successful maintenance costs optimisation.

In addition, Maintenance cost optimization must be compared against other operational parameters such as aircraft utilization, reliability and marketing.

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The scope of the maintenance and the relevant processes need to be defined accurately in a measurable focused fashion in order to improve optimization.

The relevant maintenance Engineering supervisors and mechanics can work together with management for an effort to:

1.

Work leaner and smarter by introducing efficiencies to their processes with the workplace per guidelines of performance development teams.

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2. Liaise with the Aircraft manufactures to learn more about new techniques and state of the art maintenance procedures; extend the same training to all field mechanics.

3. Coordinate and work closely with Production Planning and Stores Departments to ensure that there will not be delays in parts processing and Ship-hop-ship In house repairs.

4. Work with technical services and where practicable to develop repairs schemes of those defects which require more ground, conduct in house repairs to reduce turn around times.

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5. Set up more coordination daily maintenance meetings with all involved departs in the ground checks to ensure the optimisation of all maintenance teams working on the check to optimise their allotted time and reduce waste.

By adhering strictly to the above points, the maintenance check time can positively improve and eventually the aircraft downtime and out of service time is reduced, ensuring more revenue service utilisation and higher yields to the airline.

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Maintenance costs cannot only be reduced by working efficiently in the field, the Engineering support services can play a significant role in that aspect as well. The

Materials Management being a major stakeholder in the maintenance Dept cycle can negotiate reduced prices on units’ repairs or replacements that are required either for the aircraft checks or the overhaul workshop. They can work in close coordination with production planning to envisage opportunities of probable alternatives of less buying of parts especially those with a high price tag, to negotiate advance exchanges or borrows at reduced fixed rates.

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The expendable or consumable parts( e.g. filters, tubes, hoses and fittings) used during maintenance either as scheduled or unscheduled maintenance parts are often receive little attention from various people within the organisation. It is believed that though individually these parts will be insignificant but collectively the costs would be huge. In this context, the aspect of DMC reporting on such parts float, where a visibility on the main costs drivers of such expendable parts can be provided to the Engineering Procurement commodity manager. Procurement

Dept can then negotiate with the respective suppliers fixed lower prices, volume discounts, no year on year escalations plus so many remedies that can pour to the big pot of maintenance costs optimisation and control.

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The need for efficient Low Cost

Maintenance program

The Maintenance Program Document (MPD) is drafted by the aircraft manufacturer and customised as per the planning requirement documents of airline. MPD, otherwise referred to as preventive maintenance document, normally lists all routine tasks and required inspections at a predetermined aircraft grounding intervals to replace wear out items, adjustments rigging, faults detection and ensure the operational airworthiness/ safety of the aircraft.

Another school of thought believes that the execution of maintenance can also be triggered by condition measurements, in other words, condition-based maintenance. This has often been advocated as more efficient than time-based preventive maintenance.

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In summary, It is believed that from experience, maintenance checks intervals can be optimised to group various functional tasks in accordance with Aircraft reliability performance, thus reducing the overall maintenance program costing. This however cannot be true in all cases as findings such as cracks are prone to occur during preventive maintenance checks and can further affect aircraft ground and induce higher maint costs.

For new Aircraft programs such as the A380, Airbus states that its maintenance program motivation that to increase aircraft availability, reduce costs and achieve maturity quickly, this all can be achieved due to technological advancement, proactive fault anticipation and involvement of maintenance engineers in the early stages of aircraft design.

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