Aircraft Maintenance
Management Module
PRINCIPLES OF AIRCRAFT INSERVICE PRODUCT SUPPORT AND
CONTRACTS MANAGEMENT
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a) Aircraft Product Support
 The product support is defined as a set of aftermarket
services, processes and procedures established by the
aircraft manufacturers to assist the airline operations and to
ensure that the aircraft and its components remain
functional during the life time of the aircraft.
 In order to achieve this sustainable support, the aircraft
Manufacturers produce tri-partite Agreement with Airlines
and suppliers to define all the terms and conditions that
govern such in service support.
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 The main aspect of product support revolves around
materials and airline inventory cost optimisation. In the
next few paragraphs, we will shed some light on these
Agreements main terms in order to understand these
practices within the Aerospace Industry.
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A1) Manufacturing Product Support
Agreements- Materials Costs
 The Product Support Agreement (PSA) establishes the
OEMs contractual duties, responsibilities and obligations
related to components as offered to airlines with the purchase
of the aircraft. Therefore, it is a vital tool for DMC
significant reduction if it is efficiently used by the airlines.
 The PSA further illustrates the terms that govern the
aftermarket relationship between the Airlines, MROs and the
OEMs. The major terms and processes that are directly
linked to the DMC reduction are shown in the following
paragraphs.
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For the sake of illustration Boeing PSA No D6-81852 and Airbus
Supplier Product Support GCP 2000 would be used. The Product
Support Terms associated with Inventory Optimisation:
1. Term of Agreement: Is for as long the aircraft remain in
revenue service, i.e. through the life cycle of the aircraft. This
is quite remarkable as the airline can track their DMC financial
matrices through the full aircraft life cycle where they can
request the applicable remedies.
2. Continuous Improvement: OEMs commit to continuously
exert reasonable efforts to introduce improvement in terms of
design and quality to reduce Parts’ DMC element.
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3. Technical Field Support: OEMs commit to provide airlines
with a no charge field service to address problems associated
with their parts’ faults.
4. Parts Obsolescence: OEMs will make their maximum
efforts to reduce costs and operational impact in case of
Obsolescence introduction to the parts including cost sharing
of new replacements.
5. Software and licensing: Is offered at no charge to the
airline to enable easy operation and troubleshooting of the
parts.
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 6. Spare Parts Lead times: OEMs have an obligation to deliver
spare parts (Purchase or Repair orders) to the airline within the
specified contractual TATs. In case they are unable to fulfil their
commitment, they have to provide the airline spare parts loaners
at no additional charge and pay out a sum of penalties as
liquidated damages. Thereby the airline won’t need to buy
additional inventory stock of such parts thereby reducing its
overall inventory unnecessary investment.
 7. Spare Parts Escalation Protection: OEM have an established
formula for allowable annual percentage increase in the part
price. Should this percentage exceed a certain preset agreed
value, then Airlines can rightfully decline to pay this excess
amount.
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 8.
Lease items: The airlines are not obligated to procure
bulky structural high priced parts as OEMs are required to
stock these at their facilities at an agreed distribution sites.
These can offered when need to airlines at a reasonable
charge thus preventing the airlines from this high
investment.
 9. Repurchase of IP parts: There are occasions where the
airline purchase parts during initial provisioning for a new
aircraft but do not use them for few years. Under this term,
The OEMs accept back any unused purchased spares for a
full refund for a period of five years since EIS.
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10. Warranty and Reliability programs: OEMs provides
warranty for four years and ten years as reliability guarantees.
Due to the significance of both these terms in the DMC
reduction for the airline, have dedicated separate sections in
below to elaborate further on the offered remedies and
processes.
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A2) Support Materials Cost
reductions- Warranty claims
 The warranty terms and related contractual remedies are
considered for the airline, one of the main sources
maintenance costs reduction in case of reported failures.
The warranty effect normally extends 48 months out of
Aircraft age. The airline incurs only routine maintenance
costs during this period if they have introduced efficient
processes to capture all warranty opportunities. Some
airlines with MRO attachment can also generate some
profits from the warranty business where they recover the
costs plus a certain margin they made out of manpower
either from their own airline or a third party airline
customer.
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 The Introduction
of new aircraft received with a
comprehensive warranty support normally during the first
years of aircraft age hence contributing significantly to
maintenance cost reduction. The guarantees last for much
longer normally ten years of Aircraft age. It is anticipated
that during this period and in case of reliability issues,
OEMs will intervene and offer product support which
includes free repairs/loaner and modification.
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 OEMs provide below remedies under the PSA terms:
- Free of charge repairs/replacements for parts.
- Materials and Labour reimbursement cost for defect
corrections.
- No charge replacement parts for rogue parts.
- Labour reimbursement for inspection man-hours called by
OEM as a result of defect.
- No Fault found repairs remedies provided Airline provides
the supporting documents.
- Freight costs reimbursement for both outbound and inbound
costs.
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- Warranty period extension for unresolved defective
condition provided the OEM receives an official claim
Notice. This is quite a significant protection for the airline;
they need to be efficient in their processes to capture such a
discrepancy.
- Claim response time is industry standard of 30 days, should
the OEM fail to respond within this allowable time, the claim
will be deemed as accepted.
As we have noticed, vigilant attention while reviewing
anomalies for aircraft under warranty can play a significant
role in materials costs optimization.
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A3) Materials Cost reductionsReliability Guarantees
 The reliability program yet provides another umbrella for
the airline as term is quite long, ten years and few OEMs
offer 15 years from 1st aircraft induction. The Airline and
OEMs agreed to measure the component reliability by a
unit called MTBUR which simply means Unscheduled
Time between Unscheduled Removals.
 During the term of the guarantee and in case of component
performance issue where by the guaranteed MTBUR is not
reached, then the following remedies apply:
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- Correction of all failed covered components at no charge
- Modify all fleet components in case OEM introduces an
improvement SB.
- Provision of No charge Loaners for poor performing
components, these units compensate airline against
repeated removals and stock depletion.
- Reimbursement of all incurred transportation charges of all
poor reliable units returned back to OEM facility.
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 In view of the aforementioned, it is quite evident that the
inventory costs of such components which are covered
under the reliability guarantees would be optimised to the
airline desired levels. However, the airline must introduce
all necessary automation and processes to track all
components performance and work proactively with OEMs
to obtain the relevant remedies.
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A4) Inventory cost control &
optimization
 In addition to the techniques outlined above, i.e. the Product
Support agreements remedies, the following elements can help
in Inventory Costs optimisation:
 - Exchange support schemes, Where the airline can enter in
mutual agreements with OEMs or MROs to manage their
rotables requirement of a certain fleet when the need arise. This
way, the airline does not need to invest highly in the initial
provisioning time and focus their efforts into investment with
other assets.
 - Regional Distribution OEM Centres, The airline can
drastically reduces its inventory stock levels by means of
agreeing with suppliers to set up regional spares centre which
grants the airline easy access when needed against an agreed
contractual lease or purchase
charge.
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