• Boeing 737 Engine Specs
• Boeing 737 Max Training
• Boeing 737 800 Grounded

Aero 15 - 737-600/-700/-800/-900 Maintenance Costs Reducing fleet maintenance costs is a key issue affecting any airline’s bottom line. During the development of the 737-600/-700/-800/-900 family of airplanes, Boeing initiated a program to lower the airplanes' overall airframe maintenance costs by as much as 15 percent, relative to the earlier 737-300/-400/-500 family. The program, called Maintenance Cost Reduction by Design, included participation by 21 airlines from around the world and provided extensive in-service experience upon which to draw. A major concern of airlines in today's competitive business environment is lowering their airplane-related operating costs (AROC). These costs directly affect an airline's cash flow and ultimately its financial health. An airline's total AROC falls into six categories: flight and cabin crews, fuel, maintenance, navigation and landing fees, ownership and spares, and depreciation. A sizable part of AROC is related to airplane maintenance.

Boeing 737 Engine Specs

Although maintenance costs, as a percentage of AROC, will vary — depending on such factors as airplane type, average flight segment length, and airplane age — typical maintenance costs range from approximately 10 to 20 percent of AROC. These percentages may seem somewhat small at first glance, but they represent significant sums of money. Large carriers, for example, have maintenance budgets in excess of $1 billion. From the early stages of airplane development, the 737-600/-700/-800/-900 team strove to lower maintenance costs and give the airlines the airplane with the most competitive operating cost possible. The target for overall reduced airframe maintenance costs was 15 percent, relative to the earlier 737-300/-400/-500 family, which had set the standard for lowest operating costs in its class. The 15 percent reduction was considered an attainable, though challenging, goal that would significantly increase the airplanes' value to airline customers.

Although airplane type is a major determinant of an airline's maintenance cost, it is not the only one. Ultimately, the realized improvement in maintenance costs for a particular airline also will be a function of other factors including that airline’s maintenance policies and procedures, operating parameters, and labor market. This article discusses. 1. MAINTENANCE COST SAVINGS ACHIEVED THROUGH AIRPLANE DESIGN To reduce maintenance costs by 15 percent, the 737-600/-700/-800/-900 airplane program leveraged potential savings from three areas :.

Airplane design improvements. During the planning stages of the 737-600/-700/-800/-900 program, a basic design philosophy was followed known as value-added technology. Essentially, the design team made discretionary design changes to the airplane only if they offered a better value to the airline customer in terms of superior economical performance, which included lower maintenance costs. The design team's approach focused on a number of key goals: using digital instead of analog systems, lowering system part counts, having more common parts among models, simplifying system designs, improving corrosion protection, enhancing fault identification, and providing better access to parts for maintenance. Many of the specific design changes were directly attributable to airline customer inputs. Examples of design changes that enhanced maintainability include the following:.

A completely new wing with double-slotted continuous span flaps with 30 percent fewer parts for improved maintainability. Wing leading-edge panels designed for easier access by maintenance crews.

A simplified main landing gear assembly for enhanced maintainability and a 30 percent reduction in brake change time. Improved access to line replaceable units (LRU) and components, maximum use of quick-disconnect line fittings, and improved ground-support equipment, which reduced engine removal and installation time by more than 50 percent.

A redesigned auxiliary power unit (APU) for improved access and maintainability. Single-point-of-service vacuum lavatories that significantly lower servicing time at the gate. Redesigned electronics and equipment bays for improved access to remove and repair components. New CFM56-7 engines for 15 percent lower maintenance costs when compared with the equivalent maximum thrust rating of the CFM56-3 engine. Improved consistency and usability of built-in test equipment (BITE) user interfaces to reduce time and errors during airplane system troubleshooting.

Another vital aspect of the design improvements involved corrosion prevention. This included increased sealing between critical parts, additional protective finishes such as primer applied to detailed parts, and improved drainage that included a door threshold gutter redesign. These changes were made not only to reduce maintenance costs during an operator's heavy maintenance checks and structural inspections but also to extend the service life of the airplane. Other specific design improvements included incorporation of a digital cabin pressure control system (CPCS) in lieu of an analog system, which reduced the number of mechanical parts. The CPCS redesign also added the capability for BITE to more quickly identify problem areas, such as individual LRUs or wiring anomalies.

Boeing 737 Max Training

This reduced mechanics' fault-isolation troubleshooting time. Also, the BITE capability increased the systems' mean time between unscheduled removals (MTBUR) by approximately 75 percent and reduced the initial provisioning costs for spare parts by as much as 45 percent. By increasing the MTBUR, components remain on the airplane for a longer time, thereby reducing the inventory requirement for additional spare parts. Another design improvement involved integrating the stall management and yaw damper computers into a single unit. Eliminating the yaw damper computer reduced spares provisioning and maintenance costs and improved system reliability. In the flight deck systems, reliability, redundancy, and BITE were enhanced to make the systems less susceptible to errors (i.e., more fault tolerant) and improve their mean time between failures (MTBF) by 62 percent.

System optimization, in part through improved fault tolerance capability and MTBF, allowed the design team to reduce the total number of parts in the flight deck systems by 23 and provide the airlines with increased dispatch reliability. For these and many other design improvements, a detailed analysis was done at the system level to ensure that the comprehensive cost reductions reached the 15 percent reduction target. Engineers used three-dimensional computer (digital) modeling and employed human factors principles for all design work.

The use of digital modeling provided the means to perform detailed maintainability analysis. The approach employs maintenance access solids (MAS), which are solid design elements used to reserve space for accessing, removing, and installing parts. The digital computing data sets verified that airplane components could be readily accessed and removed during the design phase and in-service maintenance. The human interface also was digitally defined as part of the MAS design approach. The MAS design was used to examine the areas of space, or envelopes, needed to conduct various types of inspections: borescope envelopes, access envelopes for tool sweeps and the removal and installation of components, and visual envelopes for line-of-sight access to inspect components. Each envelope was verified using detailed three-dimensional digital reviews to ensure a high level of airplane maintainability.

Scheduled maintenance program improvements. The reduced scheduled maintenance activities in the 737-600/-700/-800/-900 airplanes are the result of design changes at the airplane system level and an integration of industrywide maintenance practices developed by the Maintenance Steering Group (MSG), a committee comprising airframe manufacturers, airlines, and U.S. Federal Aviation Administration representatives.

The latest iteration of these maintenance practices is MSG Level 3, Revision 2 (MSG-3 Rev. Design changes. Design improvements at the airplane system level reduced scheduled maintenance activities by extending maintenance intervals or eliminating tasks altogether. This provides the airlines with maximum flexibility and use of both the airplane and airline maintenance resources.

The result is lower costs to airlines for scheduled airframe maintenance checks, which account for 18 to 20 percent of overall maintenance costs. One example of reduced scheduled maintenance by system redesign is the trailing-edge flap-drive system. The system was redesigned to last the life of the airplane, with no anticipated overhauls, by switching from an oil-filled reservoir to grease lubrication and using 100 percent corrosion-resistant steel material in lieu of the original chrome plating to eliminate corrosion wear. As a result, the scheduled maintenance intervals were extended from 20,000 flight cycles to 75,000 flight cycles.

The air-conditioning packs also were redesigned, based on in-service experience and customer inputs, which indicated that the 737-300/-400/-500 two-wheel (turbine and compressor) ball-bearing air-cycle machine and the ram-air-system turbofan required oil servicing. The air-conditioning packs were redesigned to a three-wheel (turbine, compressor, and fan) air-bearing cycle machine, which required no scheduled maintenance service. Design improvements in the airplane's electrical power system also reduced scheduled maintenance activities. Based on in-service information, designers switched from a 50- to a 90-kVA electrical power system and selected an integrated drive generator in place of the constant speed drive to improve overall system reliability and extend the intervals between system oil-level checks and filter changes. Maintenance planning document. The 737-600/-700/-800/-900 team analyzed scheduled maintenance activities using the MSG-3 Rev. 2 process along with supporting in-service 737-300/-400/-500 scheduled maintenance data.

2 is the same process used on the 777. The process uses airplane system analysis to identify system redundancies, system reliability, past system safety records, and the system safety factor. This analysis leads to a more efficient maintenance program. The 737-600/-700/-800/-900 maintenance program had a reduction in scheduled maintenance activities compared with a 737-300/-400/-500 maintenance program in 1998. Historical data from the 737-300/-400/-500 maintenance program served as a baseline and were used to improve the 737-600/ -700/-800/-900 maintenance program. The MSG-3 Rev.

2 analysis focused on the following areas: applicable and effective tasks, clear distinction between safety and economic tasks, system-level analysis of reliability and redundancy capabilities, integration of corrosion prevention and control and structural inspections, and preclusion of systems tasks by zonal inspection where applicable. The analysis optimized maintenance intervals for each task based on design and manufacturing improvements, accumulated operator experience, and reliability data on similar airplane systems and parts. In addition, the maintenance tasks for the 737-600/-700/-800/-900 were not prepackaged into more extensive maintenance inspections performed on a periodic basis (i.e., letter checks such as A-checks and C-checks). Not tying tasks to a predefined major maintenance check allows airlines to more efficiently implement tasks into their maintenance programs based on their specific airplane use and operation. The specific maintenance intervals for individual tasks provided the airlines with greater flexibility in the establishment of their maintenance programs.

Improved maintenance documents and training. Improved manuals and training also were integral to the overall plan to reduce maintenance costs by 15 percent. These improvements involved fault reporting and isolation manuals, the structural repair manual, digital formatting, and training.

Fault reporting manuals (FRM) and fault isolation manuals (FIM). In-service experience on earlier airplane models had shown no standardized, consistent method of isolating and reporting faults. The troubleshooting information for mechanics was placed throughout the maintenance manual. These factors resulted in higher numbers of components being removed by maintenance crews that later were found not to have any faults (i.e., no-fault-found component removals). To remedy the situation, new FRMs and FIMs were written to the latest Air Transport Association (ATA) specification, which is based on the improved understanding of the maintenance crews' informational needs.

These manuals made for more precise identification of faults between flight and maintenance crews, reduced troubleshooting lookup time, and standardized reporting of faults. These manuals, combined with flight crews' advance notification to ground crews of incoming faults, reduced no-fault-found component removals. Structural repair manual (SRM).In conjunction with improved FRMs and FIMs, the SRM was enhanced. Developed in accordance with the new ATA specification, the SRM reflects the updated ATA chapter designations for each airplane system and subsystem. The SRM includes more detailed structural identification, resulting in less research time for mechanics. It also contains more comprehensive, user-friendly reports and sets larger allowable damage limits on systems and parts.

In addition, the SRM reduces or eliminates areas of the airplane once considered critical to airplane safety and performance (i.e., critical zones). The SRM also documents more temporary repairs and extends temporary repair time intervals. Digital format. Data from published studies and airline surveys showed that mechanics on average spent 25 percent of their time researching troubleshooting and repairs in the FIMs and aircraft maintenance manuals (AMM). This activity was hampered because documentation only was available on paper or microfilm, where copy quality at times was poor. The manual process of turning pages or advancing microfilm cartridges to locate the desired information was time consuming.

Also, there was no online access to engineering drawings. To address this issue, Boeing documents were made available in a digital format retrievable from a CD-ROM. Software products such as the Portable Maintenance Aid (PMA) allow quick access to data through hyperlinks while featuring enhanced search and navigation capabilities.

Online access to maintenance documentation and engineering drawings and documents was made available through the web site to reduce the time mechanics spent researching, viewing, and printing documents. The 737-600/-700/-800/-900 team also made improvements in maintenance training, in part to take full advantage of the enhanced service manuals.

Mechanics are trained more efficiently using new maintenance-oriented courses and line-oriented simulator sessions. The training uses the same systems description section contained in the AMM. Classes are conducted through computer-based training, which is student paced, more frequently revised, and more interactive. Course materials were developed jointly with major suppliers and can be used for recurring training or as a refresher. ACTUAL IN-SERVICE SAVINGS REALIZED BY AIRLINES Early indications are that the 737-600/ -700/-800/-900 family of airplanes is meeting the projected goal of a 15 percent reduction in airframe maintenance costs. With airlines moving into their second and third years of 737-600/-700/-800/-900 operation, actual cost data are becoming available.

(First-year operators are excluded from maintenance cost analysis because an airplane’s initial introductory period can skew results.) Boeing performed its analysis using actual airline maintenance costs. Where possible, airlines were selected that operated both the earlier 737 models and 737-600/-700/-800/-900s to normalize labor rates, line accounting practices, and operating efficiencies, and to give a true comparative picture of costs. Looking at cost data reported to the U.S. Department of Transportation, 737-800 total airframe maintenance costs were nearly 10 percent lower than those of the comparable 737-400 model. On a per-seat basis, the 737-800 maintenance costs were 18 percent lower than those of the 737-400.

Assuming an annual airplane utilization of approximately 3,000 flight-hours, the cost saving equates to approximately US$50,000 per airplane per year. Reviewing similar data reported to the International Air Transportation Association's Production Performance Measurement group (IATA/PPM), the maintenance costs for the 737-700 were nearly 14 percent lower than that of the comparable 737-300. Because the 737-600/-700/-800/-900 airplanes were designed as a family, they share the same design principles and virtually identical systems. As such, this comparison analysis can be applied to all new 737 models. A recent Maintenance Cost Protection Program (MCPP) review with a European operator supports the projected reduced costs. MCPP is a Boeing program offered to airlines to mitigate maintenance cost risk. The program provides for corrective action by Boeing if airframe maintenance costs exceed target levels.

The specified target level was approximately 15 percent lower than established costs for the earlier 737 models operated by the airline. A detailed maintenance cost review by both Boeing and airline personnel was performed, which included the material consumption list, rotable and repairable parts, and warranty claims. The analysis revealed that actual airframe maintenance costs were 18 percent lower than the established MCPP target for the one-year period July 1998 to June 1999. As airlines gain more experience with the new 737 models, reported costs are expected to be even lower than the predicted cost reductions.

It is important to note that an airline's actual maintenance costs will vary depending on its specific scheduled maintenance plan, contract maintenance agreements, local labor rates, cost accounting practices, operating environment, and airplane utilization. SUMMARY Maintenance activities for the 737-600/-700/-800/-900 family of airplanes were reduced through improved airplane design, reduced scheduled maintenance, enhanced training, improved technical manuals, and improved access to technical data. Reduced maintenance activities translate directly into lower operating costs for the airlines. The goal of the new airplane program was to reduce airframe maintenance costs by 15 percent, relative to the 737-300/-400/-500, which had set the standard for lowest operating costs in its class. Although realized improvements in maintenance costs are a function of individual airlines' maintenance policies, operating parameters, and labor market, early indications are that the 737-600/-700/ -800/-900 overall is well along toward meeting the projected cost-reduction goal. STEVEN HAYES REGIONAL DIRECTOR MARKETING–AIRPLANE ECONOMICS BOEING COMMERCIAL AIRPLANES Aero © The Boeing Company.

All rights reserved.

Maintenance outsourcing has become a crucial part of the business model for low-cost and smaller carriers. But there is no one size fits all solution Skybus was three years away from launching when it started to think about maintenance sourcing. The Ohio-based start-up had not acquired a single aircraft or even selected which aircraft type it would operate when it decided that for its pure no-frills business model to succeed, it needed to pursue a pioneering maintenance strategy that locked in low servicing costs for over a decade. The carrier persuaded Airbus and Boeing to offer an unusual package that combined the purchase of aircraft with maintenance services. After lengthy negotiations, Skybus awarded Airbus a contract in October 2006 for 65 A319s that includes most maintenance services for 12 years. Skybus launched services in May and now operates five leased A319s, which Airbus is also responsible for maintaining. 'The whole contract is on a cost per hour basis.

The key thing is we know what our maintenance cost will be,' says Skybus vice-president of maintenance and engineering Toney Quillen. 'We made it part of our negotiations for the airplanes.' Airbus senior director maintenance, repair and overhaul support management and customer services Wolfgang Kortas recalls: 'They made it quite clear to us during the sales campaign that their strategy was based on total outsourcing with competitive prices and very aggressive performance guarantees.' Kortas acknowledges Airbus was initially reluctant to offer Skybus a maintenance package but eventually realised it needed to go in this direction to secure orders from forward-thinking carriers like Skybus.

'We've listened to our customers,' he says. 'They kept on telling us we need to be responsible for maintenance and we've responded.'

Quillen says when Skybus began negotiations with both manufacturers, 'Boeing was far ahead with this concept. But Airbus did a turn around and pulled out all the stops. It was hands down the better deal.' Airbus now holds up its arrangement with Skybus as a 'groundbreaking contract' that demonstrates its new approach to maintenance. It claims this approach does not mean it has strayed into the maintenance market because it will subcontract most of the work for airlines like Skybus that it is responsible for. 'We can't do everything and we don't want to,' says Kortas Total support After winning the Skybus contract, Airbus held a competition to select maintenance providers.

Singapore Technologies Aerospace's (ST Aero) US division, Mobile Aerospace (MAE), won a $635 million contract covering a wide array of services, including line and light airframe maintenance and components. Wheels and brakes, which Messier-Bugatti is looking after, were the only item contracted out separately by Airbus. 'We're doing everything from engineering to planning and maintenance,' says ST Aero chief executive Tay Kok Khiang. 'Skybus outsources everything. They don't have a single maintenance crew and they are flying 15 hours per day.'

ST Aero sees the work it is doing for ­Skybus as a glimpse into the future. Tay says the contract represents one more step in a gradual trend towards more outsourcing and larger packages. While legacy carriers over the last several years have gradually outsourced more maintenance, low-cost carriers and start-ups are increasingly looking at packaged solutions.

Tay says Skybus, easyJet and Jetstar Asia have already gone down this path and believes 'other airlines will follow'. Jetstar Asia awarded ST Aero a five-year $47 million 'total aviation support' contract prior to launching in late 2004. In August 2005, SR Technics beat out ST Aero to win a much larger 'total maintenance support' contract from easyJet. The 10-year, $1 billion deal in many ways was the defining moment in the trend towards large packages. 'The contract has worked in that it has achieved what it was supposed to,' says easyJet technical director Peter Ellison.

'It has provided stable support and reduced our cost as much as possible.' SR Technics executive vice-president sales and marketing Declan O'Shea says the contract guarantees 99% aircraft availability for easyJet's fleet of A319s and Boeing 737-700s, which are operated 18 hours per day. 'That means we have a 10-minute window of error every day. Today on both platforms we are beating 99%,' O'Shea says. But Ellison reveals easyJet will likely not continue to rely so much on a single provider.

SR Technics is now responsible for maintaining and supplying components for all 120 aircraft in easyJet's fleet. Ellison says as easyJet's fleet approaches 200 aircraft, multi-sourcing will become attractive because only a few providers have the capacity to maintain such a large fleet and if the package is divided several more providers will be able to bid. 'At a time in the future we'll look into splitting the contract,' Ellison says. Over outsourcing? He also reveals easyJet plans to expand its in-house engineering team and in-source fleet management.

'We've outsourced almost everything we can. We need now to look at in-sourcing some functions,' Ellison says.

Over the last few years several large maintenance providers have begun marketing new total service packages that cover airframes, engines, components, fleet management and everything in between. But while the easyJet and Skybus deals are seen by some as the start of a wave of new mega maintenance contracts from low-cost carriers, in reality they do not meet the definition of total services. Ellison says easyJet considered opting for a true one-stop-shop contract but wanted to avoid putting 'all the eggs in one basket'. As a result, it awarded separate contracts for engines and landing gears. 'We thought it would be too risky to go for just one supplier,' he explains. 'For small- or medium-sized carriers it makes more sense.'

Even Skybus is not considered a customer of ST Aero's Total Aviation Support (TAS) programme. The carrier elected to exclude engines and auxiliary power units from its contract with Airbus and instead awarded contracts for these bits to GE and Honeywell.

'We do outsource everything but it's not one package,' Quillen says. 'It is three basic packages.

In total we outsource all the maintenance.' Skybus also decided to wait a few years before selecting heavy airframe and landing gear maintenance providers. 'We left heavy maintenance out because with new planes it won't come up for five to six years,' Quillen says. 'I don't want to pay a cost per hour for something six years down the road. I wanted that money in our pocket.' While ST Aero has been selling TAS for several years, Tay acknowledges it only has one TAS customer, Jetstar Asia, which currently operates less than 10 A320s. SR Technics has about 20 customers for its Integrated Airline Solutions (IAS) product but says most carriers opt to buy various combinations of aircraft, component, engine and fleet technical services rather than combine everything into one contract.

Spanish low-cost carrier Vueling, for example, opted only to include fleet management and components in its IAS contract. The carrier's deputy chief operating officer, Michael Bata, says after evaluating several options the carrier decided it was most cost efficient to forge separate deals for engines, heavy airframe checks and auxiliary power units.

Like easyJet's Ellison, Bata would hate to only have a single supplier: 'We have four major contracts. Through our strategic sourcing project we found the best product and price for the airline and that's what it came down to.' While many carriers are choosing to combine various elements of maintenance, it is very unusual for them to combine everything into one nose-to-tail contract. Kortas says Airbus has several maintenance support contracts with airlines covering airframes and components but only Skybus has requested such a comprehensive package. Boeing has not yet secured a customer for its turnkey lifecycle programme for the 787, GoldCare, although it has actively been marketing it for over one year. 'Psychologically airlines are not prepared to accept it,' Tay says. Comair executive manager technical Avi Bhatt says the South African carrier has saved $50 to $60 per maintenance man hour by awarding three maintenance contacts instead of one.

'Absolutely it's cheaper to split the deal and we have the resources to manage this separate contracts,' he says. 'As a small player today every dollar counts.' Cathay Pacific general manager engineering commercial Elvis Ho agrees one-stop shop solutions are more costly and believes they do not even improve cost predictability. 'That's the myth. We don't feel it's the case,' Ho says. New Cathay regional subsidiary Dragonair is now an SR Technics IAS customer.

But Cathay has decided to split up this contract from the end of October with SR Technics only retaining components. Engine suppliers Standard Aero chief executive Paul Soubry confirms that while carriers are generally trying to reduce the number of maintenance suppliers they use most are not willing to rely on just one provider. 'They are not necessarily looking for one solution but a reduced number of suppliers with more accountability,' he says. Standard Aero, which specialises in regional aircraft engines, and other providers say engines in particular are almost always contracted out separately.

'The airlines recognise engines are a different element and they want a different deal for engines,' says Hong Kong Aircraft Engineering (HAECO) executive director Ashok Sathianathan. He adds most airlines prefer to control engine maintenance separately because it accounts for up to 60% of all maintenance costs. Comair's Bhatt says by awarding separate maintenance contracts for airframes, engines and components plus auxiliary power units, carriers are able to use small providers. He explains there are many small high-quality shops that have lower overheads and can ­undercut the large providers which are pushing one-stop-shop solutions. But Bhatt adds that when it comes to airframe maintenance, awarding one contract makes sense. Comair, which operates a British Airways franchise in Africa and a domestic low-cost carrier known as Kulula, has traditionally used two local providers.

But in July it awarded a single five-year, $72 million contract to SAA Technical covering line and light airframe maintenance for its entire fleet. 'We intended to split it again but by single sourcing we got a lot of benefits,' Bhatt says. 'Our benefits are costs and maintenance reliability but more important than that, efficiencies.' Comair was an early adopter of a total outsourcing strategy, deciding 10 years ago to scrap its maintenance operation including line maintenance. Today its maintenance department consists only of Bhatt, three engineers and two quality managers.

'Comair decided to get out of the maintenance business when we got out of turboprop aircraft in 1997. It made no sense,' Bhatt says. 'We do nothing.

We outsource 100%. Outsourcing may be a bit more pricey but it's more efficient and reliable this way and it is easier to budget for it.' Panama's Copa Airlines has a similar strategy, but like most carriers carries out its own daily checks. 'Copa only performs line maintenance and minor modifications. All heavy checks and major mods are outsourced,' says Copa senior vice-president of operations Larry Ganse. 'The investment of tooling, test equipment, facilities and head count cannot be justified by the size of our fleet.'

Copa is now using GE for engine maintenance and ST Aero's new Panamanian subsidiary for airframe maintenance. Ganse says the opening of Panama Aerospace Engineering earlier this year allowed Copa to reduce aircraft service times, react faster to unpredicted maintenance requirements and improve its access to components. For smaller and low-cost carriers, outsourcing to a local provider is an ideal solution. It allows carriers to realise the benefits of having full maintenance capabilities onsite without having to invest in the infrastructure.

With this in mind, AirAsia signed a deal in May with a new Malaysian company to provide heavy airframe maintenance for its entire fleet. The Malaysian low-cost carrier says it selected Sepang Aircraft Engineering (SAE) to avoid having to waste fuel sending aircraft to Singapore, where most of its heavy airframe maintenance is now done. SAE will begin the first heavy check for AirAsia, which only does line maintenance and A-checks in-house, later this year at a new facility next to AirAsia's Kuala Lumpur base. 'It is logical in terms of cost efficiency to send our aircraft for maintenance within the country. There is always a risk in start-ups but we can see the potential of homegrown companies taking up the challenge,' says AirAsia head of engineering Azhari Dhlan. 'AirAsia core business is to provide low fares to passengers and will continue to do so.

Boeing 737 800 Grounded

With this outsourcing strategy, it allows AirAsia to concentrate on day to day operations of an airline.' Middle Eastern budget carrier Air Arabia is already benefiting from a new maintenance hangar that opened in September at its Sharjah base.

The hangar is operated by HAECO Sharjah Aircraft Maintenance (HS-AECO), a new joint venture company between Air Arabia and HAECO. While legacy carriers commonly forge joint ventures with maintenance companies, this goes against the traditional strategy of budget carriers. But Air Arabia decided it needed to establish HS-AECO to improve fleet reliability. 'We need the flexibility of them being at the doorstop to support our high utilisation,' says Air Arabia director of operations and maintenance Mohamed Ahmed. Vueling earlier this year also took the unusual decision to expand its in-house maintenance capability.

The carrier plans to open a new hangar in Barcelona in late 2008. Bata says two bays will be exclusively used by Vueling and the carrier is in talks with SR Technics to establish a joint venture to pursue third-party business using a possible third bay. 'The main point is it will have Vueling's name on the side of it,' he says. 'Vueling will build the hangar. Whether SR Technics will be a joint venture partner is still yet to be determined.'

Bata says Vueling only does line-maintenance and A-checks in-house but with the hangar opening 'we'll probably look at bringing light C-checks and phased C-checks in-house'. He acknowledges most new low-cost carriers are unwilling to invest in maintenance infrastructure but says Vueling concluded in-sourcing C-checks would be more cost efficient after its fleet reaches a certain size. Bringing maintenance in-house 'At a certain point it makes sense to bring some work in-house, when you reach a certain size,' Bata explains. 'The bottom line is what's the cost? Can you do it in-house cheaper?' Ahmed says B- and C-checks, which Air Arabia formerly sourced overseas, will now be done in Sharjah and potentially the hangar will be upgraded to accommodate D-checks. Air Arabia owns 51% of HS-AECO but HAECO will be in charge of operating the new hangar and has taken over all 50 of Air Arabia's maintenance employees.

While Air Arabia has handed HAECO fleet management and airframe maintenance, it outsources components and engines to other providers. Sathianathan says most carriers prefer to keep multiple providers and points out HAECO only has two customers with comprehensive packages Singapore cargo start-up Jett 8 Airlines and long-haul low-cost carrier Oasis Hong Kong.

Both these deals exclude engines. Another new long-haul low-cost carrier, Viva Macau, has a similar package from Guangzhou Aircraft Maintenance Engineering (GAMECO).

'This is a smaller scale total care,' says GAMECO commercial director Joey Lo. He adds mainland Chinese carriers are not interested in packages at all and even insist on multiple sources for airframe maintenance. Most maintenance providers say while there is a trend towards more outsourcing and larger packages, especially in the low-cost sector, every package is different. 'There are no two customers that are alike,' Kortas says. 'We believe in flexible solutions.'

Where is GoldCare? Boeing captured the attention of the maintenance industry last year when it began actively marketing GoldCare, a turnkey lifecycle programme for the 787. But lacking a launch customer, Boeing has said very little this year about GoldCare and claims it is instead busy restructuring the programme in response to evolving customer requirements. 'We've made the programme more modular,' says Boeing Commercial Aviation Services general manager Lou Mancini. He explains Boeing initially only offered two options, a full package of maintenance solutions and integrated materials management (IMM). It has since added two more packages offering operational planning and control and engineering planning services.

Boeing also has deferred plans to select maintenance partners in Asia and North America by the end of 2006. 'We've slowed down in signing contracts as we redefined the programme,' Mancini explains. Singapore Technologies chief executive Tay Kok Khiang says it is ready to sign up but is waiting for Boeing.

Tay expects it will be several years before GoldCare becomes a popular option and most customers will be small carriers. 'The only way to price it is to add a big insurance price,' he says. 'The package solution for the 787 will definitely come but not for five, six or seven years.' One of the 787's launch customers, Qantas low-cost subsidiary Jetstar, says the initial bid it has received for GoldCare is significantly higher than expected and blames this on high risk premiums levied by the suppliers. Jetstar acting general manager of procurement Seb Mackinnon says maintenance bids it has received covering individual systems have also been high and as a result the carrier's operating cost calculation for the 787 is 'quantum higher than what the Qantas Group was expecting and that obviously is pretty alarming'.

He adds: 'We'd like to see less risk premiums.' Boeing IMM director Joe Brummit acknowledges risk premiums are currently being priced high but says they should come down as suppliers get a better understanding of customer requirements. 'People are trying to figure out what we're actually pricing.' Boeing is confident GoldCare will be a competitive offering but not squeeze out independent providers.

The manufacturer expects about 25% of the 787 fleet will eventually be covered under GoldCare with the package tailored for each operator. 'No two airlines are the same. GoldCare won't mean the same thing for every airline either,' says SR Technics executive vice-president sales and marketing, Declan O'Shea. Stricter contracts As carriers rely on fewer maintenance providers, they are insisting on stricter contracts with steep penalty clauses.

Sabena Technics chief operating officer Pierre Reville says carriers are 'really pushing a lot' for higher levels of dispatch reliability and bigger penalties for delays. 'What they buy is dispatch capability.

We're selling service not repair,' he says, adding contracts 'tend to be more complex and integrated'. KLM Engineering and Maintenance product support director components Hans Glasbergen says carriers are now insisting on 'more strict performance indicators' and reliability guarantees on a flight hour basis. 'It all boils down to cost. Every airline is looking to cut costs,' he says. Comair executive manager technical Avi Bhatt says it took three months instead of the normal one week to sort out baseline language for its new contract with SAA Technical.

The new contract has more stringent guarantees. 'If you disrupt my service you will pay our costs,' says Bhatt. Honeywell vice-president customer and product support, Adrian Paull, says shorter turnaround times and 'real guarantees' on cost and performance are now an 'entrance ticket' to negotiations with airlines. He says 'in the past there was looseness in the language' and airlines would not hold suppliers responsible if they did not complete repairs in time, but this changed after 2001. Carriers have since reduced headcount within their engineering departments and are no longer shy to enforce product support terms and ask for contracts with 'teeth and real remedies'. Paull says when he worked for British Airways several years ago there 'was an entirely different structure.

These days much more accountability is driven to the supplier, quite appropriately I think.' While stricter contracts seem like a positive trend for airlines, Copa senior vice-president of operations Larry Ganse warns they could also be more costly: 'We would agree contracts are becoming more complex. We do build reliability into our contracts but, up to now, have not insisted on guarantees for span times. This is very much a double-edged sword in that MROs tend to overestimate the span times to protect themselves, while we are more focused on getting the airplanes back into service as soon as practical. Similarly we are of the belief that many of these 'iron clad' guarantees are being paid for in other ways, such as the labour rate, non-routine findings and back shop work.

It would take a substantial presence on the part of the airline to monitor all of this and make certain nothing was being abused.'