Why plan? It’s unnecessary. It takes too much time and you have very little time and money. But, if you plan your aircraft material needs right, you'll get back both.
So what’s holding you back? Is it the hundreds of emails flooding your inbox? Is it the pressure? Is it the non-stop, drop everything AOGs sucking the life out of your day?
That's fair. But since 23% of your direct maintenance costs go to components, it's an important topic.
Let’s bring it back to the basics.
Aircraft Material Defined
Rotable, repairable & expendable, oh my!
Expendables are items that have a high scrap rate. Like a diaper. Once you use it, throw it away. A good example of this is a bolt, gasket or cherry rivet.
Further down the line you come across repairable units. These items come without a dedicated CMM (Component Maintenance Manual) and are limited in the number of repairs that can be done on them.
And now we hit rotables. These are the granddaddy of aircraft material. They have a dedicated CMM with unlimited repair cycles - in theory.
In aircraft material planning, repairable and rotable components are clustered together under a common chain of command. 95% of all spares investment goes to repairable and rotable items. All the while expendables eat up greater than 80% of the total volume. In my book, both are critically important.
Aircraft maintenance is entirely dependent on the right provisioning of these units. Planning spans many areas: initial provisioning, anticipation of spares demand, spare float management, repair management, turnaround time management, supplier management, warranty management, AOG management, service level management and many others.
Each of these domains has its significance in aircraft maintenance. When they’re all combined they’ll contribute 30-40% of total aircraft maintenance cost. But let’s put aircraft maintenance aside for a minute. Each one of these areas also contributes to aircraft dispatch. Any improper planning will result in a grounded aircraft. The term “AOG" is embedded in so many of our bad dreams. Failure to plan right leads to AOGs, cost overheads, lost revenue and many more negative effects.
Can proper planning in each of these areas help you gain control of your money? And how?
Let's take a look...
Provisioning is selecting and procuring parts to the extent of providing necessary support to a fleet’s operation and for maintaining & repairing aircraft. It's an ongoing process in aircraft maintenance. The majority of all provisioning happens at the entry to service (EIS) for a particular aircraft. It’s an important part to support new aircraft or an end item for an initial period of operation.
Typically the initial provisioning will be based on the recommendation from the aircraft manufacturer. They’re spelled out in what we call the RSPL (Recommended Spare Parts List) document. RSPL is prepared on the basis of airline parameters:
- Number of aircraft in fleet
- Annual flying hours
- Hour/cycle ratio
- Desired protection level
- Turnaround time
- Administration time
They’re also set between the material manufacturer parameters:
- Mean time between unscheduled removals (MTBUR)
- Essential code
- Spare parts categorization
- Lead time
- Quantity per aircraft (QPA)
- Mean shop processing time
Initial provisioning can exceed 10% of the cost of purchasing an aircraft. It’s no small amount of money and planning right can save you a ton of long term headaches. Managing optimum levels of inventory is critical, especially in the presence of factors beyond our control.
Think about how you manage your repairs. It’s much more than sending them to your MRO provider. You have to process, ship, follow-up, piece part, approve, ship and receive. All this while you focus diligently on reducing your rotable cycle times.
Your rotable units have to be repaired and re-installed on your aircraft and it is imperative that an efficient repair management system is in place. This system will ensure timely repairs and availability of serviceable units. A lack of or an inefficient repair system means aircraft are facing AOG’s and AOGs cost money.
Turn Around Time Management
Though part of repair management, it depends on the supply chain & logistic cycle you have in place and the mean shop processing time. An inefficient, non-responsive supply chain creates delays. In order to keep your cycle times low, you must have a superior logistics partner and an even better MRO partner. Higher TAT implies a greater investment on spares to avoid AOG during downtime. The longer you take, the more you have to invest.
Warranty Management & Guarantees
A robust warranty process will reduce maintenance and operating costs for an airline. It ensures when a part fails, through no fault of your own, any financial impact felt by the operation will be claimed back to the fullest extent from the OEM or supplier. When the basic component warranty of 4 years expires, an airline can typically expect to pay for the repair of failed parts. This ‘repair warranty’ typically lasts 12 months.
Additionally, OEM provides certain guarantees in the form of remedies when they do not meet contractual performance. These guarantees are typically available against MTBUR, shop processing time and provisioning time period committed by the OEM. The remedies associated with these guarantees include FOC loans, exchanges and modifications. If OEM is not providing suitable remedies, provisions exist in supplier support agreements for credit penalties payable to the operator.
Industry guidelines suggest that an aircraft operator could expect to recover 2% of the aircraft value in warranty and guarantee benefits over the initial warranty period.
Once the initial warranty period with the OEM is over, you’ll want to be prepared with your supplier warranty agreement.
There are a ton of suppliers to purchase aircraft material and perform repair services for your aircraft components. Remember though, more is not always better. From these various sources you’ll get different locations. Supplier management deals with placing orders (purchases and services), tracking repair loop, contract management and enforcement. It can help drive down turnaround-time and improves operational efficiency.
There’s many ways you can save money here. I encourage you to not focus just on the direct costs. Many airlines lose a lot of money with this singular focus. Look for suppliers that’ll help you reduce your total cost of ownership - that’s where the real value is.
According to recent reports, smaller aircraft AOGs cost more than $20,000 per day. For larger aircraft, it’ll go as high as $150,000 an hour. Aircraft make money in the air. AOGs bring that to a screaming halt and cost a ton of time and money.
The challenge is to minimize grounding time through an efficient AOG management system.
In conclusion, each one of these areas has a high impact on aircraft maintenance both in terms of economics and operational efficiency. To save a ton of money, you have to have a sound system in place for these areas. Otherwise, you will have unwanted cost lost revenues.
This post was brought to you by Irfan Alam. He’s an aircraft engineer for Pakistan International Airlines and has expertise in technical contracts, rotable planning, and provisioning.