Over the years, I have heard a lot of debate about the use of PMA parts on leased aircraft. Challenges may arise from restrictive clauses in lease agreements that prevent the use of PMA on the asset. This can cause particular headaches when the lessor is an air carrier that is looking to reduce maintenance costs, but whose largely (or exclusively) leased fleet means that restrictive clauses (either perceived or actual) restrict use of PMA.
The good news for the aviation industry is that lessors’ position with respect to use of PMA appears to be loosening as:
– lessees demand the right to use PMA,
– lessors become more familiar with PMA, and
– the industry continues its shift toward ever greater PMA acceptance.
The first, and most important, step in greater PMA acceptance on leased aircraft is demand by the operators. If PMA is not useful to the operators then it is not useful at all. We have already heard at least two air carriers–Delta Air Lines and Copa Airlines– state unequivocally that they will not sign leases with “no PMA” clauses in them. Many – MANY – others have asked how they can start using PMAs on their leased aircraft. At several industry trade shows over the past year, we have heard multiple parties–both air carriers and lessors–state that the use of PMA on leased aircraft was a common occurrence; the lessee (the air carrier) just has to ASK.
Lessors typically enter a lease negotiation with a set of boilerplate terms. Those terms, however, are subject to change to suit the lessee’s business model and to satisfy the needs of both parties. At MRO Asia last year, Ananta Widjaja from Sriwijaya Air pointed out that a lessor will never give a lessee anything outside of the boilerplate unless the carrier asks for it. This point was echoed by a number of lessors over the course of that conference, who recognize that use of PMA is a reality in virtually every air carrier’s operation.
This is an important point for air carrier maintenance departments to discuss with their leasing departments. Remind the leasing department that most lessors will permit PMA to be used on leased aircraft (with a few exceptions); the carrier just has to demand the right. As lessors continue to grow more familiar with PMA, and recognize that use of PMA does not in any way devalue their asset, they grow more willing to waive the “no PMA” clauses in their lease agreements. This is beneficial for the lessee and lessor, as the lessee can continue to realize the savings and reliability improvements provided by PMA, and the lessor opens up more potential customers by allowing the use of PMA.
A number of the air carrier representatives I have met at recent trade shows have pointed out to me that they are quite likely to use PMA during the middle of the lease. For lessors, the most important part of any lease is the return conditions, because these are the terms that dictate the condition of the aircraft for the next lessee. When permitted by the lease, lessees can take advantage of this fact by using PMA throughout the term of the lease (as allowed by the lease terms) and as necessary return, remove PMA parts during the heavy check prior to the return of the aircraft.
I would have expected leasing companies affiliated with OEMs to be the last folks to embrace PMA, but I recently encountered an executive from one such leasing company who admitted that there are PMAs on his company’s products, and acknowledged that it is something they are managing.
Lessors are becoming more accepting of PMA for a couple reasons. The first is demand by their customers. Lessors need to have their aircraft leased in order to realize a return on investment, so it makes sense to permit the customer to use PMA if that is what it takes to get the lease signed.
Second, lessors have expressed concerns about an effect on residual ‘end-of-life’ value of the aircraft. Because most PMA parts are expendables that have no part-out value, this is not a concern that applies to the vast majority of PMA parts. For those very few rotable PMA parts, at least one manufacturer has reported that their overhaul recovery rates are actually higher than those of the corollary OEM parts.
Third, lessors have begun to realize that it is simply not possible for many carriers to operate without any PMA. PMAs, especially on interiors and air frames, are a reality for a significant number of carriers. Some carriers simply cannot operate without the use of PMA to control costs and reliability. Air carriers want to control costs and improve reliability to the gretest extent possible, and this drives use of PMA.
Lessors recognize this. Lessors have even started to realize that this is the case with respect to engines. And though most lessors remain squeamish about PMA in the gas path or life-limited engine PMA, the simple fact is there are very very few PMA that meet this description – which means that nearly all PMAs are fair game.
Finally, lessors are becoming more flexible in allowing PMA because it is impractical not to. When leasing older aircraft, lessors recognize that it is simply not possible to get “OEM” spares. They also recognize the significant lead times for OEM parts, when PMA parts are available off the shelf. This makes a big difference in turn time when delivering a leased aircraft to the next customer. Finally, lessors are beginning to understand that many new aircraft are, in fact, built new using PMA parts(!) It simply makes no logical (or legal) sense to demand no PMA be used when the aircraft are delivered new with PMA throughout.
There are still some hurdles for PMA in leased aircraft. Lessors remain nervous about PMAs in engine gas paths, LLP PMAs and rotable PMAs. But these are not the traditional roles of third-party PMA parts, so they are not a concern for 99% of the PMA parts out there. The best way to address PMA concerns is through education. Explaining that PMA meets the exact same airworthiness and quality assurance regulations as TC/PC parts, and must meet or exceed the safety performance of the OEM part is an important point that is often echoed by the FAA.
Ultimately, lessors are becoming more and more accepting of PMA in leased aircraft. Air carriers must remember that everything is negotiable, and that if PMA plays and important part of their maintenance and cost saving strategy, they need to demand use of PMA be allowed by the aircraft lease. PMA manufacturers should make it a point to remind their customers that lessors will allow (or at least negotiate) the use of PMA. But they won’t allow anything if the carrier doesn’t ask.