Tag: MRO Americas

Ones and Zeroes are MRO future, says Lt Gen Levy

MRO Americas, Orlando, FL: Data science – “the ones and zeroes” – will be the key discipline for maintenance and support services of the future, whether in the military or civil arena, according to Lt. Gen. Lee Levy, Commander of the US Air Force Sustainment Center (AFSC), Air Force Material Command (AFMC) is his Military Keynote speech to MRO Americas.

Within the AFSC, there are eight organisations with 43,000 personnel operating as one team from 24 geographic locations. To enable combat air power those organisations must deal with a variety of tasks, including Depot Maintenance and Modifications. This is where the AFSC demonstrates that it is a globally integrated MRO organisation, noted Levy.

“We also do software – the ones and zeroes – and are currently hiring more data specialists than qualified maintenance technicians,” he reported.

As with civil aviation maintenance, the military has to move parts around the world. “With Logistics Command and Control, we have perhaps not kept pace with developments. We’ve not been able to do this as elegantly as we’d like around the globe. Civil aviation best practices have helped,” Levy admitted. “We have to be prepared to operate in the air, in space, in cyber, on land and in maritime. And our C & C (command and control) is not where I’d like it to be.

“One of the things that drives us in the logistics ‘Kill Chain’ is what I term big E (Effectiveness) versus little e (efficiency). Our shareholders are the [US] public and when we’re called upon they expect us to do one thing – win. That’s where a decision has to be made to do something that may not be efficient, but will be effective,” he added.

Levy noted that all this is done with a lot of old technology. “The average fleet age of the Air Force is 27 years old, which is pretty geriatric. There are many MRO challenges that come along with that,” he declared.

Although many of the older aircraft are often considered less sophisticated than modern fighters, Levy again underlined the need for data specialists – but actually to work on the former. “The KC-46 (military version of the Boeing 767) has more lines of software code than an F-35 fighter,” he pointed out. “Do we have enough STEM (science, technology, engineering and mathematics) graduates coming through? I don’t think so and an inability to create STEM graduates is an issue for the whole country.”

However, the Lieutenant General admitted that the supply chain risk “is what keeps me awake at night”. The military cannot allow that to be the weakest link as it reduces “the big E”, he observed.

Levy has had to deal with there being no proper appropriation for eight years. His fear is that if he “got my money” and found he had six months to spend 12 months’ worth of money, then the suppliers might not be in a position to fulfil his requirements. Moreover if the suppliers had to drop other contracts they may well increase their prices – “and sell me a $10 widget for $14”.

Such an outcome, Levy remarked, would make him look like a poor manager of the budget and thus someone who wasted taxpayers’ money.

Military and civil MRO business are “remarkably the same,” Levy concluded. “We each have an ageing workforce and fewer STEM graduates available to us. We must therefore continue to find mutually beneficial ways to work together.”

By Bernie Baldwin, editorial contributor

Satair and VAS Aero Services collaborate to offer used/surplus parts

MRO Americas, Orlando, FL: Airbus subsidiary Satair Group has signed a new services agreement with VAS Aero Services to offer surplus and used serviceable material for Airbus aircraft to the market alongside new parts.

VAS, a leader in aviation logistics and aftermarket services including end-of-life support, will assist Satair with servicing, certification, warehousing and distribution of OEM excess parts inventory, be it simply surplus or used serviceable material.

Bart Reijnen, chief executive officer of Satair Group, called the deal “a clear commitment” to offer more to its customers, who will be able to view and purchase the surplus/USM parts through the Airbus online portals.

“We bring all the intellectual property data of pricing, demand, fair market value assessment of each part to the partnership,” explained VAS Aero Services chief executive officer Tommy Hughes. “By working with VAS, Satair will shorten the learning gap of utilising such data, as VAS is already there.”

Dynamic updates will be made to keep the market updated with news of when newly-acquired surplus and/or USM has been made available to operators.

(Photo – from left to right: Satair CEO, Bart Reijnen and VAS Aero Services executive chairman, Adi Bernstein).

By Bernie Baldwin, editorial contributor

Globalisation Continues; MRO at Right Place, Right Time

MRO Americas, Orlando, Fl: Better MRO delivery in the right place at the right time, and an increase in partnerships between global MRO players and regional players were two of the key messages to come from the MRO Americas session on globalisation of the MRO industry.

Jim Sokol, president of MRO Services at HAECO Americas, commenting on how globalisation plays out differently for heavy maintenance, described his company as being “agnostic” in its view and emphasised that it “makes sense to do the right work, with the right level of talent in the right place at the right time”.

HAECO aided its globalisation by acquiring TIMCO Aviation Services in 2014. “Three years in and we’re developing something consistent for all of our customers,” Sokol noted. “It made sense for both the markets in both Asia and North America by giving HAECO a broader network. Also, wherever the work is done, the product is the same.”

Aiming to provide a global centre for MRO is the strategy of the Thai Government in developing U-Tapao as an MRO hub, reported Ajarin Pattanapanchai, Deputy Secretary General, Thailand Board of Investment. Her role is to helps high profile OEMs and MROs get started in Thailand.

The country’s aim is to offer a competitive wage structure compared with Singapore and Malaysia. According to Pattanapanchai, it also offers lower landing/takeoff/parking fees than most other countries in the region, again including Singapore.

“The infrastructure is there – both in talent and experience,” Pattanapanchai added. “We’re stronger in component supply than actual MRO, but that is changing. The Government is trying to make sure that the human resource is available and is introducing new courses for that.”

Hisham Nasser, chairman and consultant, Egyptair Maintenance and Engineering, believes globalisation will activate new ideas. In terms of the structure of MRO in the Middle East in the next 10 years, Nasser indicated that those ideas will include the possibility of affiliating with some major MROs, such as Air France Industries KLM Engineering and Maintenance. “First, the region has to reach a certain level of stability, but I think we will see a lot of [these affiliations].”

The whole of the African MRO market is becoming more competitive, Nasser observed. He admitted that Ethiopian Airlines was ahead of Egyptair as a result of having bought new aircraft – 787s and A350s, but declared his company competitive with South African Airways which he said is facing the problem of aging competent personnel. “The competition is a healthy environment though,” Nasser commented.

One region not being seen as an attractive opportunity is Europe. Sokol confirmed that HAECO has “had some customers approach us to do that, but we’re currently not seeing it. The cost of labour and the issues surrounding that need to be sorted out first”.

By Bernie Baldwin, Editorial Contributor

Airline Cycle Past Peak, but MRO Industry Value to pass $100bn by 2027

MRO Americas, Orlando, Fl: The current financial cycle for the airline industry has gone past its peak, after the airlines posted a net profit of $35 billion in 2016. The MRO industry, however, will continue to grow from a value of around $72.1 billion this year to $103.8 billion in 2027. So said Dave Marcontell, general manager, Oliver Wyman/CAVOK as he kicked off the industry forecast session at MRO Americas 2017 in Orlando, Florida.

An increase of 10,133 aircraft in service, to take the global fleet beyond 35,000 by 2027 will accompany that MRO industry growth, which means that 40 percent of today’s in-service fleet is forecast to retire by 2027, Marcontell noted.

US carriers contributed approximately $20 billion to 2016’s airline industry profit, with a good portion of it due to exceptionally low fuel prices. Although fuel prices have gone back up to around $55 per barrel, Marcontell believes the next couple of years will still be positive for North American airlines. One notable phenomenon from 2016 was that around 630 aircraft were removed from storage and put back into service.

Marcontell then brought up what he described as the “black elephant in the room”, namely the impending labour shortage of AMTs (aircraft maintenance technicians). “The median age of technicians is now 51, which nine years higher than average workforce,” he reported.

Moving on to predictive maintenance, big data and advanced analytics, Marcontell remarked that there has been limited evidence so far as to the benefits. While most companies are investing in these developments, 62 percent of respondents to a survey about their use said they were constrained by old technologies. Last year that old technology was seen as a small problem, but now organisations are realising how hard it is to make use of all those new technologies.

However, the survey did show that while many are ‘behind the curve’, most are not standing idly by waiting for things to happen. But about half of respondents said their IT budgets are not sufficient.

Richard Brown, principal at ICF, agreed that the North American market will have another good year in 2017, with a forecast EBIT margin of 12.9 percent. All other regions are also expected to be positive except for Africa.

Brown observed that more stable fuel costs slowed aircraft retirements, which has had an effect on the MRO market. “For example, United has been putting 777-200s back into the domestic market, while British Airways has been looking to refit the interiors of some of its 747s,” he remarked. Also, fewer aircraft are being cannibalised, with no more 5-year-old A319s being parted out.

ICF’s current forecast is based on the 2016-2026 period and features 3.2 percent a year global growth, taking fleet from around 28,000 to 38,000. However, the company expects the global MRO market to grow at 4.1 percent a year – faster than airline growth. North America’s MRO market will grow from $18 billion in 2016 to $21.4 billion in 2026.

Brown highlighted a number of trends to watch, including the rise of RONA (return on net assets)-driven airlines. For these carriers, capacity management and asset utilisation are replacing market share as the key metrics of the business. “And it’s all about sweating those assets,” he added.

Whole lifecycle solutions is another trend to watch, Brown continued, “With new aircraft orders softening, OEMs are even more focused on the aftermarket. Boeing, for example, is aiming to triple its services revenue to $50 billion over the next decade.” This involves developments such as building a hangar at London Gatwick to support Norwegian, which operates 787s and 737s from the airport and will also be taking a large number of 737 MAXs.

“With a highly competitive aftermarket ecosystem, MROs need to continually identify ‘how to win’ and invest to maintain leadership,” Brown concluded.

By Bernie Baldwin, Editorial Contributor