Partners Across the Atlantic

Expanding airline business is creating maintenance partnership opportunities in North America and Europe.

By Ian Parker

In Europe and America, air travel is growing at such a rate that maintenance companies can look forward to more and more work. In addition, there is an increasingly liberal attitude in both regions as to which companies are allowed to do work where; air transport may finally become the fully internationalized business it always promised to be.

According to European Union (EU) governments and the European Commission, transatlantic air travel will increase by 50 percent by 2013. Similar increases are expected within Europe and North America. Someone will have to look after all those planes and companies on both sides of the Atlantic are positioning themselves to take best advantage of the opportunities.

Europe and America signed an ‘open skies’ deal last March which basically means that airlines from each can fly to any destination in the other.

Douglas Alexander, the UK’s transport secretary, hailed the removal of all “arcane” restrictions on EU-U.S. routes. Airfares will fall still further saving customers an estimated $14 billion by 2013. The implications for maintenance companies are positive.

For example new U.S. airline Virgin America Inc., which began operations on Aug. 8, has signed an agreement with Germany’s Lufthansa Technik (LHT) for the company to look after its fleet of Airbus A320s which will reach 31 aircraft when deliveries are complete. There is ongoing investment and job creation in the United States as a result.

Virgin America is the first customer for LHT’s Total Material Operations (TMO) package, the latest to be offered by the maintenance company. The 10-year contract is worth more than $250 million. In the first phase, line maintenance will be provided at San Francisco, New York (JFK), Los Angeles (LAX), Washington, D.C. (IAD), Las Vegas, and San Diego. Further airports will follow as the airline’s network expands.

Stefan Schmuck, LHT’s regional director for the United States, tells AMT, “TMO is the highest integration of services we can offer on the component sector. Our most successful business in the United States is components. It goes hand-in-hand with line maintenance.” He’s based in Tulsa, OK.

However there are still some entrenched views. He says, “We still encounter a ‘buy American’ mentality but it’s not as it used to be. It’s more open now — what matters in the end is the price. Time zones and language can be a problem, but we are constantly improving our language skills.” Of course the weak dollar against the Euro makes profitability more difficult.

LHT had a turnover of $120 million last year with U.S. carriers, and Schmuck tells AMT, “We will try to double this in five years.” At present most of the work is done in Europe but LHT wants to grow its infrastructure in the United States, he says.

Today, LHT employs 1,800 people in the United States and further growth will occur as Virgin America expands. LHT has more than 580 customers around the globe. Schmuck says, “We’re the leading independent MRO company in the world.”

Another example is Air France Industries/KLM Engineering and Maintenance and its U.S. company AMG, with the help of which it supports more than 20 airlines in North America. These include major passenger carriers such as Delta, United, Northwest, Continental, and major cargo operators such as Atlas Air.

Jonathan Soesman, vice president sales, United States and Canada at the joint company, tells AMT, “We offer a comprehensive and complementary portfolio MRO service for Boeing, Airbus, and regional aircraft. This includes GE and CFM engine overhaul, component support (including APUs), and airframe services, backed up by a global logistics network and the operator experience of Air France and KLM.

“Our ambition is to grow further as a major MRO player in North America. We can now offer local component repair capabilities and logistic support in the Americas through our affiliate company the Aero Maintenance Group (AMG). With AMG we have set up a logistics center in Miami. Together with Boeing, we offer a component support program (CSP) for the Boeing 747NG and 777.”

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