The International Bureau of Aviation (IBA Group) estimates that aircraft maintenance expenditure has decreased by 15-20% in the past five years. Attributing this reduction to the economic downturn and lower utilisation, airlines have been forced to assess their expenditure, rationalise their fleets and ground older aircraft.
However, as global economies begin to improve, IBA Group predicts the overall annual market for MRO services is set to rise nearly 25% to US $4.5 to $5 billion in 2014.
Phil Seymour, IBA Group’s President and COO, comments, “For many emerging markets, such as India and China where over 200 aircraft have been delivered in the last five years, the associated MRO activity will be huge.”
“The MRO business is truly global, and being one of the best European MRO facilities is not enough. Examples, such as Lufthansa Technik, show how companies need to expand their services into the emerging markets, providing lower costs combined with exceptional service, similarly the Swire Group's purchase of TIMCO in the US shows us that they are not content to rely on Asian growth, but they are also looking for global business. This can only be achieved by expanding and co-operating through joint-ventures,” Seymour adds.
IBA Group’s Maintenance Cost Benchmarking service provides an independent review of an airline’s maintenance procedures. It delivers clear and concise solutions for improving expenditure, empowering the airline to make accurate and wide-reaching cost benefit decisions. Seymour finishes, “this is not cost cutting; it is cost optimisation.”
The review is extensive, ranging from line maintenance and maintenance planning to organisational reviews and engine shop visits. Detailed analysis of the warranty management for new fleets and assessment of PMA/DER repair options for older fleets are also provided as part of the comprehensive service.
According to IATA, maintenance costs can be as much as 12% of an airline’s cash operating outlay, so any reduction in these can be an increase in the profit margin of a similar magnitude - a recent airline project realised savings of 25% across their maintenance procedures. Aircraft maintenance is entirely within the control of the airline, unlike fuel costs, so an annual review into the efficiency of contracts and resource allocation is viewed by IBA Group as basic good practice.
The International Bureau of Aviation (IBA) was established in 1988 to provide independent expert business analysis to the aviation industry. IBA advises commercial and business aviation clients, aircraft/engine manufacturers and operators. Services include asset valuations, technical and engine management, consulting and commercial services, industry and sector research and analysis. Please visit www.ibagroup.com.