Manage Equipment Assets

March 1, 2002
Manage Equipment Assets Focus on records, availability, and cost of operation

By Bill de Decker

Aircraft, like apartment buildings, construction machinery, and other equipment are assets of high value that must be managed carefully in order to preserve their value, maximize their return, and minimize their cost of operation and maintenance. There are four areas that impact this: appearance, the quality and records of the maintenance, the productivity of the aircraft, and the cost of operation.

In the typical flight operation, some of these areas are handled very well. Usually the appearance and the quality of the maintenance are excellent. In addition, much of the maintenance focus is on achieving a highly reliable operation. The same cannot be said for the maintenance records, the availability of the aircraft (which impacts productivity), and the cost of operation. Let's look at some of these problem areas.

Keep good records

Maintenance records don't just determine the airworthiness of the aircraft; they also determine the marketable and retail value of the aircraft. Keeping good records may be simple in theory, but in practice it has proven to be hard to do. The requirements are clear. Good records reflect all work and modifications performed, are in the proper format, contain accurate information about parts and their serial numbers, and help provide a traceable history of all components installed. In practice what actually occurs is that work is performed but not recorded.

For example, parts get swapped between aircraft or a part is taken from inventory and the details are never recorded. It's also common to see aircraft that have had modifications installed, such as additional avionics or optional equipment, without these actions being noted in the maintenance records. Also, problems are sometimes understated. One example is a logbook entry for an aircraft that indicated a hard landing had occurred and a hard landing inspection had been accomplished. This sounded very straightforward, until the individual performing the pre-buy inspection noted that it had taken almost three months to accomplish this "hard landing inspection"! Upon further examination, it turned out this aircraft had indeed had a hard landing - so hard it drove the gear through the wing!

The impact of these record problems is that they can seriously detract from the value of the aircraft. Missing entries about upgrades and modifications can invalidate the value of the entire modifications. Parts and components that do not have proper records are only worth their core value. One broker estimates that, based on his experience, an "excellent" set of maintenance logbooks can easily add $100,000 to the value of a midsize jet.

What is the solution? Training should include the ins and outs of proper maintenance record keeping; a good computerized maintenance management system that provides work orders, purchase orders, tracks parts and components between vendors, inventory and the various aircraft on which they are installed; and a culture that rewards high-quality record keeping.

Improve availability

The quality of the maintenance performed on most aircraft is usually not a problem, nor is the reliability. However, what is often sacrificed to achieve this is availability - in other words, the aircraft spends a lot of time in the hangar to achieve the high quality and the high reliability.

There are a number of ways to increase availability. The first one is to look at the maintenance approach used. One method is to adjust the maintenance schedule to match the potential demand for the aircraft. With this approach, maintenance is scheduled for normal downtimes, such as overnight or on weekends. In addition, when overhauls or major maintenance is scheduled, the focus is on getting the aircraft back in the air as soon as possible. This may involve the use of exchange components, loaner engines, additional shifts, etc. It also means, the maintenance staff will not be working a "normal" 8 to 5, Monday to Friday work schedule. Instead, the maintenance staff ends up working nights and weekends. Many don't like this, but the alternative is to decrease the availability of the aircraft to fit the convenience of the maintenance department. When that is done, maintenance is performed from Monday to Friday during the normal workday - the same time the aircraft is in demand for charter or corporate transportation.

Another way to improve availability is maintenance technician training. Training, whether on systems, engines, avionics, or troubleshooting is a tremendous aid in helping fix problems faster and at less cost. With good training, problems are diagnosed faster and technicians don't have to "learn on the job". In addition, there is less likelihood of the wrong part being installed.

The impact of higher availability is significant. Consider that a typical charter aircraft might fly an average of three hours per day on the days that it flies. If the aircraft flies 250 days per year that equates to 750 hours per year. However, if the aircraft is available 300 days per year, it could produce 900 hours in a year. If each hour brings in $1,000, the additional availability and flight time equates to $150,000 per year!

Manage the costs

On average, maintenance costs represent 27 percent of the annual budget and are one of the largest (if not the largest) cost item. In addition, it is the most variable of all operating costs. For example, an engine may not cost more than a few dollars per hour in between $250,000 overhauls. The most effective way to manage these costs is to collect all maintenance costs and then analyze them by tail number, system, vendor, make, and model. This will provide better insight into the real maintenance costs of each aircraft, as well as where savings are possible.

In short, aircraft are high-cost assets that require more than just a good appearance and high-quality maintenance. To obtain the best value from an aircraft also requires a strong and persistent focus on maintenance records, aircraft availability, and maintenance cost analysis. The payoff is an aircraft that is worth more, has greater availability and revenue potential, and will cost less to maintain.

Bill de Decker, a partner with Conklin & de Decker, has over 35 years' experience in fixed and rotary wing design, marketing, training, operation, and management.