Advantages of outsourcing Aviation Maintenance

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Nov 24, 2024

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Advantages of outsourcing Aviation Maintenance Successful Airline operations are largely dependent upon the company’s ability to control (drive down) operational costs as they focus on growth/expansion. All other costs, such as training ground staff/flight crews, and airline maintenance etc. can/should be given to partners. MRO is a very expensive function requiring a huge amount of resource allocation, time, and funds. For example, Air Berlin lost around 50 Mn euro annually, having 1200 technicians, paying for costly/expensive hangars, etc. when it could have saved the money by outsourcing the job to others (Dominykas, 2017). Evidently, undertaking MRO services In- house is a very expensive option for airlines, and can cost a fortune. Outsourcing FTM and ITM services can offer Airlines several advantages including (a) Maintenance Cost Savings – via access to specialised personnel with highly technical and focused expertise on the specific types of aircraft/technologies (b) Reduction of HR overheads – time and money saved in terms of benefits, sick days, leaves, and disciplinary actions (c) Experienced Workforce available at beck and call – no need to offer specialized (and expensive) training, and (d) Low Storage Cost –no need to keep aircraft spares readily available, reduces storage costs. Disadvantages of outsourcing Aviation Maintenance As the effects of Covid-19 begin to wear out, Companies are beginning to consider managing MRO services in-house on account of the several disadvantages outsourcing MRO has. There are several disadvantages of outsourcing MRO services including (a) Sacrificing passenger safety – outsourcing FTM and ITM services puts passenger safety at risk as maintenance standards may not be adhered to or may be compromised upon (e.g. maintenance by uncertified/untrained mechanics). (b) Compromising on airline reliability and reputation – on account of flight delays, cancellation, accidents, etc. (Koh, 2018), and (c) Complexity, unpredictability in operations – Airlines can keep workloads more predictable at their own premises than at a 3 rd party MRO contract station with better control
on all aspects of its fleets operations (maintenance schedules, routing, etc.). This results in a significant amount of temporary workers at repair stations, also having to learn new set/s of procedural tasks every time they change contract, with higher chances for errors (FAA, 2013). Updates on Airline MRO on account of Covid The Airline and MRO industry has been affected by several factors in the aftermath of a recession in the effects of Covid. Major concerns regarding the same relate to a shortage in trained pilots, cancellations (on account of Covid), new 5G transmissions, a shortage of maintenance workers (Silk, 2022). Airlines, struggling to maintain profits had been forced to cut down on fleet size, send Aircraft to storage (refer figure below). As the effects of the pandemic recede, the MRO market touched almost 50% of its revenues at US$ 50.3 Bn (as against US$ 91.2 Bn at Pre-Covid levels). This indicates a deficit in MRO spending of almost 45% as is indicated in the figure below. AN UPDATE ON MRO SPENDING Pre-COVID Post-COVID Engine Airframe Component Line 43.5 17.9 16.3 13.5 23.2 7.9 10.1 9.1 Fig. 3. An update on MRO Spending (as of April 28, 2020) (Oliver Wyman, 2020) Region Pre-COVID Aircraft sent Aircraft put Fleet size to storage back into service Africa 1137 700 262 Asia Pacific 8689 5334 3618 Europe 6821 5414 2871 Latin America, Carribean 1746 1319 469 Middle East 1404 1059 504 North America 8087 4588 2092 Total 27884 18414 9816 Source: (Oliver Wyman, 2020) Figure 2. Aircraft put in storage, back in service as per Covid
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