A critical link is missing between airlines’ on-time performance and the necessary aircraft maintenance support, aviation consultancy CAPA India said in a recent webinar on airline maintenance and engineering.
“High aircraft utilization targets that are built into the network and schedule require effective maintenance support. If not managed well, it can affect the integrity of the plan,” CAPA India said.
Indian airlines need to work strategically with third-party Indian maintenance, repair and overhaul (MRO) firms to ensure availability of “advanced” maintenance capabilities in the country to deliver cost and efficiency benefits, CAPA India said.
“Airlines must carefully compare OEM maintenance contracts with independent contracts. Independent contracts provide flexibility and competition,” it said. The quality of maintenance is also critical, impacting residual values and even the cost of return condition checks, structural maintenance and engine shop visits.
“CFOs must bring a financial lens to complement a technical perspective – to ensure asset value is protected and costs minimised,” said CAPA India.
Maintenance procurement requires specialist skills as it can save maintenance costs by 2-3% and airlines should not overlook maintenance planning with people, resources, infrastructure, regulations, compliance, inventory levels and warranties in mind.
Since the 1990s, Indian carriers have experienced a significant negative impact due to poor maintenance practices, to the extent that they have contributed to airline breakdowns, CAPA said, adding that the actual cost of maintenance is one of the highest costs for Indian carriers items, from 10-20% of the total cost, with a median of 15%. Actual costs include provision for lease returns, maintenance provisions, warehouses and spare parts, amortization for demanding inspections.
Airlines can also incur significant costs related to passenger compensation and relocation if technical problems lead to avoidable flight delays and cancellations. Not to mention the negative impact on customer experience and reputation.
During FY16-FY20, India’s top three MROs, AISL, AirWorks and GMRAeroTechnic, nearly doubled their revenue but captured only about 16% of the total maintenance expenditure outsourced by Indian carriers. The vast majority of business was still going to foreign MROs.