Aircraft Maintenance Cost Introduction 932021 Aircraft Maintenance Module

Aircraft Maintenance Cost Introduction 9/3/2021 Aircraft Maintenance Module 1

General definition n Maintenance cost is broadly defined as the sum of incurred labour, material costs and various overheads otherwise known as indirect maintenance costs. The labour is normally a process time controlled and productivity related where certain tools such as lean processes or “Six sigma” can be employed to enhance productivity and consequently improve consumed labour. n The material element is dependant on negotiated supplier’s contracts and products reliability programs. 9/3/2021 Aircraft Maintenance Module 2

1. Aircraft Maintenance Cost Philosophies & Economics n The maintenance costs represent 10 -20% of the worldwide airlines direct operating costs. These costs are growing in view of introduction of new more expensive material, highly sophisticated repair schemes especially those associated with structural parts and core Engine parts, and increasing labour costs. 9/3/2021 Aircraft Maintenance Module 3

Aircraft Maintenance Cost Philosophies & Economics n Boeing suggests that there are many other influencing factors to the maintenance costs such as Aircraft utilization, Environment and Age. Furthermore, Airlines influence costs of its operations and maintenance support practices; similarly component Manufactures influence product support and reliability. 9/3/2021 Aircraft Maintenance Module 4

Aircraft Maintenance Cost Philosophies & Economics n The Airlines overall maintenance costs are categorized as Controllable and Non-Controllable Costs. The controllable cost element is further split into contractual and non contractual costs. The contractual cost elements are either outsourced or accomplished In -house depending on potential benefits or savings in the short or long runs. 9/3/2021 Aircraft Maintenance Module 5

Aircraft Maintenance Cost Philosophies & Economics n Thus it is of extreme importance to understand all elements of airlines maintenance costs and contain such costs where practicable through introduction of processes and manpower improvements, enhanced training and optimization of maintenance interval requirement. 9/3/2021 Aircraft Maintenance Module 6

Aircraft Maintenance Cost Philosophies & Economics n The Airline industry currently under tremendous pressure in light of the current downturn reducing demand especially on premium cabin, hence the competition which resulted in fares reduction and subsequently low yields than breakeven costs. 9/3/2021 Aircraft Maintenance Module 7

2. Maintenance Costs (Direct /Indirect) Breakdown n The Maintenance costs are the sums of total costs pertain to Direct and Indirect Maintenance. Per IATA, Direct Maintenance comprises the following, by Cost segment: n - Airframe, Engines and component maintenance. And by cost element: Labour, Material and Outside repair Where, Indirect Maintenance includes the Overheads costs. 9/3/2021 Aircraft Maintenance Module 8

2. Maintenance Costs (Direct /Indirect) Breakdown n Boeing elaborates on these definitions further as follows: - Direct Maintenance Cost is, the direct airframe and Engine maintenance which consist of the labour and material required to perform service, repair, modification, restoration, inspection, test, and troubleshooting tasks during on-airplane and shop maintenance activities. 9/3/2021 Aircraft Maintenance Module 9

2. Maintenance Costs (Direct /Indirect) Breakdown n Maintenance Overhead consists of maintenance supervision, maintenance training, maintenance planning, unallocated labour costs, rentals and Utilities. 9/3/2021 Aircraft Maintenance Module 10

2. Maintenance Costs (Direct /Indirect) Breakdown n We have to understand the elements that comprise the Direct Maintenance Cost (DMC) and Indirect Maintenance Cost (IMC). The breakdown of these costs is: n 2. 1 Direct maintenance costs n 2. 2 Indirect maintenance costs 9/3/2021 Aircraft Maintenance Module 11

2. 1. 1 ON aircraft maintenance n This type of maintenance is normally carried out during the scheduled aircraft checks as defined by the Manufacturer’s Maintenance Planning Documents (MPD) where an extensive part of Labour Man-hours is expended as compared to materials consumed such as filters, oil, greases, fittings and minor structural parts. 9/3/2021 Aircraft Maintenance Module 12

2. 1. 1 ON aircraft maintenance n Additionally, allotted portion of check time is dedicated to tests, inspection, minor airframe corrections and components removals which are due for routine maintenance. IATA as shown in Figure (1) below refer to this maintenance category as 1 st Level Maintenance costs segments that include Airframe and Engines Labour, materials and subcontracted work. 9/3/2021 Aircraft Maintenance Module 13

2. 1. 1 ON aircraft maintenance Expected total time 9/3/2021 Aircraft Maintenance Module Mean time between unscheduled removals 14

2. 1. 1 9/3/2021 ON aircraft maintenance Aircraft Maintenance Module 15

2. 1. 2 OFF Aircraft Maintenance n This is normally carried out away from aircraft on Engines and components in either In house or outsourced overhaul shops as these costs comprise expended labour, material, testing and modifications. n The above two categories are generally split as per below percentages. 9/3/2021 Aircraft Maintenance Module 16

2. 1. 2 OFF Aircraft Maintenance 9/3/2021 Aircraft Maintenance Module 17

Aircraft Maintenance n The ON aircraft Maintenance checks are further summarised as follows: 1. Aircraft Transit checks- this is a normal minor check that occurs every flight where walk around is conducted by the Engineers to detect any obvious damage and/or discrepancy which may obstruct aircraft dispatch or serviceability for further flights. Also aircraft Log books will be reviewed to clear or defer all recorded snags. 9/3/2021 Aircraft Maintenance Module 18

Aircraft Maintenance 1. Aircraft Service or Weekly checks- This check is a little more extensive hours are expended in general visual inspections and overall Aircraft condition. Minor modification (Engineering Orders) can be conducted and additional defects clearances which require extended times can be accomplished during this check. 9/3/2021 Aircraft Maintenance Module 19

Aircraft Maintenance 1. Aircraft “A” checks- This is a routine MPD check that occurred almost every three months or 500 flight hours with various tasks scheduled for accomplishment. Few access panels, Engine cowlings and other doors will be opened to perform certain visual inspections and rectifications. 9/3/2021 Aircraft Maintenance Module 20

Aircraft Maintenance 1. Aircraft “C” checks- within this check the aircraft is grounded for an extended time where many routine MPD tasks will be carried out. As majority of access panels are opened, a detailed visual inspection will be carried out on airframes linkages, structural fittings and main systems (such as oil, hydraulic and fuel) functional or leak checks and major components defect rectification. The interior cabin such as seats will be removed for refurbishment. Galleys and lavatories will receive servicing and repairs. 9/3/2021 Aircraft Maintenance Module 21

Aircraft Maintenance 1. Heavy Aircraft checks or “D” checks as some airlines call it. The aircraft will undergo a detailed visual inspection almost in every area including main structure where an NDT and application of special die material will be carried out to detect possible skin cracks. Within the cabin the primary structural parts removed for corrosion treatment especially galleys, floor panels and seat main frames. 9/3/2021 Aircraft Maintenance Module 22

OFF Aircraft Maintenance n The OFF aircraft Maintenance are further summarized as follows: a) Engine Repair and Overhaul Maintenance – during aircraft operations, The Engines are the most stressed items where every time the aircraft takes off, Engines parts rotate at a very high speed with thrust causing certain wear to such parts at an accelerated pace. Engine internal parts especially turbine and combustion chambers are manufactured from special materials in order to withstand the high temperatures and pressure put on the engine during operations. 9/3/2021 Aircraft Maintenance Module 23

Aircraft Maintenance n Hence, the maintenance is often significant and expensive and that is the reason where majority of airlines outsource engine maintenance to Original Equipment Manufacturer (OEMs)/Maintenance Repair and Overhaul (MROs) to alleviate the burden off airlines from investment in development of such highly sophisticated overhaul shops with special required repairs. n Normally the Engine initial shop visits expenses from Aircraft introduction to maturity is relatively less expensive than aging Engine maintenance as main Life Limited Part (LLP) parts requires replacement then and such parts impose a high cost to the Engine Maintenance. 9/3/2021 Aircraft Maintenance Module 24

Aircraft Maintenance In general terms, the difference between engine and airframe maintenance is that Engine material costs will exceed 80% of the total maintenance while airframe maintenance will equally share labour and material by 50/50%. The Engine performance maintenance costs optimization is measured by the time it stays on wing as achieved by the continuous OEM development causing less removals and subsequently lower maintenance costs. 9/3/2021 Aircraft Maintenance Module 25

Aircraft Maintenance 1. Component Repairs, Modifications, and Replacements n This maintenance includes normal scheduled and unscheduled components repairs to restore its serviceable condition. The parts are often categorised into rotables, repairable and expendables whereby a multiple number of repairs/resets is possible to rotables parts and considered as assets for the airline. n The maintenance costs associated with this part depend significantly on whether these can be repaired In house or outsourced. This decision highly depends on two factors, the Turn around time and the Warranty aspect. 9/3/2021 Aircraft Maintenance Module 26

Aircraft Maintenance n In other words, if the OEM Turnaround Time (TAT) is reasonable, then it is quite sensible to dispatch such components for repairs outside under warranty without spending much hassle to develop such capability and waste Engineers energy on warranted components especially during the initial five years from Aircraft introduction. There are occasions where rotables or repairable parts are scrapped due to economic conditions, i. e. Where the Repair cost exceeds the 65% threshold of the unit cost 9/3/2021 Aircraft Maintenance Module 27

Indirect Maintenance Costs n 2. 2 Indirect Maintenance Costs n The Indirect maintenance cost or otherwise known as Overhead cost is defined as the sum of all labour and material costs for support services which add to the total maintenance of the aircraft. The elements of IMC include the overhead costs of but not limited to, Facilities, Stores, Equipment, administration, Engineering technical services, Materials management and Engg training. 9/3/2021 Aircraft Maintenance Module 28

Indirect Maintenance Costs n The IMC costs vary significantly amongst airlines subject to organisational structure and the level of In/outsourcing plus work efficiencies. n Therefore The IMC costs fall within the category of controllable airline maintenance costs but this factor cannot be controlled nor quantified by Aircraft manufacturers. 9/3/2021 Aircraft Maintenance Module 29

Indirect Maintenance Costs n The use of automation and sophisticated control system especially in the tech records, planning and materials management, drastically reduce the labour requirement and size of these support services departments and subsequently slash the IMC costs. n Therefore, the IMC costs overheads need to be reviewed frequently to envisage possibility of introducing processes improvements. 9/3/2021 Aircraft Maintenance Module 30

Indirect Maintenance Costs n The ideal tool for this exercise would be Six Sigma which looks at the work environment to analyze the adopted processes, then propose solutions for the purpose of working smarter and cut inefficiencies (Turner 2005). 9/3/2021 Aircraft Maintenance Module 31

Indirect Maintenance Costs 9/3/2021 Aircraft Maintenance Module 32

Operating Cost Breakdown Total Operating Cost (TOC) Airplane Related Operating Cost (AROC) Cash Airplane Related Operating Cost (CAROC) • • Fuel Cockpit crew Cabin crew Maintenance Landing Navigation Ground handling 9/3/2021 Payload Related Operating Cost Passenger Related 10% Cost Ownership Cost • • - Food In flight services Handling Baggage handling • Commissions • Reservations and sales Aircraft Maintenance Module • Advertising • Depreciation • Financing (airplane and introductory investment) • Operating lease cost • Hull insurance Cargo 25%Related Cost • Handling • Commissions • Reservations and sales • Advertising System Related Operating Cost System Related Cost • Airplane general and administrative • Passenger general and administrative • Cargo general and administrative 33