BOEING’S 787 DREAMLINER - DVB Bank/media/Files/D/Dvb-Bank-Corp/dvb-in-pre… · BOEING’S 787 DREAMLINER ... Normally, the engines stay in the service of the initial operator as

The leading international magazine for the manufacturing and MRO sectors of commercial aviation

October–November 2009 Issue: 102

� IS THE DOWNTURN ACCELERATING PMA ACCEPTANCE?

� THE RISKS OF ENGINE LIFE CYCLE MANAGEMENT

� AIRCRAFT RECYCLING BEST PRACTICE

� ONLINE MAINTENANCE TOOLS

BOEING’S 787 DREAMLINERWHY PATIENCE WILL BE REWARDED

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Everything is rosy during the ‘honeymoonperiod’, the first years of an aero engine’slife cycle and main part of the initial finan-

cial phase. The power plant has been freshlydelivered from the OEM and mated with its orig-inal operator who will generally be able to enjoyits daily faithful, revenue-creating service with-out worrying much about prolonged and expen-sive maintenance. Premature engine removalsfor component deterioration should be coveredby the OEM as part of its product warranty, andeven foreign object damage (FOD) events mightfall under a separate insurance policy. Typically,the OEM will also make guarantees for fuel con-sumption, piece-part life and reliability, espe-cially on new-generation equipment, andpossibly even commit to cost per flight hourand/or flight cycle. Apart from ensuring compli-ance with the regulatory requirements andkeeping a moderate level of technical oversight(to make sure the required maintenance andoperational processes are safely and ade-

quately working), the operator has no moreengine management responsibility.

But this sweet, uncomplicated life typicallycomes to an end after approximately sevenyears; although this does depend on the typeof aircraft and its utilisation. At this point theengine is taken off wing for its first scheduledmaintenance shop visit. The OEM’s warrantybegins to expire in individual areas, and itsfinancial support starts to dwindle. The enginebecomes ‘adolescent’, as David Garrison, MDengine and component maintenance at DeltaTechOps in Atlanta, US, puts it. For him, theoperator has to take on more responsibility forthe power plant’s maintenance planning in thissecond part of the financial phase. Garrisonstates: “During this phase one will be activelymanaging the unscheduled engine causes anddetermining the engine’s true capabilitiesbased on the current design and the owner’s[airline or lessor] operating parameters.During this phase one is also analysing the

� Aircraft Technology - Issue 102 �

ENGINEERING & MAINTENANCE

An aero engine’s life cycle can be divided into three main stages: the financial, management andtrading phases. Careful and far-sighted management is necessary to balance maintenance costagainst operational risks whilst maintaining maximum asset value as the engine progressesthrough these different periods.

Managing engines wisely

When an aero engine needs to be takenoff-wing for its first major overhaul or repair, itbecomes important for the operator/owner tocarefully assess its further maintenance planand long-term asset objectives.

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best life-limited part (LLP) management phi-losophy.”

Power-by-the-hourA power-by-the-hour (PBH) or total support

agreement with the OEM or an MRO provider isone option for the operator. This would allowcontinued flying without assuming the respon-sibility of balancing maintenance costs againstoperational risks and determining the mainte-nance planning. Normally, the engines stay inthe service of the initial operator as there isonly limited aircraft remarketing taking place atthis point in time. The operator can pay theOEM/MRO an individually arranged, flight hour-based rate for their technical support servicesand concentrate on its main business of pro-viding air transport. For example, DeltaTechOps’s PBH contracts usually include fleetremoval forecasting, service bulletin modifica-tion and inspection recommendations, on-wingengine condition monitoring, and the develop-ment of a maintenance programme, accordingto Garrison.

However, even apparently comprehensivepackages do not necessarily cover all eventual-ities that might concern an aircraft operator orowner. “One comment about total support isthat all too often it is not really total support,”remarks Karl Gibson, operations director ofTES Aviation, an aero engine management com-pany based in the UK. He highlights that total

support and PBH agreements always carryexclusions and might not cover certain work;FOD removal as an example. These extra-con-tractual maintenance events have then to beaccomplished on the basis of their individual(man hour) time and material cost require-ments. In that case the operator incurs boththe cost of the regular PBH/total support pay-ments, whether any regular maintenance workhas actually been done or not, as well as theindividual time and material-based paymentsfor the additional work. Hence Gibson arguesthat, in order to forecast the entire MRO expen-diture for an engine over a given period of time,the operator has to make an analysis of likelytime and materials cost in the first place, irre-spective of whether the company then decidesto sign a PBH/total support contract or not.

This does not mean that a PBH/total sup-port agreement won’t still be the best option.“We look at what is best for our customer’srequirements and do studies across a numberof maintenance cost per flight hour agree-ments,” explains Steve Froggatt, engineeringmanager at TES Aviation. “We won’t always gofor time and material if the power-by-the-hourcontract makes more sense. It all depends onthe engine, operator, any specifically harshoperating area or condition.”

For Abdol Moabery, CEO and president of GATelesis, an aircraft asset management firm,component supplier and maintenance providerin Fort Lauderdale, Florida, the issue comesdown to whether the operator wants to makeregular payments to a PBH/total supportprovider for the maintenance in advance or payfor the individual events as they come along.“The provider of that [PBH/total support] serv-ice is accumulating cash for a 10 or 15-yearprogramme. Some airlines view that cash asimportant to their business [now]. So theydon’t want to pay up front and would rather justdo it as time goes by.”

Whatever decision is eventually made, it is offundamental importance to get a clear under-standing of the full maintenance cost that islikely to be encountered throughout the pro-posed service period for the engine. Althoughthese expenditures can vary substantiallybetween different operators and equipment, theycan nevertheless be predicted with great preci-sion over long periods of time. Analysing anengine’s remaining life cycle in light of its opera-tional requirements and the financial objectivesof its owner, if it is a leased engine, is the firststep for any technical management team beforedetermining the future maintenance plan.

Management phaseThis becomes increasingly important as the

engine progresses from the financial phase



“We look at what is best for ourcustomer’s requirements anddo studies across a number ofmaintenance cost per flighthour agreements. We won’talways go for time and materialif the power-by-the-hourcontract makes more sense. Itall depends on the engine,operator, any specifically harshoperating area or condition.”— Steve Froggatt, engineeringmanager, TES Aviation

During the initial ‘honeymoon’ period of an engine’s life cycle, its maintenance is largelydetermined by the OEM’s product warranty policy and guarantees, and the operator/owner doesnot need to manage an engine plan.


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into the management phase. By then the pow-erplant is between 12 and 15 years old, mayhave transitioned from one operator to thenext, its PBH/total support contract may beexpiring, and it will need to come off-wing for itssecond, third or fourth shop visit. All productwarranty and guarantees have finally expired,and the maintenance plan is no longer gov-erned by the OEM’s product and repair devel-opments. There will be a range of alternativePMA parts and DER repairs available on themarket, which will give the operator/ownersome choice to tailor the future maintenanceplan to its individual needs. “The managementphase is where most change is going to takeplace within an engine and its value,” statesFroggatt. “The management decisions onemakes at that particular point, for a number ofshop visits, is going to dictate the residualvalue when one gets towards the trading phase[when the engine will eventually be disassem-bled to serve as a parts source]. As the lessor,one is looking more into the asset value,because one is looking at the end and whatone wants to do with the asset. The operator,specifically, is looking at the cost per hour,because that’s what it is all about to turn aprofit.”

The main factors in the assessment of anengine’s remaining life cycle, which will indicatehow long the engine may be able to stay on-wing until the next shop visit, are aircraft utili-

sation, the status of the LLPs and their remain-ing flight hours/cycles, the maintenance his-tory, and the airworthiness directive (AD)status. If the analysis is performed from anoperator’s perspective who has leased theengine, the length of the proposed serviceperiod is another major determinant. Externalengine management consultants are typicallyengaged in contracts over three or five years.Engine trend monitoring data at different powersettings (usually idle, take-off and cruise) willprovide a clear picture of the power plant’s cur-rent performance and what deterioration canbe expected in terms of both extent and rate.Establishing the fuel flow and exhaust gas tem-perature (EGT) parameters will allow the man-agement team to outline an initial overhaulstrategy, according to Moabery. “As turbineblades get older, the wear starts to cause EGTmargin degradation, and the engine will veryquickly move from a strong performing engineto one that operates with no EGT margin.”

Once all these parameters have been deter-mined, it becomes possible to predict whichmaintenance tasks will be necessary in thefuture, what this will cost, what options theoperator will have to control its spending, andhow this might be affected by additional,unscheduled maintenance. “We run thoseengines forward on our system which allows usto forecast all the events. We would work-scopeeach engine individually as a paper exercise



“The management phase iswhere most change is going totake place within an engineand its value. The managementdecisions one makes at thatparticular point, for a numberof shop visits, is going todictate the residual value whenone gets towards the tradingphase. As the lessor, one islooking more into the assetvalue, because one is lookingat the end and what one wantsto do with the asset. Theoperator, specifically, is lookingat the cost per hour, becausethat’s what it is all about toturn a profit.”— Steve Froggatt, engineeringmanager, TES Aviation

The use of PMA parts and DER repairs instead of the standard OEM material and processes is one of the central questions when an engine enters themanagement phase and the future value strategy is determined.


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and identify what the costs were against thecritical elements within that work scope, whatthe material costs would be based on thematerial standard that is in there [the engine],”explains Gibson. “We would include all theunscheduled events that could potentially hap-pen, lease costs, everything ... and we wouldgive them effectively what the cost per hour oftheir operation would be.”

If it is a leased engine, the interests betweenthe operator and owner are likely to diverge asindicated above. The airline might only be con-tractually obliged to release the engine with acertain life left on it at the end of the leaseagreement. This would allow the company tominimise the workscope accordingly to reduceits costs during the lease period. On the otherhand, however, the lessor will be looking at the

cost of operation over the entire ownershipperiod, which might go long beyond the originaloperator’s lease agreement. The lessor will wantto enhance the workscope as much as possiblein order to maintain a high asset value. Thiswould make it more attractive and marketable toother operators who might lease the engine inthe future. The two parties have then to findsome common ground to keep the cost per hourof the engine at a level that is acceptable forboth. If the lessor demands a technical standardthat is significantly higher than what is neces-sary to the operator, one solution could be thatthe lessor makes a contribution to the mainte-nance cost.

The use of PMA parts and DER repairs,instead of the standard OEM material andprocesses, is clearly one, if not the, mostimportant and powerful means to reduceengine maintenance costs. However, while theiruse has been widely established throughoutWestern Europe and North America, this is notnecessarily the case in all other regions. PMAparts can become an obstacle when trying tofind a lessee for an overhauled engine, forexample, in China and India — two futuregrowth markets.

But even within the boundaries of jurisdic-tion of the FAA and EASA, the cheaper alterna-tive repair materials and processes might notalways pay off either. In light of the increasedoperational risk of using PMA parts and DERrepairs, the potential cost savings might beconsidered much less tempting for an airlinewith, for example, 10 aircraft than a carrier witha fleet of 100 aircraft. “The risks of operatingPMA parts are vast,” believes Moabery. “Therisks are calculated over a fleet of engines. Soin the case of an airline with a large fleet, onecan look at that risk and decide it is worthdoing. But the small operator may look at it andsay, ‘for the cost savings that I save, it’s notworth it’. If I have a major engine failure or acatastrophic event, then all of those savingsare wiped out by one event.”

Trading phaseAt approximately 20 years of age, the

engine enters into the trading phase, the finalpart of its life cycle. By this time, the value ofthe entire aircraft is mainly driven by the enginevalue. Ironically, however, the book value of thepower plant in itself is coming down so far atthis point that it no longer warrants the cost foran overhaul. The engine’s technical standardand performance has been surpassed by itsyounger counterparts in the fleet, and possiblyeven by new-generation equipment that hasemerged in the meantime. Furthermore, therewill be an increased number of other engines ofthe same type and similar age on the market,



“The risk of operating PMAparts are vast. The risks arecalculated over a fleet ofengines. So in the case of anairline with a vast fleet, onecan look at that risk anddecide it is worth doing. Butthe small operator may look atit and say, ‘for the cost savingsthat I save, it’s not worth it’.— Abdol Moabery, CEO andpresident, GA Telesis

Trading phase: when the value of the individual parts and components exceed the book value of acomplete engine, it is teardown time and the asset will serve as a spare part source.


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which have been phased out by other operatorsand have consequently brought down enginelease rates and spare part prices. Not onlydoes it then become cheaper for the operatorto swop an engine against a leased one ratherthan to repair or overhaul it, indeed therecomes the point where the value of the individ-ual parts and components exceed the bookvalue of the complete engine. It is teardowntime at this point and the engine will serve asa source for spare parts.

The dynamics of the trading phase are sub-ject to the economic conditions at the time. Inperiods of growth, when queues before airlinecheck-in desks and OEM sales offices are long,the service lives of older aircraft are stretchedtoo, and consequently lease prices for olderengines with some residual ‘green-time’ arestable. ‘Green-time’ is the available period dur-ing which an older engine can remain in serviceuntil its last maintenance records expire and itwill be torn down. Conversely, when the indus-try goes into a downturn and airlines are cut-ting capacity, the older, less efficient aircraftare the first ones to stay on the ground. “Agood example right now is the CFM56-3 model[for 737 Classics], where there are so many

spare engines available in the market that anoperator may decide to run off ‘green-time’ ona leased engine as opposed to putting in $2-3m to repair the original engine,” reportsMoabery.

While the deferral of maintenance andusing-up of surplus engines will help to driveolder equipment permanently out of the mar-ket, it would be a short-sighted waste of mate-rial and finances to take advantage of aircraftcapacity cuts in the current economic climateand apply the practice to younger equipmenttoo. Garrison warns: “In the airline industry,economic cycles are a way of life and have asignificant impact on an airline’s budget sensi-tivities. The airline industry is a cash hungrybusiness and during an economic downturn,airlines work hard to preserve cash. Thisstance can make engine management very dif-ficult, because you will need to invest in yourfleet during the shop visit to make sure thatyou build in the goodness to obtain your enginerun time and reliability plan. Airline customerswho do not maintain the investment disciplineduring the economic downturns can expecttheir cost per hour and total cost to increase infuture years.” �



In times of an economic downturn, whencapacity is being cut and aircraft stored, itbecomes even more attractive for airlines todefer pending maintenance and just swop orlease spare engines instead.


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BOEING’S 787 DREAMLINER - DVB Bank/media/Files/D/Dvb-Bank-Corp/dvb-in-pre… · BOEING’S 787 DREAMLINER ... Normally, the engines stay in the service of the initial operator as