How Do MRO Costs Breakdown for Different Engine Types

Confidential – not for third party distribution © SGI Aviation 2009

How do MRO costs break down for different engine types?

Oct 2009

Paolo Lironi, Executive DirectorHead of Engine Advisory

1Confidential – not for third party distribution © SGI Aviation 2009

The effects of ageing and maturity on engines costs

The costs of second and subsequent shop visits as compared with the first shop visit

The effects of operating in severe environments, in operating short/long stage lengths and in operating abnormal missions

The effects of short-term leasing and engine ‘part-out’ in the sunset years of operation

Comparative costs for different engine types and variations in where the costs are found

TopicsHow do engine MRO costs break down for different engine types?


Cost breakdown for engine model – First shop visit

Factors affecting shop visit costs

Second & subsequent shop visits

End of life

Conclusions

Agenda


First shop visit

Cost breakdown


• Age of the model

• General market status

• Number of engines in the market

• Availability of DER

• Availability of PMA

• Only new models

• Only OEM material used

• No DER

• No PMA

Shop visit cost breakdown for engine modelSGI’s Analysis

Major Factors Assumptions

Presenter

Presentation Notes

When considering the cost break down per each engine, there are to major groups of factors to be considered Related to the engine model Specific to the engine and its on wing life We will see later how the age of the engine model has an effect on the cost of the shop visit …. In our analysis we have used the indicated assumptions


WorkscopeFactors driving the engine removal off wing

Engine RemovalContracts

ReliabilityOperations

Fleet Needs


• Deterioration• Contract• Modification status of the engine• Time on wing of the engine• Spare level• Thrust rating (Re rate) & De rate• EGT• Stagger• Reliability issues• Budget• Utilization• LLP profile

• Only core performance restoration• Average contract terms• Average engine deterioration• Average time on wing for the engine• Average flight length

First shop visit – cost analysisFactors to be considered

Major Factors Assumptions


• Parts do no need to be replaced

• Parts have to be repaired

• Parts have to be replaced

First shop visit – cost analysisCost per hour curve

Considerations

Co

st p

er

ho

ur

Time on wing

Engine operating cost/ time on wing

Presenter

Presentation Notes

the parameter is "cost per hour". In the early stages, the cost per hour is high as the engine did not fly much and (in case the engine has to be repaired), the cost of the shop visit is quite low because parts do not need to be repaired or replaced. When the engine has accumulated more hours and has to be repaired, parts will have to be repaired (lower cost than replace them + engine on wing longer = lower cost per hour). If the engine is kept on wing longer, the number and amount of parts to be repaired will decrease and the number of parts to be replaced will increase, driving the shop visit cost up and the cost per hour up, too. Note: there is a minimum on the curve, i.e. there is a certain on wing life of the engine where the cost per hour is minimum


The shop visit cost is divided into:

• Accessories and fees

• Material – cost of new material

• Repair – cost of repairing parts

• Labor – cost

All mark up and fees are included in the cost

The following engines have been considered based on

• SGI experience

• Mix of modern concept engines and mature engines

Methodology


• Accessories and fees are similar

• On new engines, material cost is most relevant

• the cost of repairs is significant on older models

Shop visit cost breakdown for engine modelBreakdown per engine model

Considerations

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Acc/fees

Material

Repair

Labor

Presenter

Presentation Notes

Each column is showing the percentage over the total cost of the shop visit. Observations: on new engine models, the cost of material is by far the most relevant cost of the shop visit On CF6-80 engine model, which can be considered a mature engine, the % of repair is much higher.


Proper workscope

• Only necessary modifications to be implemented

• Cost effective analysis of necessary repair level per each module and of repairs

Use of Properly repaired parts to be maximized

Proper management of the engine through the shop

• Number of workscope revisions to be minimized

• Unexpected findings to be evaluated and corrective actions to be managed

Plan in advance

• LLP & normal replaced parts to be acquired in advance

Tailored contract

ImprovementsHow to reduce shop visit costs


Factors affecting shop visit cost

Analysis


Major factors affecting engine operating cost

Operating costEnvironment

Thrust rating change

Thrust reduction

Flight lengths

Presenter

Presentation Notes

Environment Engines operated in difficult environment are showing significant problems Thrust reduction The engine thrust rating is the same as certified, but the flying crew selects lower than maximum take off (and climb) power. Thrust reduction is going from 20k to 19k in the flight deck below certified, thru flex thrust for example. This is flight dependant (a/c weight, runway length and conditions, weather). Thrust rating change is a physical and constant reduction in thrust rating (going from 23.5k to 20k on the engine certified). There is a constant benefit of de-rate if your operations and missions allow for it (regardless of full power T/O). There is a separate benefit of reduced thrust T/O which is more important for engines that are rated close to their design rating. Ex. a CFM56-7B20 is rated well below its design rating of 27k, hence your de-rate effect is maximum and your reduced thrust will have little effect due to the significant de-rate. A CFM56-7B27 is rated at its design rating and hence will benefit more from reduced thrust but there is no de-rate benefit. A 7B26 could have both de-rate and reduced thrust benefits.


• Low fuel consumption:

• High operating temperature

• Cooling systems

• More prone to have environment effects

• Certain engine areas are more critical • Deterioration rate is higher

(more rapid)

• On wing life is reduced

• Scrap rate is higher

• Workscope is more extensive

Environment effects on modern design enginesDesign requirements

Considerations

Results

Presenter

Presentation Notes

Modern engines have more issues with environmental factors than previous engines Low fuel consumption high operating temperatures for the engine high technologies treatments Metallurgical basys and chemical composition of parts are more “extreme”. Remember: single crystal blades – thermal barrier coating more and more sophysticated Examples are HPT Blades in CFM engines in China and HPC Drum in V2500 engines in India. Some modules are having more issues than others. For example -5A engines operated in the middle east are basically limited to CC issues, which is not the case on V2500 engines Cooling system are more extreme when the environment is creating problems, parts deteriorates much quicker


Environment effects on CFM56-7B engines

0%

10%

20%

30%

40%

50%

60%

LPC HPC CC HPT LPT AGB Non Mod TOTAL

CFM56-7B DIFFERENCE IN COST PER MODULE

First shop visit Second shop visit


Environment effects on V2500-A5 engines

0%

10%

20%

30%

40%

50%

60%

70%

80%

FAN LPC INT CASE

HPC DIFF COMB NGV HPT LPT GBX ENG TOTAL

V2500 DIFFERENCE IN COST PER MODULE


• Take off thrust reduction has a major effect on deterioration

• De-rate has a bigger impact on full power take offs

• It is more beneficial to use flex take offs at higher thrust settings

• Flex take offs benefits are higher at maximum take off power

• Severity curves usually used to consider this effect

• On wing life can be increased up to 25% by maximizing flex take off policy

Thrust reductions

Considerations

Effects

0

5

10

15

20

25

30

35

40

45

0 1 2 3 4 5

Dete

rio

rati

on

Derate

Effect of de rate /deterioration

Presenter

Presentation Notes

The deterioration of the engine is mainly caused by the temperatures reached by the engine during take off Therefore the derate is having a major effects on the deterioration of the engine 1 minute of take off thrust is responsible for 45% at least of the engine maintenance cost The deterioration is not linear over the de-rate used. There is a constant benefit of de-rate if your operations and missions allow for it (regardless of full power T/O). There is a separate benefit of reduced thrust T/O which is more important for engines that are rated close to their design rating. Ex. a CFM56-7B20 is rated well below its design rating of 27k, hence your de-rate effect is maximum and your reduced thrust will have little effect due to the significant de-rate. A CFM56-7B27 is rated at its design rating and hence will benefit more from reduced thrust but there is no de-rate benefit. A 7B26 could have both de-rate and reduced thrust benefits.


• Thrust ratings can be changed easily

• Wide range of Thrust ratings across same engine model

• Parameters

• Rotor speed

• Temperature

• Pressure

• Operating curves are changing significantly

• Engines are operated at multiple thrust settings during one engine run

• Higher time on wing can be achieved

• Higher reliability

• Lower maintenance cost per hour

Results

Thrust changes

Considerations

Presenter

Presentation Notes

On modern concept engines, the thrust rating can be changed with no hardware change. The thrust change is having a major influence on the three major parameters affecting the deterioration of the engine Big airlines and lessors are using the engines at higher thrust and they are then de-rating the engines to a lower thrust – the EGT Margin is still good For example a V2500 engine has The downside is that the shop visit cost will likely to increase as the number of parts not-repairable is going to increase i.e. more parts will be replaced


• Flight length proportional to aircraft weight

• Deterioration is higher during take off

• Leasing contracts refers to “cost per hour”

• Short flights less weight more derate

• Long flights more weight less derate

• Additional cost is divided in more flying hours

• There is no significant changes in cost per hour based on the sector length

Effects

Stage length effects

Considerations

Presenter

Presentation Notes

The deterioration of the engine is higher during take off and not during the other phases of the flight Short flights less weight more derate Long flights more weight less derate It is good practice to consider deterioration rate of the engine based on cyc and not flown time If we consider flight time: the cost per hour of the engine is basically unchanged if we consider the increase in flight length and the increase in deterioration because of the increase in weight and the decrease in derate At a recent conference, the OEM advised that they were surprised to see that the engine was lasting on wing less than a JT8 engine



Analysis


• Previous shop visit

• Material used: new or overhauled

• Modification status of the engine

• LLP profile of the engine

• Operating thrust

• FH/FC ratio

• De-rating

• Average TO temperature

• Severe environment

• Short length

• Engine model fleet problems

Changes in on wing life


Driving factors

Presenter

Presentation Notes

NOTE: For the modern V2500 and CFM56-5B/7B the subsequent runs will depend on workscoping and LLP. They are quite predictable and will most of the time run to the build life of the engine post SV. As opposed to older engines that are much more difficult to predict as they are much more dependent on performance and reliability issues. Second runs will most likely be more expensive because more modules are accessed and more LLP’s are replaced. See attached interesting workscope presentation from GE.


• Majority of the parts are checked/repaired/replaced during a shop visit, however there are some parts affected by “ageing” – stators

• Each engine model is affected by a common issue across the fleet

• Shop visit cost increasing

BUT

• More used parts are available in the market

Effects

Major factors affecting shop visit cost over time

Factors


Shop visit cost over time

“Highly depending on the market”

and

“Not generic for all engine models”

0

2

4

6

8

10

12

14

16

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

Sh

op

vis

it c

ost

Time

Availability of repairsAvailability of replacement parts

Minor number of repairs available

New technology introduced

Fatigue problems


Cost breakdown for CFM56-5B/7BDifference between first shop visit and subsequent

0%

10%

20%

30%

40%

50%

60%

70%

Labor Repair Material Acc/fees

SV 1 WS SV 2 WS


Cost breakdown for V2500Difference between first shop visit and subsequent

0%

10%

20%

30%

40%

50%

60%


SV 1 WS SV 2 WS


Cost breakdown for CF6-80E1Difference between first shop visit and subsequent

0%

10%

20%

30%

40%

50%

60%


SV 1 WS SV 2 WS


End of life

SGI experience


• Market driven

• Aircraft application

Product life cycle curve

Considerations

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6

Pro

du

ct r

eq

uest

Time

Product request vs time


• The number of engines in operation are decreasing

• Request for aircraft with this engine model is less and less

• Availability of repairs is limited

• The cost of repairing an engine is higher than buying a replacement

• The availability of spare engines is limited

• Engine exchange is common

End of life for fleets with small number of engines

Market

End of Life


• The number of flying engines is extensive

• Request for aircraft with this engine is stable

• The availability of repairs is extensive

• The repair cost is stable

• Engines available in short term lease

• High availability of spare engines

End of life for numerous engine fleet

Market

End of Life


Conclusions

Life Cycle


Environment and engine operations are the most critical factors for engine deterioration

The cost of operations can be predicted using a model for each engine

The cost for repairing an engine is depending on the product phase of the engine model

End of life strategies are depending on the engine model

ConclusionSGI experience


Paolo LironiExecutive Director

SGI Engine Advisory B.V.

World Trade Center Amsterdam F-03

Strawinskylaan 381, 1077XX

Amsterdam, The Netherlands

(T) +31 20 880 4261

[email protected]

Contact detailsI would be glad to answer any questions that you might have!

mailto:[email protected]


Paolo LironiExecutive Director

SGI Engine Advisory B.V.

World Trade Center Amsterdam F-03

Strawinskylaan 381, 1077XX

Amsterdam, The Netherlands

(T) +31 20 880 4261

[email protected]

Contact detailsI would be glad to answer any questions that you might have!

mailto:[email protected]

Documents

How Do MRO Costs Breakdown for Different Engine Types