- Nov 9, 2003
- 16,512
- 5,865
Overhaul & Maintenance
Performance Drives MRO Face Off
By John Croft
03/05/2004 04:46:33 PM
By now, MROs of all stripes are familiar with the axiom that airlines giveth, and the airlines taketh away. Case in point: Air Canada Technical Services started the new millennium with the lucrative JetBlue heavy maintenance contract; lost it to EADS Aeroframe Services in 2001, then retook the prize in 2003. The ping pong action likely will accelerate with the expected avalanche of union concessions tripped off by United Air Lines last year. It's a pressure cooker environment where airline union concessions have created a more level playing field, but any MRO with a winning record of cost, quality and turn-time performance can intercept contracts at any moment. The MROs that survive and thrive will find that they must optimize their operations, sometimes equipping with the finest electronic aids, sometimes hiring a coaching staff of consultants, but always obeying the time-honored mantra to cut costs without compromising safety or quality, although some do better than others in walking the quality/cost tightrope.
"The market is extremely fierce," says John Schildroth, executive vice president and chief operating officer of EADS Aeroframe Services, "and extremely competitive." The action will heat up in the U.S. this year as airline MROs and third-party providers vie for the heavy maintenance contracts on the thousands of new-generation single-aisle aircraft (Boeing 737-700/800 and the Airbus A320 family) that are moving from phase checks to block checks, marking the transition from short visits to sometimes million-dollar, week-long labor intensive marathons.
MROs at several major airlines are emerging as prime contenders in the drama, a counterintuitive movement given that independent providers offer lower pricing and airline management has the newfound freedom to outsource.
"You can compete if you're cost efficient and put out a quality product," said Dave Shotsberger, Continental Airlines' director for technical operations in the Southeast U.S., Europe and the Caribbean. Shotsberger's 400-employee, two-hangar shop in Orlando just celebrated a noteworthy event - the one-year anniversary of its new 737-700/800 4C check line, a development that seemed unlikely in the post Sept. 11 industry as it meant a multi-million-dollar investment by Continental and a commitment to stick with the plan indefinitely.
The Orlando operation has become an increasingly important maintenance station for the airline since 1998, when its primary function = line maintenance - was augmented with 737 interior modifications. To handle the work, Continental acquired a second 65,000 sq.-ft. hangar and boosted its workforce by 180 technicians. Over the next two years, the carrier brought in three more modification lines, including 1C checks for the 737-300.
Continental was "fairly certain" when the first of its 90 next-generation 737s began arriving in 1998 that the 4C checks eventually would be done in-house five years or so down the road, Shotsberger said. That notion naturally eroded post-2001, putting the maintenance organization on the spot to beat out both outside and inside competition in a company analysis in 2002 that looked at doing the work either in Orlando, Houston (the carrier's primary heavy maintenance facility) or at an outside vendor. Shotsberger and two senior leaders, with 50-plus years of airline maintenance experience among them, closed themselves in a room away from the office and developed a strategy that leveraged the shop's tribal knowledge, equipment and facilities to overcome its higher labor rates. "It was a confidential thing," he said. "We didn't want to work on it at work."
After weeks of strategizing in a room scattered with hundreds of work cards representing the various 4C tasks, the group came up with a plan. Because Continental had phased its orders such that aircraft would largely come due for 4C checks in a serial manner, the global objective became to finish the checks on all the aircraft in time for the cycle to repeat. The upshot was 500 hours-per-day of labor to complete the checks in 10 days each. To meet a company mandate to look for cost savings that wouldn't impact quality or safety, the team focused on improved processes and facility savings. As an example, Continental came up with a lower-cost way to clean its seats and also obtained a reduction in rental fees from the airport owner, the city of Orlando.
Presentation of the cabin is a prime focus of the maintenance work at Orlando. Shotsberger said Continental adds significant time to the 4C check in order to pull out, clean and refurbish the entire interior of the cabin - a costly and time consuming task, but one that the company, from CEO Gordon Bethune down, believes makes a crucial impression on passengers.
Shotsberger's whirlwind effort paid off: The company approved his plan to bring the 4C work to Orlando, the shop hired 100 more technicians and the line started on Jan. 13 last year. As it turns out, the end justified the means: The first checks went so well that the team was able to decrease span time from 10 days to nine days for the -800 and eight days for the -700. In an added bonus, Continental was able to bring in-house the eight-day quarter-D checks on the 737-500 fleet with the newly found slack in the schedule. Continental by design outsources the heavy maintenance on its 45 Boeing 757 and 18 Boeing 777 aircraft. Shotsberger said that's primarily because the number and spacing of the maintenance visits for the larger aircraft would not provide a "stable flow" of work. There are 89 in-house block checks planned for this year, either at Orlando or Houston, and 17 (757 and 777) scheduled for third-party vendors. In addition, the carrier typically sends out additional heavy airframe work when there's a "peak" that can't be fit into the various lines.
In arguing to keep work in-house, Shotsberger said higher labor costs can be counterbalanced by being able to "better control" the flow of airplanes through the facility and by maintaining an energized workforce and supportive landlord. "It's a known quantity here - excellent workforce, good infrastructure and cooperative relations with the Greater Orlando Airport Authority." Will they bring in more work? Shotsberger said the picture will probably not change for this year, but he may hatch plans to bring in more work in 2005 or 2006.
In or Out?
At United Air Lines, where labor agreements last year paved the way for outsourcing potentially all heavy maintenance, the in-house organization remains in the lineup to do C checks for the airline's 98 Airbus A320s, first delivered in 1997. "When we decide to outsource, we go through a request-for-proposal process," said Loy Montes, director of maintenance services for United Services, the airline's MRO division. "We did that for the C checks and decided we could do it better than anyone," opposed to the other options, he said. Conversely, D checks, or HMVs (heavy maintenance visits) in United parlance, have been done for about a year at Timco in North Carolina and ST Mobile Aerospace Engineering in Mobile, Ala., according to Montes.
In addition to working on its own aircraft, United brings in substantial revenue - about $200 million a year - from third-party work for other airlines, including engine overhauls, components and line maintenance. The heavy work is done primarily at the carrier's San Francisco base.
For C checks, Montes said the carrier used cycle time as the primary factor in deciding who would do the work, with cost and quality a close second. With the ultimate decision to keep the checks in-house, however, United Services, like Continental's MRO operation, is continuously open to redirection. "If there's someone out there who can do it faster, better and cheaper," Montes said, "it makes sense for the company to do that." The "cheaper" part would not have been hard to beat in the recent past at United. Bruce G. Strand, president and CEO of Strand Associates, Inc., said when the carrier filed for bankruptcy a year ago, its "full-up" maintenance costs were greater than $80 an hour, 30% to 50% higher than what's available at major U.S. third-party shops like Timco and Goodrich Aviation Technical Services in Everett, Wash.
While outsourcing decisions are not based on cost alone, it certainly doesn't hurt. In the last 12 years, U.S. airlines have increased airframe outsourcing from roughly 30% to 50%, said Strand. "In the early states of an airplane, B checks and below, it makes all the sense in the world to keep that activity in house," he said. "Once an airplane starts to enter the heavier C-type checks, the specialist (or third party) just does it better and less expensively than can be done in-house," said Strand.
The counterculture move by airlines like Continental and Southwest to reverse the outflow for airframe maintenance would seem to bring that assertion into question, although a long time industry observer told O&M, "It could be that majors holding onto the C checks are kidding themselves when you factor in all of the costs." Southwest operates much like Continental, doing the line maintenance, airframe B checks and C checks in-house, and contracting out the rest.
Airlines watching from the sidelines may have to sort out the same issues in the near future. Strand said United's new labor contract will force other "legacy" carriers to do more outsourcing, joining the ranks of the cargo and low-fare operators who predominantly have been "outsource oriented." Strand recommends that carriers who decide to outsource look at four criteria: the quality assurance of the work, from a regulatory standpoint; the cost; the turn-time; and the reliability.
On the other side of the fence, MROs may want to heed the advice as well: "Carriers look at and monitor very carefully the condition of the aircraft coming out of check, in terms of the number of pilot reports levied against the aircraft. If there's an inordinate number, the carrier goes back to the vendor," said Strand.
Air Canada Technical Services (ACTS) considered that advice two years ago and gave its own operation a no-nonsense critique. "When we really looked in the mirror, we realized there were a few things we didn't do well," said Ben Minicucci, vice president of heavy maintenance operations for ACTS. Of particular concern to Minicucci was that the MRO's unit costs were higher than other North American companies', like Timco and EADS Aeroframe Services, companies ACTS considers its direct competitors for the "bulge" of A320 series and 737-700/800 heavy check work on the horizon.
Along with the A320 heavy maintenance work, ACTS performs C checks and winglet installations for Aloha Airlines' 737-700s and -800s and is bidding for United's HMV checks for its A320s. The MRO also handles 767s, A330/340s, A310s as well the 737 classic and RJs from a customer base that includes JetBlue, Atlantic Coast Airlines, Aloha, SkyService, USA 3000 and others. Thirty percent of the company's work is third-party maintenance; Air Canada gets the rest.
Technology Tools
To decrease unit costs, the company realized it needed to first reduce heavy maintenance span times, and to do that, Minicucci said the checks had to be "micro-planned" in "gory detail." At the time, the shop was working in a paper environment using spreadsheets and flow charts with "hundreds of pieces of paper floating around," said Minicucci. "We really didn't know where the check was."
The game plan was to improve heavy check planning by accumulating accurate data on each and every task, archive the information and analyze it to better predict the span time. "Based on historical data, you should generate this many pieces of paper with that many man-hours," said Minicucci. "If you load the right number of man-hours per day, you should get the aircraft out on time."
To execute the plan, ACTS launched a number of initiatives, including an effort to transform the company from a quality control organization to a quality assurance operation and educate all employees about the business of maintenance. To upgrade its information technology infrastructure, ACTS hired Duluth, Minn.-based Sinex Aviation Technologies and became the launch customer for that company's FleetCycle production manager software package, a product now in use at US Airways, Southwest Airlines and others.
The software, which puts a web-based "communication loop" around production control and project management, according to Sinex, is installed at Air Canada's four heavy maintenance facilities and is being used by 2,500 technicians. The idea is to go paperless: Work assignments are made to the mechanics electronically; work cards are signed off electronically and non-routines are written up and evaluated electronically as well, replacing what had previously been done by faxes and telephone calls. "I'm responsible for maintenance at Montreal, Winnipeg, Calgary and Vancouver," said Minicucci, "and I can now tell you in 10 minutes how each line is doing. I can tell management the same thing."
Minicucci said the initiatives allow Air Canada to predict to within an eight-hour shift when any maintenance event will be complete once initial inspections are complete, a vast improvement over the high variability in the past. The net result has been a 10% to 20% reduction in C checks and a 20% to 40% reduction in D checks, said Minicucci. Supervisors at Continental Airlines' Orlando facility cautioned that increases in productivity likely will not come from software upgrades alone, given the uncertainty in what mechanics typically find after starting a C check on a 737-700 or -800. "The work flow is like a battle plan, and battle plans last until the battle gets started - when the aircraft gets here," said Lee Halberg, one of Continental's production controllers at Orlando. "Everything changes."
Halberg views computer aids as a way to increase efficiency by making sure the work is completed in the right order, but he finds that they are little help when non-routines bring the work to a halt. Continental uses a hybrid production control system based on legacy software the carrier continuously up-grades. The system, called BMX, creates and keeps track of routine and non-routine work cards, but requires an operator to key the results into the system by hand. Outsourced work is tracked by a different program, although the two will be merged soon.
The process at Orlando appears orderly and efficient: The trailer-sized office in the hangar is neatly arranged with a flow chart on one wall, an in-work board on another and a non-routine board covering the third. The computer system, also in the room, contains a database of non-routine repairs that officials use to track maintenance trends. United Airlines has a similar system, developed internally, that creates and tracks work cards. OEMs like Boeing are trying to enter this market segment as well. Aloha Airlines recently began using Boeing's Enterprise One software, which includes modules to track airworthiness directives and service bulletins, monitor the service histories of high-cost components as well as to organize maintenance task cards, optimize schedules, generate work packages or support work bids.
At the end of the day however, Halberg credits the guy in charge of the check with the ultimate success or failure to make progress. "The computer system won't make a difference if you have crappy management."
Be that as it may, JetBlue would appear to be a firm believer in the high tech, newly streamlined ACTS operation. The successful low-fare carrier outsources C and D checks for its 53 Airbus A320s to ACTS. David Ramage, vice president of technical operations at JetBlue, said a desire to bring more maintenance work in-house at his airline would be a "tough sell" given the heavy up-front investment that would be needed for a new hangar, tooling and equipment.
There are other negatives as well. Ramage said the carrier has a large inventory of spare parts for line maintenance but is free from having to store all the necessary ingredients for heavy checks. "We're going to pay for it," he said, "but we don't have to store it."
In the support area, MROs generally have a large "background" operation, he said, which might include a paint shop or cleaning area, for instance, that would be difficult for a low-cost carrier to establish. In terms of productivity, Ramage said the JetBlue fleet is not large enough to support the high utilization rate necessary to make an in-house MRO operation successful. "If you have 600 airplanes, you might consider (doing your own heavy maintenance)," Ramage said, "but if you had 100 airplanes, you probably wouldn't. I suspect there are a lot of folks out there who are envious of people that can go out and use an external MRO."
The opportunity to outsource maintenance to independent repair stations also introduces new challenges in quality assurance, however. "For the most part, there are gaping holes in the quality and training of the people working at repair stations," said National Transportation Safety Board Member John Goglia, a former aircraft mechanic who spent 30 years in the aviation industry. Although mechanics are not required to hold an FAA Aircraft & Powerplant certificate, Goglia said it behooves an airline to know the qualifications of who's touching its aircraft, because the carrier is ultimately responsible to see that "the personnel are proper for the job they're supposed to do."
Goglia said when carriers outsource work, the amount of airline supervision is typically much lower than what would be available for an in-house repair. "The airlines pay a substantial amount of money to have this work done, but they don't provide a level of management oversight to ensure that they're getting what they pay for."
That's not to say Goglia doesn't have any qualms about airline-owned shops. He said that internal pressures to cut costs can affect quality in rather unusual ways. At one shop, where mechanics would print work cards and forms before heading out to do their tasks, Goglia said he witnessed a situation where only one printer was working, and the shop couldn't get approval to fix the others. The result, he said, slowed work and could have introduced errors had mechanics decided to perform tasks from memory rather than wait in the queue. Goglia's main concern about in-house operations is the ripple-down effects from across-the-board cuts. "The managers are telling me the manpower is below what they need, more so for mechanics," he said. "Inspection departments are also cutting out the fat, and they didn't have any fat to start with."
Carriers and maintenance shops in many cases are being proactive about such concerns.
FedEx sometimes sends as many as 16 company employees to a repair station during heavy maintenance work, and it only deals with repair stations with a "proven track record" and a "very strong" relationship with the aircraft manufacturer, said a company spokesman. FedEx also insists that all mechanics go through FedEx-supplied training and certification.
JetBlue uses a scoring system to rate a company's management expertise, training, experience and record in performing, among other factors, and compares the results in a tradeoff matrix when selecting a third-party vendor. Ramage, who worked for Air Canada for 31 years before taking the job with JetBlue last September, said the company revisits the matrix "as needed," although it prefers to "find someone that does good work and stick with them for the long term."
EADS Aeroframe Services witnessed the effects of intense competition last August when JetBlue pulled its heavy maintenance contract from the Lake Charles, La.-based MRO and awarded the CAD$139 million, six-year contract to ACTS.
Minicucci surmises that ACTS won back JetBlue's business by offering a superior packaging of quality, span time and price. Unfortunately, that's no guarantee that the company will have the work tomorrow. "We lost JetBlue once because we did not fulfill their expectations," said Minicucci. "If we stay sharp, history may not repeat itself." Despite the loss, EADS Aeroframe Services, an all-Airbus operation, is running at high capacity and soliciting A320 operators, in addition to "maintaining contact with other A320 operators," said John Schildroth, executive vice president and chief operating officer. "There are approximately 900 A320 series aircraft in the U.S. at either an airline or with a leasing company," said Schildroth. "Of that total amount, we make a pointed effort to go out and contact operators to see if we can meet their demands." The 400-employee MRO also is considering expanding its capabilities to include other airframes, said Schildroth. Among the company's current clients are FedEx, Air Jamaica Airlines, ASTAR Air Cargo and Skyservice Airlines.
At full capacity, Aeroframe Services can handle eight widebody or 12 narrowbody aircraft, and it offers one of the lowest unit costs in North America, said industry observers. Unit costs aside, Schildroth knows better than to rest on his laurels. "There is a lot of capacity today and many MROs are going out of business," he said. "Because of that, customers' loyalty is exclusively dependent on an MRO's ability to perform."
The article appeared in Overhaul & Maintenance's March 2004 issue.
Performance Drives MRO Face Off
By John Croft
03/05/2004 04:46:33 PM
By now, MROs of all stripes are familiar with the axiom that airlines giveth, and the airlines taketh away. Case in point: Air Canada Technical Services started the new millennium with the lucrative JetBlue heavy maintenance contract; lost it to EADS Aeroframe Services in 2001, then retook the prize in 2003. The ping pong action likely will accelerate with the expected avalanche of union concessions tripped off by United Air Lines last year. It's a pressure cooker environment where airline union concessions have created a more level playing field, but any MRO with a winning record of cost, quality and turn-time performance can intercept contracts at any moment. The MROs that survive and thrive will find that they must optimize their operations, sometimes equipping with the finest electronic aids, sometimes hiring a coaching staff of consultants, but always obeying the time-honored mantra to cut costs without compromising safety or quality, although some do better than others in walking the quality/cost tightrope.
"The market is extremely fierce," says John Schildroth, executive vice president and chief operating officer of EADS Aeroframe Services, "and extremely competitive." The action will heat up in the U.S. this year as airline MROs and third-party providers vie for the heavy maintenance contracts on the thousands of new-generation single-aisle aircraft (Boeing 737-700/800 and the Airbus A320 family) that are moving from phase checks to block checks, marking the transition from short visits to sometimes million-dollar, week-long labor intensive marathons.
MROs at several major airlines are emerging as prime contenders in the drama, a counterintuitive movement given that independent providers offer lower pricing and airline management has the newfound freedom to outsource.
"You can compete if you're cost efficient and put out a quality product," said Dave Shotsberger, Continental Airlines' director for technical operations in the Southeast U.S., Europe and the Caribbean. Shotsberger's 400-employee, two-hangar shop in Orlando just celebrated a noteworthy event - the one-year anniversary of its new 737-700/800 4C check line, a development that seemed unlikely in the post Sept. 11 industry as it meant a multi-million-dollar investment by Continental and a commitment to stick with the plan indefinitely.
The Orlando operation has become an increasingly important maintenance station for the airline since 1998, when its primary function = line maintenance - was augmented with 737 interior modifications. To handle the work, Continental acquired a second 65,000 sq.-ft. hangar and boosted its workforce by 180 technicians. Over the next two years, the carrier brought in three more modification lines, including 1C checks for the 737-300.
Continental was "fairly certain" when the first of its 90 next-generation 737s began arriving in 1998 that the 4C checks eventually would be done in-house five years or so down the road, Shotsberger said. That notion naturally eroded post-2001, putting the maintenance organization on the spot to beat out both outside and inside competition in a company analysis in 2002 that looked at doing the work either in Orlando, Houston (the carrier's primary heavy maintenance facility) or at an outside vendor. Shotsberger and two senior leaders, with 50-plus years of airline maintenance experience among them, closed themselves in a room away from the office and developed a strategy that leveraged the shop's tribal knowledge, equipment and facilities to overcome its higher labor rates. "It was a confidential thing," he said. "We didn't want to work on it at work."
After weeks of strategizing in a room scattered with hundreds of work cards representing the various 4C tasks, the group came up with a plan. Because Continental had phased its orders such that aircraft would largely come due for 4C checks in a serial manner, the global objective became to finish the checks on all the aircraft in time for the cycle to repeat. The upshot was 500 hours-per-day of labor to complete the checks in 10 days each. To meet a company mandate to look for cost savings that wouldn't impact quality or safety, the team focused on improved processes and facility savings. As an example, Continental came up with a lower-cost way to clean its seats and also obtained a reduction in rental fees from the airport owner, the city of Orlando.
Presentation of the cabin is a prime focus of the maintenance work at Orlando. Shotsberger said Continental adds significant time to the 4C check in order to pull out, clean and refurbish the entire interior of the cabin - a costly and time consuming task, but one that the company, from CEO Gordon Bethune down, believes makes a crucial impression on passengers.
Shotsberger's whirlwind effort paid off: The company approved his plan to bring the 4C work to Orlando, the shop hired 100 more technicians and the line started on Jan. 13 last year. As it turns out, the end justified the means: The first checks went so well that the team was able to decrease span time from 10 days to nine days for the -800 and eight days for the -700. In an added bonus, Continental was able to bring in-house the eight-day quarter-D checks on the 737-500 fleet with the newly found slack in the schedule. Continental by design outsources the heavy maintenance on its 45 Boeing 757 and 18 Boeing 777 aircraft. Shotsberger said that's primarily because the number and spacing of the maintenance visits for the larger aircraft would not provide a "stable flow" of work. There are 89 in-house block checks planned for this year, either at Orlando or Houston, and 17 (757 and 777) scheduled for third-party vendors. In addition, the carrier typically sends out additional heavy airframe work when there's a "peak" that can't be fit into the various lines.
In arguing to keep work in-house, Shotsberger said higher labor costs can be counterbalanced by being able to "better control" the flow of airplanes through the facility and by maintaining an energized workforce and supportive landlord. "It's a known quantity here - excellent workforce, good infrastructure and cooperative relations with the Greater Orlando Airport Authority." Will they bring in more work? Shotsberger said the picture will probably not change for this year, but he may hatch plans to bring in more work in 2005 or 2006.
In or Out?
At United Air Lines, where labor agreements last year paved the way for outsourcing potentially all heavy maintenance, the in-house organization remains in the lineup to do C checks for the airline's 98 Airbus A320s, first delivered in 1997. "When we decide to outsource, we go through a request-for-proposal process," said Loy Montes, director of maintenance services for United Services, the airline's MRO division. "We did that for the C checks and decided we could do it better than anyone," opposed to the other options, he said. Conversely, D checks, or HMVs (heavy maintenance visits) in United parlance, have been done for about a year at Timco in North Carolina and ST Mobile Aerospace Engineering in Mobile, Ala., according to Montes.
In addition to working on its own aircraft, United brings in substantial revenue - about $200 million a year - from third-party work for other airlines, including engine overhauls, components and line maintenance. The heavy work is done primarily at the carrier's San Francisco base.
For C checks, Montes said the carrier used cycle time as the primary factor in deciding who would do the work, with cost and quality a close second. With the ultimate decision to keep the checks in-house, however, United Services, like Continental's MRO operation, is continuously open to redirection. "If there's someone out there who can do it faster, better and cheaper," Montes said, "it makes sense for the company to do that." The "cheaper" part would not have been hard to beat in the recent past at United. Bruce G. Strand, president and CEO of Strand Associates, Inc., said when the carrier filed for bankruptcy a year ago, its "full-up" maintenance costs were greater than $80 an hour, 30% to 50% higher than what's available at major U.S. third-party shops like Timco and Goodrich Aviation Technical Services in Everett, Wash.
While outsourcing decisions are not based on cost alone, it certainly doesn't hurt. In the last 12 years, U.S. airlines have increased airframe outsourcing from roughly 30% to 50%, said Strand. "In the early states of an airplane, B checks and below, it makes all the sense in the world to keep that activity in house," he said. "Once an airplane starts to enter the heavier C-type checks, the specialist (or third party) just does it better and less expensively than can be done in-house," said Strand.
The counterculture move by airlines like Continental and Southwest to reverse the outflow for airframe maintenance would seem to bring that assertion into question, although a long time industry observer told O&M, "It could be that majors holding onto the C checks are kidding themselves when you factor in all of the costs." Southwest operates much like Continental, doing the line maintenance, airframe B checks and C checks in-house, and contracting out the rest.
Airlines watching from the sidelines may have to sort out the same issues in the near future. Strand said United's new labor contract will force other "legacy" carriers to do more outsourcing, joining the ranks of the cargo and low-fare operators who predominantly have been "outsource oriented." Strand recommends that carriers who decide to outsource look at four criteria: the quality assurance of the work, from a regulatory standpoint; the cost; the turn-time; and the reliability.
On the other side of the fence, MROs may want to heed the advice as well: "Carriers look at and monitor very carefully the condition of the aircraft coming out of check, in terms of the number of pilot reports levied against the aircraft. If there's an inordinate number, the carrier goes back to the vendor," said Strand.
Air Canada Technical Services (ACTS) considered that advice two years ago and gave its own operation a no-nonsense critique. "When we really looked in the mirror, we realized there were a few things we didn't do well," said Ben Minicucci, vice president of heavy maintenance operations for ACTS. Of particular concern to Minicucci was that the MRO's unit costs were higher than other North American companies', like Timco and EADS Aeroframe Services, companies ACTS considers its direct competitors for the "bulge" of A320 series and 737-700/800 heavy check work on the horizon.
Along with the A320 heavy maintenance work, ACTS performs C checks and winglet installations for Aloha Airlines' 737-700s and -800s and is bidding for United's HMV checks for its A320s. The MRO also handles 767s, A330/340s, A310s as well the 737 classic and RJs from a customer base that includes JetBlue, Atlantic Coast Airlines, Aloha, SkyService, USA 3000 and others. Thirty percent of the company's work is third-party maintenance; Air Canada gets the rest.
Technology Tools
To decrease unit costs, the company realized it needed to first reduce heavy maintenance span times, and to do that, Minicucci said the checks had to be "micro-planned" in "gory detail." At the time, the shop was working in a paper environment using spreadsheets and flow charts with "hundreds of pieces of paper floating around," said Minicucci. "We really didn't know where the check was."
The game plan was to improve heavy check planning by accumulating accurate data on each and every task, archive the information and analyze it to better predict the span time. "Based on historical data, you should generate this many pieces of paper with that many man-hours," said Minicucci. "If you load the right number of man-hours per day, you should get the aircraft out on time."
To execute the plan, ACTS launched a number of initiatives, including an effort to transform the company from a quality control organization to a quality assurance operation and educate all employees about the business of maintenance. To upgrade its information technology infrastructure, ACTS hired Duluth, Minn.-based Sinex Aviation Technologies and became the launch customer for that company's FleetCycle production manager software package, a product now in use at US Airways, Southwest Airlines and others.
The software, which puts a web-based "communication loop" around production control and project management, according to Sinex, is installed at Air Canada's four heavy maintenance facilities and is being used by 2,500 technicians. The idea is to go paperless: Work assignments are made to the mechanics electronically; work cards are signed off electronically and non-routines are written up and evaluated electronically as well, replacing what had previously been done by faxes and telephone calls. "I'm responsible for maintenance at Montreal, Winnipeg, Calgary and Vancouver," said Minicucci, "and I can now tell you in 10 minutes how each line is doing. I can tell management the same thing."
Minicucci said the initiatives allow Air Canada to predict to within an eight-hour shift when any maintenance event will be complete once initial inspections are complete, a vast improvement over the high variability in the past. The net result has been a 10% to 20% reduction in C checks and a 20% to 40% reduction in D checks, said Minicucci. Supervisors at Continental Airlines' Orlando facility cautioned that increases in productivity likely will not come from software upgrades alone, given the uncertainty in what mechanics typically find after starting a C check on a 737-700 or -800. "The work flow is like a battle plan, and battle plans last until the battle gets started - when the aircraft gets here," said Lee Halberg, one of Continental's production controllers at Orlando. "Everything changes."
Halberg views computer aids as a way to increase efficiency by making sure the work is completed in the right order, but he finds that they are little help when non-routines bring the work to a halt. Continental uses a hybrid production control system based on legacy software the carrier continuously up-grades. The system, called BMX, creates and keeps track of routine and non-routine work cards, but requires an operator to key the results into the system by hand. Outsourced work is tracked by a different program, although the two will be merged soon.
The process at Orlando appears orderly and efficient: The trailer-sized office in the hangar is neatly arranged with a flow chart on one wall, an in-work board on another and a non-routine board covering the third. The computer system, also in the room, contains a database of non-routine repairs that officials use to track maintenance trends. United Airlines has a similar system, developed internally, that creates and tracks work cards. OEMs like Boeing are trying to enter this market segment as well. Aloha Airlines recently began using Boeing's Enterprise One software, which includes modules to track airworthiness directives and service bulletins, monitor the service histories of high-cost components as well as to organize maintenance task cards, optimize schedules, generate work packages or support work bids.
At the end of the day however, Halberg credits the guy in charge of the check with the ultimate success or failure to make progress. "The computer system won't make a difference if you have crappy management."
Be that as it may, JetBlue would appear to be a firm believer in the high tech, newly streamlined ACTS operation. The successful low-fare carrier outsources C and D checks for its 53 Airbus A320s to ACTS. David Ramage, vice president of technical operations at JetBlue, said a desire to bring more maintenance work in-house at his airline would be a "tough sell" given the heavy up-front investment that would be needed for a new hangar, tooling and equipment.
There are other negatives as well. Ramage said the carrier has a large inventory of spare parts for line maintenance but is free from having to store all the necessary ingredients for heavy checks. "We're going to pay for it," he said, "but we don't have to store it."
In the support area, MROs generally have a large "background" operation, he said, which might include a paint shop or cleaning area, for instance, that would be difficult for a low-cost carrier to establish. In terms of productivity, Ramage said the JetBlue fleet is not large enough to support the high utilization rate necessary to make an in-house MRO operation successful. "If you have 600 airplanes, you might consider (doing your own heavy maintenance)," Ramage said, "but if you had 100 airplanes, you probably wouldn't. I suspect there are a lot of folks out there who are envious of people that can go out and use an external MRO."
The opportunity to outsource maintenance to independent repair stations also introduces new challenges in quality assurance, however. "For the most part, there are gaping holes in the quality and training of the people working at repair stations," said National Transportation Safety Board Member John Goglia, a former aircraft mechanic who spent 30 years in the aviation industry. Although mechanics are not required to hold an FAA Aircraft & Powerplant certificate, Goglia said it behooves an airline to know the qualifications of who's touching its aircraft, because the carrier is ultimately responsible to see that "the personnel are proper for the job they're supposed to do."
Goglia said when carriers outsource work, the amount of airline supervision is typically much lower than what would be available for an in-house repair. "The airlines pay a substantial amount of money to have this work done, but they don't provide a level of management oversight to ensure that they're getting what they pay for."
That's not to say Goglia doesn't have any qualms about airline-owned shops. He said that internal pressures to cut costs can affect quality in rather unusual ways. At one shop, where mechanics would print work cards and forms before heading out to do their tasks, Goglia said he witnessed a situation where only one printer was working, and the shop couldn't get approval to fix the others. The result, he said, slowed work and could have introduced errors had mechanics decided to perform tasks from memory rather than wait in the queue. Goglia's main concern about in-house operations is the ripple-down effects from across-the-board cuts. "The managers are telling me the manpower is below what they need, more so for mechanics," he said. "Inspection departments are also cutting out the fat, and they didn't have any fat to start with."
Carriers and maintenance shops in many cases are being proactive about such concerns.
FedEx sometimes sends as many as 16 company employees to a repair station during heavy maintenance work, and it only deals with repair stations with a "proven track record" and a "very strong" relationship with the aircraft manufacturer, said a company spokesman. FedEx also insists that all mechanics go through FedEx-supplied training and certification.
JetBlue uses a scoring system to rate a company's management expertise, training, experience and record in performing, among other factors, and compares the results in a tradeoff matrix when selecting a third-party vendor. Ramage, who worked for Air Canada for 31 years before taking the job with JetBlue last September, said the company revisits the matrix "as needed," although it prefers to "find someone that does good work and stick with them for the long term."
EADS Aeroframe Services witnessed the effects of intense competition last August when JetBlue pulled its heavy maintenance contract from the Lake Charles, La.-based MRO and awarded the CAD$139 million, six-year contract to ACTS.
Minicucci surmises that ACTS won back JetBlue's business by offering a superior packaging of quality, span time and price. Unfortunately, that's no guarantee that the company will have the work tomorrow. "We lost JetBlue once because we did not fulfill their expectations," said Minicucci. "If we stay sharp, history may not repeat itself." Despite the loss, EADS Aeroframe Services, an all-Airbus operation, is running at high capacity and soliciting A320 operators, in addition to "maintaining contact with other A320 operators," said John Schildroth, executive vice president and chief operating officer. "There are approximately 900 A320 series aircraft in the U.S. at either an airline or with a leasing company," said Schildroth. "Of that total amount, we make a pointed effort to go out and contact operators to see if we can meet their demands." The 400-employee MRO also is considering expanding its capabilities to include other airframes, said Schildroth. Among the company's current clients are FedEx, Air Jamaica Airlines, ASTAR Air Cargo and Skyservice Airlines.
At full capacity, Aeroframe Services can handle eight widebody or 12 narrowbody aircraft, and it offers one of the lowest unit costs in North America, said industry observers. Unit costs aside, Schildroth knows better than to rest on his laurels. "There is a lot of capacity today and many MROs are going out of business," he said. "Because of that, customers' loyalty is exclusively dependent on an MRO's ability to perform."
The article appeared in Overhaul & Maintenance's March 2004 issue.
