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Turbine engine aftermarket MRO

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Post-warranty powerplant maintenance, repair, and overhaul (MRO) requires owners, operators, and lessees to consider wide-ranging influences and service alternatives.


By Don Van Dyke
ATP/Helo/CFII. F28, Bell 222
Pro Pilot Canadian Technical Editor

Over the life of an aircraft, MRO costs can amount to as much as 35% of its annual operating budget. The financial, accounting, and risk systems under which an aircraft is managed affect the way operating costs and risks should be viewed and reported.

Turbofan, turboshaft, and turboprop engine maintenance, repair, and overhaul (MRO) involves tasks undertaken to meet international certification and airworthiness standards.

In doing so, powerplant MRO satisfies service-level drivers, such as safety, performance, and reliability.

Typical MRO services include engine wash (if approved), hot section inspection (HSI), line maintenance, engine removal and replacement, loaner or rental engines, overhaul, and transferable/renewable coverage. Less common services involve on-site restoration of aircraft on ground (AOG) to operational functionality.

Flightcrews are encouraged to be broadly familiar with MRO concepts which underpin their role in observation, evaluation, and aeronautical decision-making, as they may affect operational outcomes, accountability for aircraft airworthiness, and risk management.

Engine MRO aftermarket

Engine MRO aftermarket begins with expiration of original equipment manufacturer (OEM) warranties. Engines represent roughly 20% of new aircraft value. Nearer disposal, however, they account for 80% of aircraft value. Thus, focused engine aftermarket MRO spending acts to preserve total aircraft asset value.

The global MRO aftermarket is currently valued at $78.6 billion, and is expected to increase to $126.6 billion by 2032, according to management consulting firm Oliver Wyman.

Despite widespread geopolitical and economic uncertainties, commercial engine MRO is thriving and is, by far, the largest and most rapidly growing segment. Currently valued at $34.1 billion, it is forecast to grow to $65.3 billion by 2032, accounting for more than half of global MRO aftermarket spend. The commercial engine MRO sector is also the one in which the greatest number of OEMs participate.

Demand growth. Leasing analysts have witnessed a strong travel recovery in 2022 as Covid-19 restrictions have been lifted. However, for several reasons, MRO slots remain limited in number, and supply chain anomalies present additional constraints. The massive growth in private and business aviation will further increase demand for MRO services.

chart

The greatest engine MRO cost segment consists of maintenance of airfoils/aerofoils (blades) of varying sizes in the fan, compressor, and turbine sections.


Engine MRO capacity will be challenged by the increasing presence of turbine-powered unmanned aircraft systems (UASs). Inclusion of next-generation engines in new aircraft may further increase MRO demand, since new engine designs generally have more expensive material requirements than their predecessors. Engine MRO is expected to comprise 46% of the overall MRO market by 2030.

Competitive landscape. Historically, aftermarket engine airworthiness requirements have been met through independent MRO providers. OEMs continued to monitor reliability data to avoid unnecessary maintenance by amending prescribed programs.

Client participation in the engine MRO aftermarket has since evolved into 3 primary channels – through the airframer, by way of an independent 3rd-party plan provider, or through the engine OEM competing directly with MROs by providing life cycle maintenance on systems they manufacture.

In Table 1 above you can see an overview of aftermarket MRO plans offered by engine manufacturers, as well as the airframer integrators with whom they are associated.

An Oliver Wyman 2021 survey concludes that OEM presence will probably continue to grow, focusing on the engine and component aftermarkets, rather than on airframes.

Challenges facing engine MROs

table
While resourcefulness is important in dealing with parts shortages and shipping delays, other challenges may be even more concerning.

Workforce. Many industries seek the same expertise and competence in hydraulics, pneumatics, and electrics as are found in aviation. This demand for skilled labor has exacerbated a lack of business aviation technicians. Major labor migrations have left aviation with shortages of requisite expertise and an aging workforce that needs to be replaced with qualified people. Attracting and retaining talent, however, remain significant challenges, and corresponding solutions are elusive.

Sustainability. The 41st ICAO Assembly adopted a long-term global aspirational goal (LTAG) for international aviation of net-zero carbon emissions by 2050, supporting the UN Framework Convention on Climate Change (UNFCCC) temperature goal.

While efforts to reduce the effects of flying on the environment are laudable, many activists view business aviation and its low passenger-to-fuel-use ratio as a major carbon contributor.

Understanding and predicting the process of pollutant formation from aircraft engines is a key aspect of mitigating aircraft emissions and helping to achieve 2050 climate-neutral goals. Emissions such as soot, which are byproducts of the combustion process of hydrocarbon fuels, can produce harmful effects on human health and contribute to climate change.

In 2019, Pratt & Whitney Canada (P&WC) launched a carbon offset service for turbine engine clients enrolled in its Eagle Service Plan (ESP), in which owners/operators pay a small fee for each flight, and P&WC will estimate and compensate for the aircraft emissions by sourcing high-quality carbon offset credits from South Pole, a globally recognized 3rd-party carbon offset service, and provide a corresponding certificate of carbon compensation.

New technologies. While there have been impressive advances in electric propulsion, battery weight continues to limit commercial scaling beyond small GA aircraft. Engine MROs must be ready to accommodate hydrogen, electric, or hybrid-electric propulsion as the most likely way forward.

The use of predictive analytics will feature increasingly as a central pillar of engine maintenance scheduling, supporting MRO component repairs, inventory management, and supply chain administration.

Artificial intelligence (AI). AI will be used to predict defects and resource requirements more effectively in support of operational and financial decision-making. Sensors and Internet of Things (IoT) technology will become inexpensive and more accessible, improving detection of performance and MRO needs.

Introduction of advanced technologies to digitize and automate maintenance activities, as well as AI, will improve overall maintenance process efficiency, reduce overall turnaround time, and enhance safety.

Supply chain. The number of aircraft in service is expected to double to more than 40,000 by 2036, accompanied by a corresponding increase in needed MRO services, parts, and spares. Supply chain issues continue to be problematic, with long lead times for engine parts.

Blockchain. Goals of blockchain technology include the provision of traceable technical data relating to parts serviceability and modification status. While investment in blockchain has slowed during the pandemic, digital marketplaces like Honeywell’s GoDirect Trade seek to leverage the concept of pedigrees in facilitating trade in OEM and trusted used engine parts.

Strategizing engine MRO resources

NBAA highlights talent acquisition, personnel training, and retention as the 3 greatest operational challenges in 2023.

Aftermarket engine MRO services are provided by OEMs, independent MROs, OEM–MRO partnerships, or in combination. Each option offers different features, and faces challenges in distinctive ways.

OEMs. OEMs offer comprehensive coverage, plan price, and the value of brand-name recognition. Access to parts inventory reduces downtime, often allowing the OEM to complete maintenance more quickly under its own plan. The OEM uses new parts for repairs and overhauls, particularly on engines or components it currently produces. In all cases, only new OEM-authorized parts and services are offered.

By having full control from design to manufacture, and in-service operations of an aircraft, OEMs can characterize an engine comprehensively and use this data to analyze performance. With this data, OEMs can design maintenance procedures and determine when work must be performed. While owners/operators own operating data, OEMs can gather sufficient reliability data to change maintenance plans, removing unnecessary tasks to improve efficiency while maintaining airworthiness.

Independent MROs. MROs have field experience in ensuring the continuing airworthiness or repair of engines operating in the aftermarket. Larger MROs having relevant skilled manpower, technical capabilities, and information, can compete directly with OEMs.

MROs offer flexibility (alternatives to comprehensive full-service contracts), mobility (supporting remote needs), and pricing (promoting greater use of quality used serviceable materials for both proprietary and non-proprietary designs). MROs can expand and diversify capabilities (fleet management, line planning, fewer regular checks, and smaller repairs), and are often better placed to meet the specific and changing needs of their clients.

Since unplanned maintenance is the most risk-based and the type accompanied by the greatest financial and operating consequences, the rapid response capabilities of MROs may prove to be a competitive edge. Another differentiator for MROs is the price point of competing OEM products.

OEM–MRO partnerships. Given the significant advantage OEMs enjoy with intellectual property (IP), design data, and manuals, several larger MROs have elected to partner, rather than compete, with OEMs. Example forms of OEM–MRO collaboration include material agreements, authorized service centers, and distribution agreements. Although industry consolidation is possible, this awaits greater clarity on the extent to which aviation recovers from Covid-19 restrictions.

Conclusion

MROs have evolved from providing airframe-based services to focused maintenance of engines, as well as complex assemblies, components, and parts supply.

Interactions between OEMs and independent MROs reflect both cooperation and competition. As industry recovers from the Covid-19 pandemic effects, competition has largely halted, allowing cooperation in innovation and investment, particularly in the areas of digitization, predictive maintenance, cybersecurity, and risk management practices.

Observed aftermarket MRO cost increases do not arise from greater maintenance activity as much as they transfer associated cost responsibility from the OEM to the owner. Planning for, and selection of, aftermarket services then becomes critically important.

Although the increasing presence of OEMs in the aftermarket is currently only modestly disruptive, it has led to several other concerns, particularly the extent to which engine and component manufacturers control and leverage IP to gain market share. IP control is a factor in driving material costs upward. Also, many owners/operators wish to avoid being locked into full-life-cycle, full-service contracts often encouraged by OEMs, including heavy maintenance, line maintenance, and supply chain.

Shortages among key labor resources are a pressing problem common to all service providers. This is an especially critical aspect, since it is the pilot who interfaces most often and most intimately with anomalous aircraft behavior and marginal performance. Insightful collaboration between pilots and maintenance staff is an important safeguard to avoid an unplanned engine maintenance event.


DonDon Van Dyke is professor of advanced aerospace topics at Chicoutimi College of Aviation – CQFA Montréal. He is an 18,000-hour TT pilot and instructor with extensive airline, business and charter experience on both airplanes and helicopters. A former IATA ops director, he has served on several ICAO panels. He is a Fellow of the Royal Aeronautical Society and is a flight operations expert on technical projects under UN administration.