Your address will show here +12 34 56 78
Uncategorized
The global MRO spending for commercial air transport in 2018 is expected to reach $77.4 billion, up from $75.6 billion a year before.

 

Consultancy Oliver Wyman is projecting a compound annual growth rate of 3.5% over the next five years to $91.9 billion by 2023, according to a report from the company.

However, over a 10-year period till 2028, the global air transport MRO market will grow at 4% CAGR, rising to $115 billion.

This is a higher than its earlier forecast that the industry will grow 3.8% annually for ten years, reaching $109 billion by 2027.

Oliver Wyman still expects Asia to be the driver of MRO growth, led by China, whose MRO’s sector is expected to jump 10.6% annually and eventually occupy 16% of global MRO demand. However, they could be hindered by rising labour costs and temporary infrastructure and capacity constraints.

India is forecasted to grow at 5.6% annually, but will represent less than 3% of the market.

The Asia-Pacific region will grow an annual rate of 4%, with MRO demand “rising to equal those of Western Europe and North America”.

Oliver Wyman states that carriers are currently sending nearly 24% of widebody heavy airframe maintenance to Asia-Pacific and China. This would result in “an inflection point where capacity growth within Asia cannot keep pace with the MRO demand of its own countries plus that of foreign operators particularly those in the mature North America and Western Europe regions”.

This could create MRO opportunities in North America, Western Europe, and Latin America.

Meanwhile, North America MRO spending is forecasted to shrink from $19.9 billion in 2018 to $19.4 billion by 2023, then rebound to $23.8 billion by 2028 – presenting an overall growth rate of 1.8% CAGR. Latin America MRO spending, which represents 5% of the total market, is expected to grow 4.7% annually from $3.9 billion to $6.2 billion, but market share will be flat.

In addition, Western Europe MRO will grow at 3% annually from $16.2 billion to $21.7 billion. However, it will lose four percentage points of market share. Eastern Europe is forecast to grow 2% annually thanks to the effects ofeconomic sanctions placed on Russia.

The Middle East could grow at 4.3% CAGR and add over $4.6 billion in MRO spend, and will make up nearly 12% of the global MRO market.

Africa, highly subject to terrorism and political unrest, is still expected to grow three% annually and will retain its current 3% market share.


Article source

 
0

Aircraft
Jan 26, 2017 – The part-out process is an option for aircraft owners. Part-out candidates can range from young aircraft variants with a large user base. to older types that are gradually being phased out. The part-out process is examined here along with potential values and disassembly providers. 


Teardowns and End-of-Life Solutions

Every year 500-600 commercial passenger and freighter aircraft are withdrawn from service. Some of these might be placed in long-term storage, but many are disassembled. The number of organizations offering teardown or part- out services has increased in recent years. The part-out process is described here. Potential part-out candidates and resulting asset values are considered. Some of the main teardown service providers are also summarized.

The part-out market

The part-out process involves an aircraft being withdrawn from service and dismantled. Engines and other components are removed and either returned to stock to support the rest of the fleet, or made available for sale or lease so that the owner can maximize asset values.

Aircraft might be parted out when they still have years of operational life remaining because owners believe the sum of the parts is worth more than the revenue that could be obtained from continued operations. Alternatively, an aircraft may be parted out as it approaches its utilization threshold or when it becomes obsolete.

Aircraft might belong to different types of owner when they are parted out. These include airlines, leasing companies, banks, specialist investment funds and parts trading companies.

Mike Corne, commercial director at eCube Solutions, believes that airlines account for only a small percentage of global part-out demand. “Generally only the major operators will directly part out aircraft, typically when they are in the process of phasing out a particular type and are trying to minimize further spares investment in these aircraft,” says Corne.

Banks and leasing companies may occasionally be customers in the part-out process, but typically dispose of aircraft before they are disassembled. “A leasing company’s business is fundamentally about earning revenue from the lease of operating aircraft,” says Corne. “They do not want to own 1,000 small component assets taken from parted-out aircraft.

“In the past five years, a number of specialist investment funds have raised capital to acquire aircraft that they have evaluated to be worth more as parts than as a whole asset,” continues Corne. “These comprise 60-70% of the actual owners of part-out assets.”

Parts trading specialists

In many cases, aircraft are sold or consigned to parts trading specialists shortly after they are removed from service. 

“Parts trading companies probably own about 25% of the aircraft that are parted out,” estimates Corne. “They also manage a large percentage of part-out projects on a consignment basis from third-party owners, which in most cases are specialist investment funds.” 

Touchdown Aviation (TDA) is a parts trading specialist with experience of the part-out market. TDA is headquartered in the Netherlands, but has recently opened a new facility in the UK. It offers aircraft component sales, leasing and exchange programs. “We focus on narrow-bodies, including younger A320 family airframes and 737NGs,” explains Julian Marcus, managing director at TDA. “Acquiring aircraft for part-out has allowed us to enlarge our inventory faster and at more competitive prices.”

TDA manages part-outs for aircraft it has acquired directly or that it manages on a consignment basis for third-party owners. “Under the consignment process, the parts trader and owner agree on the percentage each party receives when the consigned material or components are sold,” explains Marcus. “The consignee handles everything in terms of logistics, marketing and the sale of the components, which are owned by the third party.”

AJW Aviation is another parts trading specialist with experience of the part-out market. It provides component sales, loans, exchanges, power-by-the-hour (PBH) support and parts pool access, among other services. The part-out process is appealing to parts specialists like AJW Aviation, because it provides an avenue for them to obtain high-demand component items at lower costs to support their PBH and sales activities.

Selling or consigning an aircraft for part-out to a parts trading specialist allows third-party-owners to make returns on component asset values without having to invest in developing skills and experience outside of their core business activities. 

AJW Aviation has previously bought its own aircraft to part-out, but has also managed the process under consignment agreements. “In the future we want to perform most part-outs on a consignment basis,” explains Conrad Vandersluis, vice president of strategic material and asset management at AJW Aviation.

“AJW Aviation plans to manage the part-out process for up to 10 airframes and 30 engines in 2016,” continues Vandersluis. “The CFM56-5B, CFM56- 7B and V2500-A5 are engine types of focus both for consignment or purchase, because of the longevity of material requirements for these engines for the foreseeable future.”

Parts trading specialists will contract a third-party dismantling provider to tear down an aircraft in most cases. There are occasional exceptions to this rule, with some organizations providing combined trading and dismantling services. 

Some components will be removed from the part-out aircraft in serviceable condition. Others may need to be sent for inspection, repair or overhaul.The parts trading company may have some in- house repair and overhaul capabilities, but in many cases this work is performed by a third party. 

“Parts are removed in serviceable condition in accordance with the aircraft maintenance manual (AMM) during the dismantling process,” explains Vandersluis. “We aim to maximize the reliability of components in our inventory, so we tend to send removed items to a repair shop for more rigorous testing in accordance with the component maintenance manual (CMM). AJW Aviation is part of the AJW Group, which also includes AJW Technique, a component repair facility in Montreal, Canada. AJW Technique’s approvals include avionics, hydraulics, pneumatics and electrical and lighting components. AJW Aviation sends 14% of its components to AJW Technique for inspection, repair or overhaul as required. AJW Technique provides us with high- reliability repairs and competitive rates, which helps us to control re-certification costs. 

Engines and components will be returned to the parts trading company once they have been removed and, if necessary, sent for inspection or repair. They will then be added to its spares inventory where they will be made available for sale, lease and PBH component support services. 

Some parts trading companies like AJW Aviation will part out airframes and engines. Others, such as Aviall, only focus on engines. “Aviall continues to work with original equipment manufacturers (OEMs) to meet and anticipate the needs of their complete lifecycle engine business,” explains Sheena Mitchell, vice president commercial engines and rotor- wing programs at Aviall. “We provide engine parts and service support to our OEM partners through distribution agreements and unique programs. These agreements often involve forecasting, ordering and delivering OEM replacement parts through our worldwide distribution and supply chain capabilities. Materials from our asset part-outs are used to complement our OEM aftermarket offerings and support several OEM PBH programs.”

Many of the larger parts trading companies will be more interested in younger aircraft types with large fleets and high component demand, such as the 737NG and A320 families, because they have higher asset values. Some other parts traders might specialize in the part- out of older types with fewer in-demand and lower value components.

The dismantling process

It is not unusual for an aircraft to enter a short period of storage following its withdrawal from service while ownership changes hands and final decisions are made regarding its ultimate fate. Many dismantling providers also offer storage services.

“A typical scenario would see an airline deliver an aircraft to a dismantling facility at the end of lease on behalf of the lessor,” explains Mark Gregory, managing director at Air Salvage International (ASI) “Some aircraft may enter a brief storage period lasting several weeks while the lessor decides what to do with the asset.”

Some dismantling companies will be approved Part 145 maintenance providers, or will work closely with a partner or affiliate Part 145 organization. This allows them to provide necessary care and maintenance during any storage periods. “The aircraft is brought in under care and maintenance,” explains Gregory. “We then work with the lessor to satisfy lease transition maintenance requirements. In most cases, the aircraft will be sold or consigned to a parts trader before the physical teardown process begins.”

“When an aircraft arrives for parting- out, the crew is debriefed for any incoming defects and the technical log is consulted to identify any deferred defects,” explains Gary Spoors, managing director and accountable manager at GJD Services. “The aircraft is then made safe, by de-arming the slide packs and fitting safety pins and locks as needed.

“For re-certification requirements, full-power engine ground run performance checks are carried out,” continues Spoors. “These are followed by system operational tests, including flight control and autopilot checks, and checks of the PA system and toilets. The engines are inhibited when all of the necessary checks have been completed.

“The next stage is to configure the aircraft for dismantling,” says Spoors. “This involves lowering the flaps, raising the speed brakes, dropping the landing gear doors and positioning flight surfaces as required for removal. Upon completion, all the extra spoiler locks, gear door locks and gags are fitted to prevent inadvertent operation and relevant circuit breakers are pulled to prevent the operation of systems. At this point the hydraulics are drained, the fuel is removed, tanks are opened for venting and all gaseous systems are deflated.”

“The engines and high value components are removed after the liquids have been removed,” explains Derk-Jan van Heerden, chief executive officer and founder at Aircraft End-of-Life Solutions (AELS).

Depending on the level of demand and maintenance status, engines may not be parted out with the rest of the aircraft. “Engines have their own lifecycle that is not parallel to that of the airframe,” says van Heerden. “You could have an end-of- life airframe with young engines, or a valuable airframe with end-of-life engines. Each aircraft that is disassembled

will bring two engines on to the market. These may be disassembled for parts, leased out, used internally or scrapped for their metal value.”

Since airframe and engine life cycles are not necessarily in sync, some engines may be parted out independently of any airframes.

Spoors says that once the engines have been removed, items including the auxiliary power unit (APU), avionics, flight control actuators and air- conditioning and hydraulic systems components take priority. The interior is then removed, including the seats and carpets. “Any remaining items that contain carbon fibers, such as the fin and tail plane on some aircraft, are removed for specific disposal,” explains Spoors. “It is essential these materials are treated in the correct manner, because they contain fibers that are smaller than asbestos fibers, and can severely affect a person’s health if they are breathed in. The disposal of such materials comes with additional associated costs.”

“The last item to be removed is the landing gear,” says van Heerden. “If components are removed by a Part-145 approved maintenance organization they can be recertified on removal as ‘Serviceable As Removed’, subject to test, inspection and record review,” explains Spoors. “The aircraft needs to remain registered during the part-out process, and have a current Certificate of Airworthiness (CofA) or Airworthiness Review Certificate (ARC), for parts to be removed as serviceable. Parts are normally shipped straight to the customer that owns the asset. If they need a shop visit they may well sit on a shelf until a demand arises.
“After all of the main components have been removed a final walk-through and associated check take place,” continues Spoors. “The empty hull is crushed and sheared, and the scrap metal is sent for recycling.”

Part-out candidates

A number of scenarios could lead to certain aircraft types or individual airframes becoming part-out candidates.

“Part-outs provide airlines with a cheaper alternative for spares to maintain their fleets,” explains Stefan Haynes, vice president sales EMEA at GECAS Asset Management Services (AMS). “Parting- out is a good option whenever it is no longer economically advantageous to continue operating an aircraft. The part- out process may also appeal to operators looking to exit an aircraft type entirely or for those who want to retire an aging fleet.

“To conserve cash an operator might consider parting out an aging aircraft (15 plus years) that is due a heavy maintenance check,” continues Haynes.

“Aircraft owners consider their options each time a high-cost event arises at the end of a period of operation, such as a lease return,” says Corne. “This might include an engine performance restoration or heavy structural airframe maintenance. If it makes economic sense, they may decide to sell the aircraft as a part-out candidate and cash in on any maintenance reserves, rather than invest in restoring the aircraft to a condition for a further period of operation.”

 A downside or risk with part-out is that as the fleet for a type diminishes in numbers, the quantity of material and spares from dismantled aircraft increases, while demand from a small fleet reduces.

“Another typical part-out scenario is when an operator goes bust leaving a fleet of aircraft behind,” explains Spoors. “An example of this is when Spanair ceased flying. Those aircraft were in Spanair livery, with Spanair seats and Spanair internal trim. That’s a lot of capital expenditure (Capex) just to re-lease the aircraft. The owner then starts to look at when the heavy maintenance is due and that seals the aircraft’s fate.”

“Aircraft that have been operated under harsh conditions, have missing maintenance records or are maybe even incident-related, can also become part- out candidates,” says van Heerden.

“Some countries have age limits on commercial aircraft, which can make certain airframes strong candidates for part-out,” says Haynes.

“Part-out demand typically starts after first-tier carriers move their stock to second-tier operators,” says Spoors.

“A typical age-range at which aircraft become suitable for part-out is 15-20 years, but it depends on the aircraft type,” says Haynes.

Aircraft might be parted out at an even younger vintage if the owner thinks this approach will offer the best return on investment. Gregory says that the average age for A320 family part-out candidates is about 18 years, but that ASI has processed a number of 12-15-year old examples, and even one aircraft as young as seven years.

Other aircraft will be parted out at much older vintages, as their accumulated utilization approaches operational limits of validity.

For owners of younger in-production aircraft variants the part-out process is one of several options to maximize remaining asset value. “Depending on the vintage of the aircraft, alternatives to parting-out can include selling it or continuing to use it as a flyer, converting it to a freighter, selling it as a training aid or prop, or completely scrapping it,” says Haynes.

Passenger-to-freighter (P-to-F) conversions have traditionally been considered economically viable when aircraft are 15-20 years of age. Some aircraft types are being converted at up to 25 years old in the current market. P-to-F conversions are only available for certain types, however. There are few alternatives to the part-out process for aircraft older than 25 years, should the owner consider it uneconomic to continue passenger operations. “Sometimes it is cheaper to park the aircraft, rather than cover the cost of disposal, but those disposal costs will get more expensive,” says Spoors.

“An aircraft that is disassembled as soon as possible after its last flight is considered a better part-out candidate from a technical point of view because the components will still be in operational condition,” says van Heerden. “The longer an aircraft is parked the more likely it is that their condition will deteriorate.

”The most likely teardown candidates in the current market can be sub- categorized into high-demand and low- demand part-out candidates.

High-demand candidates

High-demand candidates are generally relatively young airframes of no more than 10-15 years of age, for which the part-out process is preferred over alternative use options, includingcontinued passenger operations or P-to-F conversion.

“The newer the aircraft model, the higher the parts demand and the higher the component value,” says van Heerden. “This makes younger types more interesting disassembly candidates. In that field, however, you are also competing with potential buyers who want to fly the aircraft.”

“Aircraft types that have a large operational user base and a low retirement rate can become more valuable as parts than as flying machines,” says Spoors. “Aging aircraft with high in- service numbers are ideal part-out candidates,” concurs Haynes.“Aircraft variants that have been superseded by newer models, but where a strong level of parts commonality remains between the different generations are also good candidates,” adds Haynes.

In the current market the most in-demand turboprop part-out candidates include first generation ATR 42s and ATR72s and Bombardier Q400s.

The most in-demand regional jet (RJ) part-out candidates include older E-Jets.

The most in-demand narrow-body candidates are 737NGs including the -700 and -800 series, and younger A320 family variants including A319s, A320s and A321s. “There are quite big differences between early line number A320 family aircraft and later-build aircraft,” explains Vandersluis. “First, there are three distinct variations of avionics fit for the A320 family, with no real commonality between them. Early aircraft also had different APUs and slight differences related to the landing gear. EIS2 standard A320 family aircraft manufactured from about 2003/2004 onwards are the most desirable part-out candidates in terms of component value.

”The most appealing wide-body part- out candidates from a parts demand perspective are A330s and 777-200s.

Lower-demand candidates

Aircraft types for which there is less demand for aftermarket spares will see less demand as part-out candidates.

This might include aging types in excess of 15-20 years of age that are being retired from service, resulting in a contraction in the active fleet and in many cases an oversupply of aftermarket spares. These aircraft will have few alternative options to the part-out process. This may lead to high numbers of part-outs for certain types, regardless of the lack of demand for associated spares and the resulting impact on asset values.

“At a certain moment in time individual aircraft or variants will become less desirable from an investment point of view,” says van Heerden. “Their continued operation is then the only alternative to parting-out. All aircraft that reach end-of-life need to be disassembled. We cannot park them somewhere and walk away.”

“There is clearly a point at which a critical proportion of the total delivered fleet has been parted out,” says Corne. “This creates an excess supply of airframe spare parts, and further additions drive the pricing to a stage where it is uneconomic to part out any more aircraft. This will vary by type depending on how long older variants remain in service, but it is generally hard to consider a strong economic demand for part-outs when retirements exceed 50% of the original fleet.”

“The decrease in demand for part- outs is directly related to the amount of aircraft remaining in service,” claims Spoors. “The 747-400 is a prime example. There are probably more 747-400 windscreens in the market place than there are active 747s!

“We are almost at the point in the life cycle of some aircraft, where their remaining valuable and in-demand assets will not cover the cost of the part-out and subsequent disposal of that aircraft,” adds Spoors.

In many cases aircraft being removed from service with little component value will still be disassembled rather than being parked indefinitely. In this situation the owner will attempt to claim as much value from the components as possible. “The owner will try to find ways to mitigate costs by selling even only a few items from the aircraft,” says Corne.

Examples of aircraft that might be parted out in the current market despite less demand for their components include: MD-80s, 737 Classics, older A320 family variants with CFM56-5A or V2500A engines, A340-200s and -300s and 747-400s.

“A340s can be good part-out candidates due to their limited operational attractiveness, but high levels of airframe systems commonality with the A330,” explains Corne.

“The outer landing gear and nose gear are interchangeable between the A340 and A330,” says Gregory. “There would still be a fair degree of wastage from an A340 teardown, however.”

Part-out values

The potential asset values that can be realized from parting out a commercial aircraft will vary considerably, depending on a variety of factors, including the aircraft type, age and condition.

There will be more demand for types with a large operating base where only a small fraction of the overall fleet has been parted out so far.

One such aircraft is the 737-800 of which there are currently 4,142 in service. Vandersluis confirms that, depending on the condition of components, a 737-800 with its two CFM56-7B engines is one of the highest- demand aircraft in the teardown market.

Oriel estimates that the current market value for a 15-year-old 737-800 in half-life maintenance condition with half-life engines is about $13.80 million. It estimates that the engine value will account for $9.00 million alone.

Engines are the most valuable assets in any part-out. “Engines are typically the driving economic factor for purchasing an aircraft for part-out,” says Corne. “Depending on condition they could account for 70-80% of the total asset value.

”After the engines, the highest value components will include the APU, landing gear and standard avionicsincluded in the line replaceable units (LRUs) fit list. “A 737-800 landing gear recertified to half-life status might have a significant value when sold either as removed, or recertified time continued,” speculates Vandersluis. “A GTCP 131-9B APU which has undergone a relatively recent shop visit, and which has more than 50% of LLP life remaining, will also command significant value due to APU commonality across the 737NG family. This provides good opportunities for lease revenues.” The avionics LRU fit on the 737NG family is consistent across early- and later-build aircraft, which helps to maintain aftermarket values.

ASI estimates that a typical 737-700 might have component asset values of up to $6.0 million. This would be realized by selling components in a mix of overhauled, serviceable and as-removed condition. To achieve the $6.0 million value, ASI believes that $0.5-1.0 million of shop visit investment would be required for certain components.

ASI speculates that flight-deck display units for a 737NG can have a value of $58,000-60,000 each and that quick engine change (QEC) kits are worth up to $250,000 each after allowing for about $50,000 of investment for a shop visit. Other high value items can include secondary heat exchangers, with a value of $145,000; and APU starter generators, with a value of $158,000. These values would apply to components fresh from overhaul or a shop visit.

ASI also speculates that the value of a 737NG landing gear could vary from $0.5 to $1.2 million depending on the life remaining.

The aftermarket value of components for a certain aircraft type can decrease as more airframes are parted-out. “If too many aircraft of a certain type are parted out the market will be flooded with spares and parts value will decrease,” explains Gregory. “The value of a 737NG thrust reverser started at about $1.20 million when the first aircraft were being parted-out, but has since fallen to $250,000-280,000.

”Aging aircraft with shrinking fleets that are being parted out because they have reached or are approaching the limit of their operational validity will have fewer in-demand components. Despite lower demand even older airframes are likely to have some components of value.

“The value of a typical 737-300 is probably about $1.2 million,” estimates Gregory. “There are probably only 300- 400 parts remaining that would be removed, with the rest being scrapped. These parts might be worth $100,000- 200,000.”

“The number of useful components will reduce for older aircraft, but they may have some commonality with younger generation types which could lead to a certain level of spares demand,” says Vandersluis. “Any rotating parts, such as constant speed drives (CSDs), integrated drive generators (IDGs) and starters are likely to see reasonable future demand, while a certain type is still flying. The value of these assets will, however,depend on the purchase price and recertification costs.”

Raw materials

“Once the engines and other useful components have been removed the remaining raw materials are recycled,” says Corne.

“There is a return on scrap metals, but there is a cost involved in conducting the scrapping process and for the disposal of hazardous materials,” explains Spoors. “Depending on the size of the aircraft the disposal cost can be more than the scrap value.”

“With current commodity prices, there is very little net value remaining in the raw materials,” says Corne. “The value is likely to be less than $5,000 for a narrow-body aircraft.?

Aircraft dismantlers


The majority of aircraft disassembly service providers are contracted to tear down aircraft owned by a third party. These organizations earn revenue from various services, including parking and storage, as well as those related to disassembly and disposal and third-party logistics.

Some dismantlers also have in-house parts trading services, and may buy their own aircraft to part out.

Many aircraft dismantling providers are members of the Aircraft Fleet Recycling Association (AFRA). AFRA was established in 2006 to provide a set of standards designed to promote the safe and sustainable management of end-of- life aircraft and components. AFRA claims its best management practice (BMP) guide has significantly improved the environmental and sustainable performance of end-of-life aircraft management practices. Although many dismantling organizations are AFRA members, they may not all be AFRA- accredited. AFRA-accredited dismantling organizations are those that have demonstrated that their processes are in accordance with AFRA standards.

Some of the main aircraft dismantling service providers are identified here. This is not a comprehensive survey, and interested parties should make their own independent enquiries regarding specific capabilities and approvals.

Aircraft End-of-Life Solutions (AELS)

Aircraft End-of-Life Solutions (AELS) is an AFRA-accredited member, based at Woensdrecht Airport in the Netherlands. It offers disassembly services at its own facility or remotely on site at the location of an aircraft if required. “We have experience of disassembling aircraft from small 10-seat types up to 747s,” says van Heerden. “We can disassemble aircraft up 757 or A300 size at our own facility.”

AELS also offers storage services in association with a partner Part 145 provider. It also ensures that materials are recycled. It does not have in-house component repair capability, but can manage this process if required. AELS cannot remove parts in serviceable condition itself, but its Part 145 partner has this capability.

AELS does offer its disassembly, recycling and storage services to third parties including airlines, lessors and banks, but earns most of its revenue by buying its own aircraft to part out. AELS will remove engines during the part-out process but does not disassemble them. AELS also acts as a parts trader, selling components it has removed from aircraft.

Air Salvage International (ASI)

Air Salvage International (ASI) is based in the UK, and has been dismantling aircraft for 20 years. It does 50-60 part-outs per year for airlines and parts traders.

ASI is based at Cotswold Airport in Gloucestershire in the UK. It has been offering aircraft storage and dismantling services for 20 years. “We dismantle 50- 60 aircraft per year, which accounts for nearly 15% of annual global demand,” claims Gregory. “About one-third of the annual part-outs we perform are for airlines. The other two-thirds are for parts traders. We can dismantle all commercial types, either at our main  base, or remotely if required.

”ASI does not disassemble enginesalthough it may remove QEC parts.

As a founding and accredited memberof AFRA, ASI takes responsibility for recycling or disposing of unwanted materials in an environmentally compliant fashion. Waste disposal takes place off site and is performed by approved waste management companies including AFRA-accredited metal recyclers.

ASI works closely with affiliate companies GCAM, an MRO and Skyline Aero, a parts trading company, also based at Cotswold airport. GCAM’s Part 145 approval means it can provide line maintenance and continuing airworthiness management for aircraft stored at ASI’s facility. Skyline Aero can offer on-site parts consignment services.

eCube Solutions

eCube Solutions is an AFRA- accredited member based at St Athan, near Cardiff in Wales. “We have experience of dismantling all commercial types at our main base,” says Corne. “We have multiple disassembly lines carrying out projects on A319, A330 and 767 types, and we are shortly due to start work on an A340-300 and 737NG.

“We also provide teams to perform remote part-outs worldwide, and recently completed disassembly projects on A330s and A340s in the Philippines,” adds Corne.

“Engines are removed as components in their own right during part-out,” explains Corne. “We do not disassemble them, but either ship them for return to service, or to a specialist engine part-out company.”

eCube Solutions offers storage services both at aircraft and component level. It also handles recycling requirements. “We take environmental responsibility for material recycling, although the physical activity is sub- contacted to specialist companies,” says Corne.

eCube Solutions provides Part 145 services by co-operating with strategic partner BCT Aviation. “This allows us to offer a range of maintenance tasks on virtually all commercial aircraft types,” explains Corne. “There are processes in place to remove components with ‘Serviceable As Removed’ tags, but in reality it is very rarely requested. Ourcustomers tell us that most end-users want fresh shop tags, which come with a higher degree of certainty in terms of reliability and the time to next shop visit, than a visually inspected used component taken directly from an aircraft.”

GECAS Asset Management Services (AMS)

GECAS AMS was acquired by GECAS in 2006 and is based in Memphis Tennessee. It has a dismantling facility located in Greenwood Mississippi, and is an AFRA-accredited member.

“We can disassemble all types of commercial and regional jets,” explains Haynes. This is work is mainly performed at GECAS AMS’ main facility, but it does also offer remote disassembly capabilities. GECAS AMS also manages off-site engine part-outs by a third party.

GECAS AMS ensures that all scrap metals from dismantled aircraft are recycled. This work is performed by an approved third-party scrap vendor for the recycling of scrap metals.

Components removed during the part-out process are placed in GECAS AMS’s inventory from where they are sold to a variety of customers.

GECAS AMS provides dismantling services for its parent company GECAS, but also provides part-out services to third parties. It also dismantles aircraft that it buys from third parties.

GJD Services/ GJD Aero Tech

GJD is based at Bruntingthorpe, Leicestershire in the UK. It includes GJD Aero Tech and GJD Services. GJD Services is an accredited AFRA member specializing in aircraft recycling and GJDAerotech is a certified part 145 maintenance facility which specializes in aircraft maintenance, storage and decommissioning.

GJD Aero Tech provides Part 145 services, including component removal and recertification, while GJD Services holds the relevant permits for recycling and disposal.

GJD can dismantle all commercial aircraft types either at its main base or remotely worldwide if required.

“We offer competitive parking rates at a number of locations, aircraft storage checks, care and maintenance, line maintenance, non-routine and ad hoc maintenance, scheduled maintenance up to and including A checks, and the inspection and recertification of removed parts,” explains Spoors.

“Post-storage and return-to-service maintenance, AD and SB compliance, component removal and recertification, AOG technical support and off-wing engine-support can also be provided,” continues Spoors. “We also offer certified engine storage, maintenance and disassembly services.”

KLM UK Engineering

KLM UK Engineering Limited (KLMUKE) is based at Norwich International Airport in the UK. “KLMUKE offers products and services to support the entire aircraft lifecycle for a variety of types including the E-170 and E-190 series, 737 classics and 737NGs, the A320 family, BAe146/Avro RJ and Fokker 70/100,” explains Alex Miller, customer support manager at KLMUKE. One of these services is parting-out.

AJ Walter is one specialist parts provider that provides component sales, loans and exchanges, and power-by-the-hour (PBH) rotable inventory support.

KLMUKE has five heavy maintenance bays across three hangars, along with a specialist aircraft part-out bay. It is an AFRA-accredited and UK Environment Agency-approved dismantler. “Many of projects so far have come about due to ‘deferred decisions’ with aircraft being parked on site by the owner while potential new operators are found,” explains Miller. “If no operator is found after a set period of time, the owner can choose to part the aircraft out at a reputable facility without the cost and inconvenience of a ferry flight.”

Vallair

Vallair is an AFRA-accredited member based in Chateauroux, France. It offers disassembly, storage and recycling capabilities. “As one of the founding members of AFRA we take our environmental responsibility very seriously,” says Anca Mihalache, sales and marketing manager at Vallair. “At the end of the dismantling process we use a recycling company that cuts the fuselage to recover and reuse the metal.”

“We can dismantle narrow-bodies, including A320 family, 737 Classic and 737NG airframes,” continues Mihalache. “Our dismantling area can process 12 aircraft per year.

”Vallair provides dismantling services for third-party aircraft, but also sources its own airframes for part-out. It has built up an inventory of A320 and 737 components. “We have also dismantled more than 10 CFM56-5A engines,” adds Mihalache. Vallair does not dismantle engines at its facility.

This inventory of airframe and engine components is available for sale or lease. “We sell elevators, inlet cowls, fan cowls, thrust reversers, radomes and other parts in serviceable condition with a fresh tag,” explains Mihalache. “We also have an in- house repair shop for engine nacelles and flight controls.

”VAS Aero Services LLC (VAS)VAS is an aftermarket parts specialist with experience of managing the aircraft disassembly process for third-party airframes and engines owned by airlines, MROs, OEMs and leasing partners. VAS also acquires assets for teardown to distribute material into its preferred supplier agreements with strategic customers. In the past, it has used preferred third-party MROs andteardown providers to perform disassembly work scopes.

VAS is now included as a disassembly provider since its owner America Aero Group recently acquired EirTrade Aviation (Ireland) to complement VAS’s existing aftermarket services. “VAS can now offer aircraft disassembly services through EirTrade Aviation’s facility located at Knock Airport, Ireland,” explains Kevin Ferreiro, business development manager at VAS. Additional services available to customers are aircraft, engine, and inventory storage and recycling programs.

“VAS has experience of managing aircraft teardowns for most commercial aircraft models,” adds Ferreiro. Upcoming disassembly targets include A320 and 737 family aircraft and other models.

“Most of VAS’s business includes marketing and reselling components from parted-out aircraft and engines directly to major airline, MRO and OEM customers,” explains Ferreiro. “VAS sells direct to over 1,200 of the largest end- users in the aviation market. Other VAS capabilities include: surplus inventory consignment for re-distribution in the aftermarket; engine and inventory exchanges; inventory supply programs and sourcing portals; engine maintenance management; aircraft and engine technical support and inventory analysis; and marketability.”

Other

A number of other organizations advertise aircraft dismantling services. In Europe these include Apple Aviation and Sycamore Aviation in the UK, AircraftPart-Out Company (APOC) in the Netherlands, Aviation International Recycling in Spain, Green Bird Aviation in Belgium, Rheinland Air Service GmbH in Germany, Tarmac Aerosave in France and Total Technic in Turkey (see inserted chart).

Some of the largest storage and teardown facilities are in the United States (US). There is a particular concentration of providers in Arizona where low humidity levels mean aircraft can be stored for longer periods without experiencing corrosion issues. Examples of Arizona-based dismantling providers include Aircraft Demolition, Ascent Aviation Services, CAVU Aerospace, Jet Yard, Kingman Airline Services and Marana Aerospace Solutions. Other US- based dismantlers include: ADI – Aircraft Demolition & Recycling in Florida; ARC Aerospace Industries; ComAv Technical Services and Pacific Aerospace Resources & Technologies in California; Hondo Aerospace in Texas; Jet Midwest in Missouri; Stewart Industries International in New Mexico; and Universal Asset Management Inc (UAM) in Tennessee.

Dismantling providers are also located elsewhere in the world. One notable example is Aircraft Recycling International (ARI) Ltd, which was established in 2014 and is headquartered in Hong Kong. ARI plans to operate the largest dismantling facility in Asia. The first phase of this facility, which will be located at Harbin Taiping International Airport in China, is due to be operational by 2017.

Article source

0

Aircraft

If there is one word that describes the state of the narrowbody market, it is “unprecedented.” Never have so many different models either entered or been prepared to enter service by so many manufacturers, and never have demand and production reached such high levels as in the past several years—though this production surge has been accompanied by serious supplier issues. Yet, in spite of the huge demand for existing Boeing and Airbusproducts, there is mounting uncertainty about the future product strategy of the two market leaders.

This is a year of transition for almost all involved players. It is the last year in which the classic Airbus A320 family and the Boeing 737NG will be produced in large quantities. Starting next year, the A320neo and the 737 MAX will dominate. This year, not only is the first serious production ramp-up of the Bombardier C Series occuring, but so is its imminent integration into the Airbus product portfolio—with regulatory approval expected by midyear. At the same time, Embraer has delivered the first E190-E2, an aircraft it hopes will become a significant player at the lower end of the narrowbody market along with its larger variant E195-E2, which is scheduled to enter service next year.

Airlines have more choice than ever when selecting narrowbody fleets
Comac and UAC are poised to deliver aircraft but focus on home markets
Strategic positioning of Embraer and Bombardier changes


New competitors also are being prepared for commercial service, with the United Aircraft Corp. (UAC) MC-21 and Comac C919 in flight tests. Their market penetration will likely be limited mostly to their home countries, but in the case of the Chinese C919, that is a nice problem to have.

However, these events are not taking place in a vacuum. “The last eight years have witnessed an unprecedented (except for the 1960s, the first years of the jet airplane) run of world traffic growth of 7% almost every year,” Edward Greenslet writes in The Airline Monitor, a regular in-depth analysis and forecast of industry trends. “Not only are producers seeing strong demand for their products, the airlines behave as if the recent traffic numbers are the new normal.” Greenslet adds that “both sides of the demand equation are, in effect, proceeding on the assumption that recent conditions will continue indefinitely.” That is a mistake, he believes, because “the prospect of seeing a time of lower demand is as near to a certainty as anything can be. The only question is when.”

But for now, no one seems bothered. In fact, because of the current demand growth for air travel, “deliveries for this and next year are actually below what the industry needs, lending support to the rate increases that are planned,” Greenslet states.

And so at this stage, production can only accelerate, driven primarily by Airbus.

Airbus CEO Tom Enders says he can “absolutely see a basis” for an output of 70 or more A320neo-family aircraft per month “from a commercial point of view.” The aircraft maker is in the process of moving to build 60 narrowbodies per month in mid-2019 from a production level in the mid-40s at the end of 2017. Chief Commercial Officer Eric Schulz says 63 per month is the next step. “We look at rates all the time; why would we not contemplate going higher?” Schulz asks. “Demand is very strong, and there are a lot of opportunities.” At the same time, “we have to deliver a complete aircraft, and suppliers have to be able to support the increase,” he adds.

Which describes exactly Airbus’ problem. In the first three months of 2018, the OEM delivered only 95 single-aisle aircraft, just over 30 per month and well short of its own targets. “We have dozens of gliders parked in Toulouse and Hamburg,” Enders says, referring to A320neos and A321neos awaiting Pratt & Whitney PW1100G engines. 


Airbus was forced to suspend deliveries of Pratt-powered aircraft in early February after a recently introduced modification to the engine led to several inflight shutdowns and aborted takeoffs. Deliveries have yet to be resumed; Enders also has publicly highlighted delays in engine deliveries by CFM International, which provides the alternative powerplant, a clear sign of Airbus’ sense of urgency around the issue. Enders clearly expects 2018 deliveries to be even more “backloaded“ than last year. The company delivered 718 aircraft in 2017, more than 100 of which were handed over in December. The OEM wants to deliver about 800 aircraft in 2018, most of them single-aisle jets and a growing portion of them Neos.


A320neo-family deliveries are still dominated by the A320neo, although the A321neo’s share is rising. Greenslet believes the A321neo “certainly appears to have come closer than any other model to defining the sweet spot for single-aisle aircraft over the next two decades.” The A319neo is currently still in flight tests and is planned to be delivered to its first operator in 2019. Much more important, next year also marks the entry into service of the A321LR, which is capable of long-haul missions across the Atlantic, from Europe to Asia or North America to Brazil.

At the same time, Airbus is pushing out a decision on whether to go ahead with upgrades of its A320neo-family aircraft. Schulz says that “we cannot fix everything at the same time,” referring to in-service issues, the output increases and potential product development. While “we don’t cancel anything,” Airbus’ management has come to the conclusion that “we need to deliver what we committed to first.”



Airbus has been studying both minor and more substantial upgrades to the A320neo and A321neo, dubbed A320neo plus and A32neo plus-plus. Both studies entail stretching the aircraft, while the plus-plus variant would include more difficult changes such as a new composite wing. Industry reaction to the plans has been mixed.

The project was at least partially designed as a response to Boeing’s proposed new midmarket airplane (NMA), which has yet to be launched. Airbus management’s thinking centers on being able to provide an upgraded version of the A321neo well ahead of the expected NMA entry into service. While there have been expectations of an NMA launch decision this year with the aircraft entering service around 2025, Boeing is still working out the business plan—and aircraft pricing in particular—and there has been speculation the aircraft may come later than anticipated. If that happens, Airbus would gain time to fix problems with the current model, ahead of jumping on to a new version, as well as allow it to further consider its product strategy. If Boeing moves ahead sooner, Airbus may risk coming under more pressure for a strong reply.

Boeing, meanwhile, continues a fine balancing act at its facility in Renton, Washington. It is simultaneously pumping out 737s at unprecedented rates, introducing a new model into the production system and readying for development of the stretched -10 next year.

Boeing rolled out the first of three 737-9s for United Airlines. The airline plans to put the aircraft into service by midyear. Credit: Boeing

As it moves into the next critical phase of its MAX introduction strategy, Boeing knows it cannot afford any slips, with the 737 increasingly vital to its cash flow. Of the 184 Boeing commercial aircraft delivered in the first quarter of 2018, some 132 were 737s, including the 10,000th member of Boeing’s smallest jetliner family—a 737-8 MAX for the new variant’s launch customer, Southwest Airlines.

Since the first 737-8 was handed over in May 2017, deliveries of the MAX have begun to accelerate on plan with 74 in the hands of operators by the end of December and another 40 by late April 2018. The tally includes the first 737-9, which was delivered to Lion Air in March 2018. The Indonesian-based low-cost carrier also made headlines in early April when it was confirmed as a previously unidentified customer for 50 737-10s.

Boeing, which is completing detailed design of the higher-capacity derivative this year, plans to begin flight tests of the final stretch model in 2019 and initiate deliveries in 2020. About 416 737-10s have been ordered by 18 operators since its launch at the 2017 Paris Air Show. Although this appears to be a relatively small portion of the 4,474 firm orders for the entire 737 MAX family announced through the end of March, Boeing says more than 1,500 positions are currently undecided or unknown.


As the higher-capacity model is Boeing’s principle counter to the highly popular A321neo, the company is also eager to bolster marketing and sales efforts for it, looking to sustain the MAX production line through the late 2020s. This year could be a vital one for sealing several campaigns with airlines that have been maintaining a watchful eye on the new stretch variant. According to Boeing, these potential customers have signed off on the finalized design of the novel landing-gear configuration that enables a 66-in.stretch over the 737-9, for an overall length of 143 ft.

The -10 extension consists of a 40-in. plug in the forward fuselage and 26 in. aft. The completely revised taller main landing-gear design, which combines a telescoping feature to shorten the leg and a semilevered lower element to move the aircraft takeoff rotation point aft, still fits within the existing wheel well but can extend to raise the body a further 9 in.

Although Boeing is reluctant to provide details of its backlog breakdown, there is no disguising the 737-8’s popularity. With an orderbook estimated at almost 2,330,  the 737-8 accounts for the overwhelming majority of declared MAX orders. However, as narrowbody operators continue to upgauge and trend toward larger-capacity models as traffic and range capability grow, questions remain about the future 737-9 orderbook and to what extent it will be cannibalized by the newly available 737-10.


Announced orders for the 737-9 amount to a relatively modest backlog of about 116, but the true tally is thought to be more than 400. However, some erosion has inevitably taken place since the -10 became available, notably from United Airlines. In 2012, it became one of the main customers for what was then the largest variant, along with Lion Air, when it ordered 100 MAX 9s. United was among several operators that converted -9 orders to -10 in mid-2017, when the new model was firmly launched.

The U.S. carrier, which is expected to take its first three 737-9s by the end of April, converted 39 MAX 9 orders to the -10, but with 61 firm positions, it still remains the single largest acknowledged customer for the 737-9. United is expected to receive up to 10 aircraft in 2018 and will put the first of the 179-seaters into service around midyear on routes from Houston and Los Angeles to Anchorage, Alaska; Austin, Texas; Fort Lauderdale, Florida; Honolulu; Sacramento, California; and San Diego.


While boosting the orderbook for the upper end of the MAX family against the A321neo is urgent business for Boeing, the situation is arguably more critical at the lower end, where flight tests of the 737-7, the smallest member of the series, began on March 16. Despite a redesign of the -7 in 2016 at the request of launch customer Southwest Airlines and WestJet of Canada that added range and an extra 12 passenger seats to provide capacity for 138 in a typical two-class layout, the market reaction remains lukewarm.


Boeing is scheduled to spend the bulk of this year on the flight-test and certification program before delivering the initial 737-7 in 2019. The OEM also is banking on positive performance results from the test campaign to stimulate orders, which officially stand at fewer than 60. Boeing believes the aircraft’s range capability of 3,850 nm, the longest of any MAX version, could make it an attractive niche player for airlines looking to open new point-to-point routes in much the same way as the 787 has been.


Key to this capability are the aerodynamics of the MAX wing and redesigned tail cone, plus the propulsion improvements provided by the CMF Leap 1B. Together, these allow the MAX 7 to fly 1,000 nm farther and carry more passengers than its predecessor, the 737-700, and with 18% lower fuel cost per seat. Boeing thinks this gives the MAX 7 the advantage over its nearest rival, the Airbus A319neo. The aircraft, it says, carries 12 more passengers 400 nm farther than the smaller Airbus, with “7% lower operating costs per seat.” Other close rivals in the tightly contested 130-seat sector include Bombardier’s stretched CS300 and Embraer’s 195-E2.

Flight tests of the initial 737-7 appear to be on track, with the aircraft focused on certification high-speed air testing. A second aircraft is expected to join the flight-test program shortly.


After its market introduction in 2016, the Bombardier C Series is now about to enter a transformative phase, with Airbus nearing regulatory approval to take majority control of the program. There are differing views on how that will change the aircraft’s prospects and whether Airbus marketing efforts will be enough to turn around its fortunes. One school of thought is that nothing much will change, because Airbus sales representatives will prefer to sell the larger narrowbodies.


A different take is that Airbus will push the C Series hard because,absent a merger agreement with Embraer, Boeing has little to counter with. What is clear, however, is Airbus’ drive to reduce C Series production and supplier cost, the effects of which the OEM’s suppliers will likely see soon after the transaction has been approved.

Also new to the scene is the Embraer E2, with its predecessor still largely limited to regional operators. Embraer’s business case for the E2 rests on the assumption of much higher production volumes, so the aircraft needs to succeed in new market segments. JetBlue Airways is close to a decision on how to replace its current E1 fleet. If it opts to stay with the Brazilian manufacturer, the program would receive a major boost and send “a strong signal to the market,” says Embraer Commercial Aviation President and CEO John Slattery. Other campaigns, primarily in North America and Europe, are ongoing.

In China, two Comac C919 prototypes are in the air, with a third due to join the flight-test program this year. C919 development is working to achieve airworthiness certification in 2020, says the Civil Aviation Administration of China. 


The agency reiterates Comac’s previously stated target of first delivery in 2021. As of early March, the first and second prototypes had flown 23 times, Comac chief designer Wu Guanghui said at the time. They first flew in May and December 2017, respectively.


The third aircraft is expected to make its first flight “before the end of the year,” Wu says. “In 2019, it is planned to have three more aircraft in flight testing, for a total of six.” That will complete the flight-testing fleet, according to current plans.

The second C919 has been under modification at Shanghai, where Comac is based, and is due to move to Comac’s flight-testing base at Dongying in April. These two aircraft will be used for hot- and cold-soak testing, too, Wu says.

At least nominally, the program would be protected by tariffs that China, responding to Washington’s taxes on Chinese goods, said on April 4 it would apply on U.S. goods. These included aircraft with empty weights of 15-45 metric tons (33,000-99,000 lb.). The upper end of that range was evidently defined by the C919’s specifications.


In practice, the tariff’s influence on the C919 program is unlikely to be great,  if it is even imposed, because the consistently Chinese nationality of the program’s customers indicates politics, not competitiveness, is the chief influence on orders.

The last reported test flight of the Irkut MC-21, Russia’s new narrowbody aircraft, was in early November. Since then, neither Irkut Corp. nor UAC has revealed  anything about the testing, although Irkut  says certification trials of the MC-21-300 narrowbody airliner continue, without providing further details.


The testing is now limited to one prototype. It was rolled out in June 2016 and took off for the first time in May 2017. After completing 20 flights under the factory test program in Irkutsk, the aircraft flew for certification trials to the Gromov LII Flight Research Institute in Zhukovsky, near Moscow, in October.


The second MC-21 prototype was rolled out at the Irkut facility in Irkutsk on March 25. The manufacturer reported that the second prototype had been assembled taking into account the results of the trials of the first aircraft. 


Irkut did not say when the second prototype will fly, but Russian media cited an Irkut representative saying this could happen in May. The second prototype is expected to speed up the trials. “The introduction of new aircraft to flight tests will enable us to solve the key tasks of the program: to complete the certification of MC-21 in a timely manner, to launch mass production and to deliver the first airliners to the customer,” says Denis Manturov the Russian minister of industry and trade.


The third prototype was spotted in the final stages of assembly. Irkut says it has begun building the fourth test aircraft. 


The company plans to receive Russian type certification for the MC-21 in mid-2019, to be followed by European Aviation Safety Agency validation a year later. The MC-21-300-baseline version will carry between 163 and 211 passengers over a distance of 6,000 km (3,700 mi.). It will be powered initially by a pair of PW1400G-JM engines. 


The fourth prototype is expected to be equipped with Russian PD-14 engines in the second quarter of 2019. This engine is expected to get Russian certification later this year. The certification of the PD-14-powered MC-21 variant is planned for 2021.


The MC-21 backlog stands at 175 firm orders, mostly from Russian leasing companies. The country’s largest carrier, Aeroflot, is expected to be the major operator of this type. It firmed up its order for 50 aircraft through Avia Capital Services, a leasing arm of Rostec Corp., in February and is set to take the first delivery in early 2020. 

Article source

0

Maintenance

Aeronautical Repair Station Association’s 2018 survey reveals the painful effects of the workforce shortage that is forecasted to only get more acute.


One of the top two strategic threats facing repair stations is finding and retaining maintenance staff, and the issue is adversely affecting their businesses, according to a new industry survey.

The Aeronautical Repair Station Association’s (ARSA) 2018 member survey revealed that 80% of respondents said the mechanic workforce shortage results in work taking longer than it normally would. In addition, 28% of respondents said their companies are not adding new MRO capabilities, 20% have declined new work and 11% are not expanding facilities–all thanks at least in part to the shortage.

The survey, conducted between Jan. 23 and April 3, was answered by 125 ARSA member organizations. The association’s membership includes 488 U.S. and non-U.S. approved maintenance facilities.

Respondents indicated their companies have more than 1,000 mechanic job vacancies combined. Extrapolating this across the association’s entire membership, this figure would climb to more than 2,500 open aviation technical jobs.

Multiplying that figure by estimated average revenue per employee figures, ARSA forecasts that members will forego between $333.5 million-$642.5 million in 2018 revenue if those open positions are not filled.

Earlier this year, Oliver Wyman’s Cavok Group estimated that by 2022, the demand for maintenance technicians will outstrip supply. If the ARSA survey is any indication, the workforce shortage affects could become even more prominent in coming years.

While the workforce shortage is painful, the ARSA survey found that the lack of access to maintenance information is equally painful—each issue was chosen by 53% of respondents as a business challenge. “Getting access to instructions for continued airworthiness has always been a focus of the maintenance community–it was essentially the founding issue for ARSA more than 30 years ago–but it once again has taken the lead among challenges that keep industry leaders awake at night,” says Brett Levanto, ARSA’s VP communications.

The other challenges are regulatory costs/burdens (45%), inconsistencies between regulatory systems (28%) and restrictions to international trade or markets (18%).

Despite these business concerns, ARSA’s survey shows that half of the respondents note their companies have increased profitability in the past two years, and 66% expect revenues to grow this year. Only 14% expect a decline in profitability.


Article source

0

Aircraft

A burgeoning MRO sector is in the forecasts, but a number of hurdles to its realization remain.

Commercial aviation in Africa has long been hampered by geopolitical strife, a spotty safety record and extremely high airport fees and taxes on jet fuel. But thanks to aggressive marketing campaigns, the advent of technologically advanced aircraft and an increased commitment to safety, airline service in Africa is growing rapidly. The Air Transport Action Group report “Aviation: Benefits Beyond Borders” (July 2016), found that in terms of international airline traffic, Africa is the second-fastest-growing region in the world. But the continent’s overly strict regulatory environment needs to be simplified for the industry and local MRO providers to really take off.

As the report confirms, Africa’s airlines are subject to some of the most restrictive regulations in the world, with a plethora of individual bilateral agreements between countries. To overcome this, 52 African states came together to adopt the Yamoussoukro Declaration in 1988, aimed at liberalizing the continent’s skies. This was followed by the Yamoussoukro Decision in 1999, which worked toward the same goal. However, since then progress has stalled, with many states failing to agree on the decision’s implementation. 

CAN MRO PROVIDERS REALIZE POTENTIAL GROWTH IN AFRICA?

Another issue affecting airlines in the region is the move by some African governments to block the flow of foreign exchange because of slumping oil prices. For international carriers, this means an inability to repatriate revenues. This action also restricts the ability of carriers registered in those African countries to purchase aircraft spare parts and services, which are mostly priced in U.S. dollars. At the African Airlines Association (AFRAA) general assembly in Zimbabwe in November 2016, Elijah Chingosho, secretary general of the body, urgently called for these restrictions to be lifted. Since then, AFRAA estimates that Angola, Nigeria, Egypt and Sudan have blocked some $2 billion in revenues.

Musa Zwane, acting CEO of South African Airways and CEO of SAA Technical, puts the current number of airliners in Africa at roughly 1,300, with approximately 1,000 new aircraft deliveries due over the next 20 years. Credit: South African Airways

Fleet Forecasts

Africa accounts for about 5% of the global commercial airline fleet. Musa Zwane, acting CEO of South African Airways (SAA) and CEO of SAA Technical (SAAT), notes that although current aircraft demand from Africa is relatively small compared to the rest of the world, the rapid pace of growth is the same as that projected for the Middle East and Asia-Pacific regions. He puts the current number of airliners in Africa at roughly 1,300, with approximately 1,000 new aircraft deliveries due over the next 20 years.

Zwane attributes these growth projections to several factors. The average age of the African fleet is fairly high, and aircraft will need to be replaced. There is also serious competition from Gulf carriers—such as Emirates, Etihad Airways and Qatar Airways—which have a formidable presence in African skies. He stresses that it is vital for local airlines to opt for new-generation aircraft that are more fuel-efficient and offer improved reliability.

Another factor is the relationship of GDP growth to air travel expansion.  “One must consider that the continent has been affected by the slowdown of China and this has severely affected the African countries that generate much revenue from the export of commodities,” Zwane says. “The slow economic growth will affect the demand for air travel, as it is disposable income that can create this need.” 

According to the Airbus Global Market Forecast (GMF) for 2016, air transport growth is highest in emerging markets, where the middle class is expected to grow from 2.8 billion to 4.8 billion in the next two decades. The manufacturer predicts that air traffic worldwide will double in the next 15 years. The Asia-Pacific region leads the way, with 5.7% annual growth projected over 20 years, while Africa is expected to grow at 4.8%. The GMF predicts 1,000 aircraft will be delivered to the continent in the next 20 years.

Boeing’s Current Market Outlook for 2016-35 projects that air traffic to, from and within Africa is expected to grow at about 6.1% annually over the next 20 years as technology increases fuel efficiency, opening up new international routes that were previously not possible. Flights between Africa and Europe continue to account for the largest share of the region’s air travel, although this segment is decreasing. This traffic flow, and that between Africa and the Middle East and within Africa, accounts for more than 86% of total capacity, with intra-Africa traffic the fastest-growing segment by net capacity. Boeing’s forecast expects this growth, combined with the need to replace the region’s aging fleet, will result in demand for 1,150 new aircraft.

Martyn Haines, technical director of Kenya Airways, says a mixture of old and new aircraft is expected to join the relatively small African fleet in the next 20 years. Credit: Kenya Airways Technical

Martyn Haines, technical director of Kenya Airways, agrees with the forecast of more than 1,000  new aircraft in the next 20 years, but points out that figure covers only new deliveries from the production line. “There is an influx of older aircraft in age and model that is expected over the same period with the possibility of the number topping up another 1,000 aircraft,” he says. “This would cover a range of different aircraft types, manufacturers, and configurations. This assumption is evidenced by the expansion of new low-cost carriers not necessarily positioned to lease/finance new aircraft, and existing operators needing to be more innovative in the use of a mix of new and older fleets.”

Limited MRO Opportunities

The economic, political and geographical issues affecting airline traffic in Africa and the fact that local traffic growth has remained mostly flat has limited opportunities for MRO growth. Aviation Week’s MRO Forecast estimates that airlines in Africa spent about $2.5 billion on MRO in 2016. But this spending is expected to grow, as the influx of new aircraft will require new and more sophisticated technical skills and capabilities. ICF International predicts that by 2025, African MRO spending will increase by about $2 billion.

The dominant MRO players on the continent can be divided into African and non-African operators. Local MRO providers include SAAT, Ethiopian Airlines Maintenance and Engineering, Kenya Airways Technical, Air Algerie Technics and Tunisair Technics.

Non-African operators include Air France Industries KLM Engineering & Maintenance (AFI KLM E&M), Direct Maintenance and Sabena Technics. There are also joint ventures such as  Air France Industries’ and Royal Air Maroc’s Aerotechnic Industries.

SAAT is one of Africa’s leading MRO providers and has an aggressive focus on building its third-party business. According to Zwane, the market segments for MRO in Africa mirror the global trends of outsourcing and insourcing. Engine and component services are still dominated by the original equipment manufacturers (OEM), which are fast becoming an ever-bigger threat to MROs as they enter the aftermarket with total care and support packages. “Airframe and line maintenance segments have a distribution, especially in Africa, of many legacy airline MROs performing in-house services, but there is a slow transition toward more third-party MRO providers,” he adds.

Zwane believes that in order for Africa to both grow commercial aviation and stimulate economic growth, it is imperative for all countries to embrace the Yamoussoukro Decision. Consequently, SAAT has taken up a leadership role in promoting this campaign in Africa.

Kenya Airways Technical is one of the continent’s emerging MRO players. It offers third-party services with line and heavy maintenance and is ready to expand for more third-party work. Credit: Kenya Airways Technical

Kenya Airways Technical is one of the continent’s emerging MRO players. It already offers third-party services with line and heavy maintenance and provides coverage for a range of component repairs and overhaul. It also offers entry into service support, training and technical services.  

International Investment

MRO giants such as AFI KLM E&M have long seen Africa’s potential and have made substantial investments in the region. “Africa is an important market for us. We have contracts in West Africa with Air Cote d’Ivoire and Congo Airways and also in East Africa with carriers such as Ethiopian Airlines and Kenya Airways,” says Jean-Michel Picard, AFI KLM E&M vice president of sales for Africa and the Middle East. We also have contracts in Reunion, Mauritius and Madagascar, which for us is part of Africa. Local MRO capacities are still limited, but growing, with our support in many cases.” In November 2016, AFI KLM E&M and Ethiopian Airlines signed a long-term component services contract covering a fleet of 28 Boeing 737NGs.

Picard says AFI KLM E&M is always seeking to develop and expand its MRO support network, but it is often a challenge to set up an MRO shop in Africa. Political unrest can affect the aftermarket supply chain—in extreme cases, spare parts become unavailable.  Africa’s remoteness from major OEMs and parts suppliers also can be an issue due to the huge distances involved in the logistics supply process. Existing and future MRO operators will have to find solutions for such problems.

Whenever a new airline starts operations, AFI KLM E&M proposes a variety of support structures. “Sometimes we acquire equity stakes in an airline, as Air France-KLM has done with Kenya Airways, Air Cote d’Ivoire and others,” says Picard.

Training Is Essential

Kenya Airways Technical Director Martyn Haines argues that the biggest aftermarket requirement is training for MROs, ranging from basic to sophisticated specialized services. These needs vary by operator, size and exposure. One example is software management, which may require bespoke support in development of user interfaces, loading and control. As African operators/MROs are affected by the loss of highly skilled and trained staff being aggressively recruited to move to the Middle East, an emphasis on training will continue to be critical. SAAT’s Zwane agrees that skilled labor is a growing requirement. He says local MROs will require significant training on new-technology aircraft, particularly in avionics and composites.


Airframe and line maintenance tends to be performed in-house by legacy carriers serving Africa, but Musa Zwane, CEO of SAA Technical, believes a slow transition toward the use of more third-party providers is occurring. Credit: South African Airways

One way to gain this expertise is to partner with established providers. In December 2015, SAAT put out a request for proposal that included both component support and a joint venture for MRO support. In June 2016, AAR won that competitive bid and began work at O.R. Tambo Airport in Johannesburg in October. This is a plus for the region, as the deal will boost South Africa’s MRO industry and increase access to Africa-based MRO services.

According to Cheryle Jackson, president of AAR Africa, legacy airlines in developed countries have long partnered with third parties to reduce the cost and increase the efficiency of aftermarket services. “Carriers in emerging markets like Africa are now realizing the same benefits of outsourcing, which can be particularly helpful during a period of start-up or expansion in terms of helping to keep both capital and operating costs lower.”

She cites partnership benefits such as supply chain and technical expertise. AAR provides component parts and component repair to Ethiopian Airlines, Kenya Airways and Fastjet in Tanzania.

Jackson points out that partnerships are also an important way for the African aviation industry to grow and strengthen its local supplier base and workforce. This is crucial—with the aviation market in Africa expected to grow exponentially by 2030, many aviation services are still outsourced beyond the continent.

Zwane believes partnerships are the solution to many of Africa’s MRO problems. “Joint ventures and collaborations will certainly provide this continent with the much-needed economies of scale,” he says. “Partnering through aviation can lead to economic growth for this entire continent. Now is the time for African aviation to take the lead in propelling this region as an emerging economy with a fortified future.”

Even with such partnerships, challenges remain in providing and expanding MRO services in Africa. Jackson agrees that a sufficiently trained and ready-to-go workforce is a common problem. She mentions having enough operational aircraft to support an MRO hub as another hurdle.

From the perspective of an African airline operator and MRO, Kenya Airways’ Haines sees the following obstacles to MRO growth:

· Lack of infrastructure to support aviation businesses.

· Lack of critical mass that would promote investment.

· Lack of agreements between governments to support and enable multi-country business investments.

· Middle Eastern carriers’ aggressive recruiting of African-educated engineers and technicians.

Future Growth Plans

The three major African MRO hubs are in Johannesburg, Nairobi and Addis Ababa, Ethiopia. In August 2016, there was much fanfare when ASKY Airlines based in Lome, Togo, and shareholder Ethiopian Airlines announced plans to establish an aircraft MRO and training center in West Africa. This is a significant development, as West Africa does not have any local stations capable of performing heavy maintenance. Tewolde Gebremariam, CEO of Ethiopian Airlines, explained that ASKY was in discussions with the Togolese government and that if approved, the MRO facility would service Boeing and Bombardier aircraft. If this MRO center is established, it will certainly be a boon to the continent’s MRO capabilities.

Africa has the potential to be one of the fastest-growing aviation regions and to become an important MRO hub over the next 20 years. There are significant growth opportunities for both airlines and MRO providers, but whether the continent will be able to overcome its myriad challenges remains to be seen. But as one of Africa’s greatest leaders, Nelson Mandela, said: “It always seems impossible until it’s done.” 

Article source

keep reading

0

Aircraft

DULLES, Va., 10 Aug. 2016. Orbital ATK Inc. (NYSE:OA), a provider of aerospace and defense technologies in Dulles, Virginia, won an $11 million contract to continue administering Contractor Logistic Support (CLS) under the Iraqi Air Force’s Armed Caravan program.

The contract calls for Orbital ATK staff to provide sustained CLS services, including all maintenance and support training, for the modified aircraft fleet currently used by the Iraqi Air Force in its security mission. The contract will also include spare parts, component repair, publication updates, maintenance training, and logistics. Additional options, if exercised, would bring the cumulative value of the contract to $118 million and extend the period of performance through 2020.


“Orbital ATK has a proven track record of providing vital maintenance and training to the Iraqi Air Force,” explains Cary Ralston, vice president and general manager of Orbital ATK’s Defense Electronic Systems Division of the Defense Systems Group. “We are committed to providing reliable, affordable, high-quality service built upon our years of experience and our ability to quickly adapt to the rapidly evolving mission requirements.”

 

Orbital ATK has been supporting the Iraqi Air Force since 2007 when the first missionized Cessna 208 aircraft was delivered out of the company’s Fort Worth Special Mission Aircraft facility. Over the years, Orbital ATK has supplied three armed aircraft (AC-208B), three reconnaissance aircraft (RC-208B), and five trainer aircraft (TC-208B) in support of the U.S. government contracts for rebuilding the Iraqi Air Force.

Orbital ATK’s certified and battle-proven AC-208B Armed Caravan configuration is an affordable, highly-reliable solution that requires minimal personnel and facilities to operate and maintain. Operational readiness since initial fielding continues to be outstanding.

Orbital ATK’s Special Mission Aircraft product portfolio provides affordable, responsive, and advanced capabilities to customer-preferred platforms. Orbital ATK’s expertise includes outfitting various aircraft – including the Cessna 208B Caravan, Alenia C-27J Spartan, CASA CN-235/295, Lockheed C-130 Hercules, Bombardier Dash-8, Hawker Beechcraft King Air, Sikorsky H-60 Blackhawk, AgustaWestland AW139, and others – with integrated ISR and attack capabilities, as well as providing Contractor Logistics Support services. Orbital ATK’s expertise in weaponization, mission systems architecture, as well as aircraft integration and certification of complex subsystems, enables rapid fielding of these capabilities.

Orbital ATK’s Defense Systems Group provides precision and strike weapons, advanced propulsion and hypersonics, missile components across air-, sea- and land-based systems, ammunition, and related energetic products.

Orbital ATK designs, builds, and delivers space, defense, and aviation systems for customers around the world, both as a prime contractor and merchant supplier. Its main products include launch vehicles and related propulsion systems; missile products, subsystems, and defense electronics; precision weapons, armament systems and ammunition; satellites and associated space components and services; and advanced aerospace structures. Headquartered in Dulles, Virginia, Orbital ATK employs approximately 12,000 people in 18 states across the United States and in several international locations.

0

Aircraft

Irish LCC Ryanair announced it will open its first Spanish C-check maintenance hangar at Seville Airport (SVQ), from early 2018.

According to the airline, the construction of this maintenance hangar will begin shortly and will create up to 150 high-tech jobs, including licensed engineers, mechanics and support staff, as it has invested over €8 million ($8.53 million) at Seville Airport.

The facility will accommodate heavy maintenance checks for Ryanair’s Boeing 737-800 fleet, as it continues to take delivery of its 380 new Boeing aircraft order.

The LCC claimed that the new maintenance hangar will allow the airline to grow to 600 aircraft and increase its passenger numbers to 200 million per year by 2024, resulting in the creation of more than 1,000 new engineering jobs across Europe. Ryanair opened its base at Seville Airport in 2010.

Ryanair’s Chief Operations Officer, Mick Hickey said: “As Spain’s biggest airline, Ryanair is pleased to announce an €8m investment at our first Spanish C-check maintenance hangar facility in Seville. This one bay maintenance facility will open in early 2018, and create up to 150 high-tech jobs, underlining Ryanair’s ongoing commitment to Seville and Spain.

0

Aircraft, Maintenance

Oklahoma City’s Economic Development Trust on Tuesday authorized its staff to begin negotiating a formal agreement with a regional airline to open a maintenance center here.

The trust authorized a start of negotiations on a $2 million economic incentive deal with SkyWest Airlines Inc. to bring the maintenance center to town.

To qualify for the incentive, SkyWest will be obligated to create at least 375 jobs within five years and generate a payroll of about $23 million by the end of the center’s third year of operation.

The total estimated economic impact of the SkyWest deal is more than $327 million during its first three years of operation, including capital investments, wages, state and local taxes, trust officials said.

If an agreement is reached, SkyWest will build a 135,000-square-foot maintenance building on Will Rogers World Airport’s east side as part of the airport’s Lariat Landing project.

Airline and city officials said the initial investment to build a maintenance center capable of handling eight of SkyWest’s aircraft a day would be at least $20 million and perhaps as much as $30 million. Airline officials also said the new center would be among SkyWest’s largest.

Last week, a spokeswoman for SkyWest said the company hoped to open the maintenance center about a year from now.

 

SkyWest, based in St. George, Utah, owns and operates 410 aircraft serving 238 cities (including Oklahoma City) in the U.S., Canada and Mexico for United, Delta, American and Alaska Airlines.

In 2016, it carried 31.2 million passengers on routes covering 17.5 billion miles. It also has numerous other maintenance centers. The closest is in Colorado Springs, Colo.

Brent Bryant, economic development program manager for the city of Oklahoma City, said Tuesday he expects it will take about 60 to 90 days to negotiate a formal agreement with SkyWest.

Bryant also said he expects construction would start soon after the agreement is approved by the trust.

Money for the deal comes from a $75 million economic development bond issue voters approved in 2007.

0

NO OLD POSTSPage 3 of 3NEXT POSTS