Jetstar airs concerns about Boeing 787 maitenance costs

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Boeing 787 launch customer Jetstar is concerned that operating costs for its new fleet will be significantly higher than expected after receiving the first batch of bids for aftermarket support.

Speaking at the maintenance master class during last week's Asian Aerospace Congress in Hong Kong, Seb Mackinnon, acting general manager of procurement at the Qantas low-cost subsidiary, said that the figures Jetstar has calculated so far for 787 per hour operating cost is "quantum higher than what the Qantas Group was expecting and that's obviously pretty alarming".

Jetstar has received 787 maintenance bids from Boeing, all major suppliers and some third-party providers. This includes a bid for Boeing's GoldCare turnkey lifecycle support programme as well as bids covering individual systems. Mackinnon declines to disclose Jetstar's maintenance cost estimate but says it was calculated by slicing, dicing and combining various bids. He told the conference the higher than expected figure is likely the result of high risk premiums being levied by the original equipment manufacturers.

"We'd like to see less risk premium," he says. "We think OEMs should be carving out [part of] that given they know their product."

Boeing Commercial Aviation Services integrated materials management director Joe Brummit agrees risk premiums are currently being priced high but told the conference they should reduce as suppliers get a better understanding of the customer requirements and go through the request for proposals process. "People are trying to figure out what we're actually pricing," Brummit says.

Jetstar also expects the prices to come down as second and third bids are received. "It's early days," Mackinnon says.

He acknowledges the high risk premiums are not surprising given the technology on the 787 is new and the aircraft is not yet in service. But Jetstar is concerned the prices may not go down fast enough given the carrier needs to soon start awarding maintenance, spare parts and other support contracts to support the aircraft's August 2008 entry into service. Qantas, which has firm commitments for 65 787s, has so far allocated Jetstar the first 15 aircraft from this order.

Jetstar is also concerned it may be forced to pay more for maintenance because there are no or few third-party maintenance providers for many of the components and systems. "The lack of competition probably makes a difference," Mackinnon says.

Boeing launched GoldCare in mid-2006 but has not yet secured a launch customer and "continues to evolve" says Mackinnon. Boeing's Brummit concurs, saying: "Absolutely, it's still evolving. We continue to get inputs from customers. We won't get stuck on one model."

But Mackinnon says it is not only GoldCare which is priced too high but also the individual bids from the suppliers, most or all of whom are also partners in the GoldCare programme. "It's not just GoldCare. It's aggregate and it's rough numbers," Mackinnon says.

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