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How a failed airline's support deal with Airbus may become the future model

Stymied by the closure of Skybus Airlines, the groundbreaking maintenance contract brokered between the US low-cost carrier and Airbus never got to show its full promise. But while the deal failed to herald an immediate revolution in total OEM airframe support, it did succeed in garnering the attention of airframers worldwide, which now see their roles evolving as airlines call for more creative maintenance solutions that include integrated approaches.

In recent years, new entrants and smaller operators have increasingly adopted a business model that includes outsourced maintenance, repair and overhaul. Columbus, Ohio-based Skybus took this ideology to a new level, asking Airbus and Boeing to proffer packages that would combine the purchase of new aircraft with cost-per-hour maintenance services well in advance of the carrier's mid-2007 launch.

Airbus had lengthy discussions with Skybus executives during the competition about the carrier's desire to seek the comprehensive support it desired, including the risk of such a model, says vice-president service solutions and strategy for Airbus North America, John Dickie. The package Airbus ultimately developed for Skybus "really evolved for them and around them", he says.

BOEING'S GOLDCARE

Boeing had already been developing its GoldCare programme to give a single contact point for 787 customers, and deliver material management, engineering and maintenance services for the new twinjet at predictable costs. Skybus management was given an opportunity to review GoldCare. Boeing's vice-president, services and support for the 787 programme, Robert Avery, believes this review "led to Skybus asking for full service" in tandem with its narrowbody order. Airbus and Boeing tabled proposals that were conceptually alike, although Avery claims the US airframer's technology pieces "are a lot more mature and integrated".

Skybus ultimately awarded Airbus a contract for 65 A319s that included integrated maintenance services. While Airbus took responsibility for the airline's maintenance, the airframer tapped Singapore Technologies Aerospace's US division, Mobile Aerospace, to perform the work, including line maintenance, component management, engineering and technical services, following a bid process among the 15 members of the European manufacturer's MRO network established in 2005.

The total aviation support contract was valued by ST Aero at $635 million over a 12-year period. Work began when Skybus launched its no-frills service. For Skybus, it took away a significant amount of hassle and investment costs otherwise experienced by a new-entrant carrier. In less than a year, Skybus was operating 11 leased A319s, a mixture of older and newer models, and was poised to start taking delivery of new airliners from its 65-strong order with Airbus. However, in April, the carrier joined the growing list of airlines that have become casualties of sky-high fuel prices and a weakening economy, and shut its operation.

Even though Skybus's short-lived existence precluded the carrier's maintenance deal from blossoming to its full potential, the arrangement is considered a success by Airbus, ST Aero and the MRO community.

Skybus aircraft averaged well over 99% dispatch reliability with an average yearly utilisation of more than 4,600h, well beyond any Airbus operator, says Dickie of Airbus. ST Aero president Tay Kok Khiang says this type of all-encompassing support package supplies "strong clarity of who is responsible for what" in the maintenance function of an airline's operation. Having a single point of contact eliminates the potential for overlap that could be triggered by relying on several suppliers for a complete maintenance programme, he says.

Similar agreements are expected in the future. Boeing's Avery says the trend is there. "Especially with high fuel prices, airlines are looking at every opportunity to wring every piece of value out of their operation as they can," he says. The Boeing executive points to a report from consultancy Aerostrategy, which suggests that in 2018, the Airbus A320 and Boeing 737 families will combine to represent around 48% of the fleet. Together, Airbus and Boeing will have locked in 50% of those single-aisle customers with integrated MRO contracts.

Boeing is already considering accelerating plans to extend GoldCare to other aircraft types within its portfolio. This change in thinking is "not so much related" to the delay in 787 deliveries, but rather to customer requests. "The common question is: 'It sounds great for the 787, but can you do this for other types?'" says Avery. The programme has been tweaked due to pressure from 787 customers that wanted it broken into smaller modules. "The main thing is that the basic content of GoldCare is still the same. The difference is we're more flexible, allowing customers to pick and choose among the services," says Avery.

Flexibility is essential, agrees Airbus's Dickie, who says airlines are less interested in a "predetermined menu". He describes the US airline industry as "a broken model" and says airframers need to be ready to help airlines "fix the model" from a maintenance cost and technical support perspective.

With the exception of certain aspects of GoldCare, Airbus and Boeing share "one key point of consistency" in that they will "not try to do everything themselves" because it is not cost effective and the airframers do not have the skill sets to support those endeavours, says ST Aero's Tay.

As the two largest commercial airframers continue to evolve their maintenance support strategies, regional aircraft manufacturers are also broadening the field with more integrated offerings for the commercial sector. Boeing's Avery says he would not be surprised if Bombardier or Embraer offer similar programmes to GoldCare. "I think it can be and probably will be adapted for regionals."

There is already evidence that this is happening. Bombardier is planning to leverage its experience in providing cost-by-the-hour programmes for business jets to grow its newly announced Q400 component repair and exchange programme, which boasts three key offerings - component repair for unscheduled maintenance, whereby operators send in their part and Bombardier takes care of its repair and return delivery access to an exchange pool of rotables and a satellite pool at an operator's home base.

The Canadian airframer would be prepared to offer a similar total support programme agreed between Airbus and Skybus should the need arise. "[Whether] another Skybus comes along and wants that capability in our new product [such as the CSeries] remains to be seen. But, if so, it's our obligation to find a way to make that work for both Bombardier and the customer," says Mike Kanaley, vice-president and general manager of fleet management and service programmes for Bombardier's services division. "We also don't pretend that it's all going to be performed by Bombardier. We'd leverage our supplier networksand if that works for the customer that works for us."

With specific respect to the proposed 110/130-seat CSeries, the manufacturer is taking a much more comprehensive approach to fleet management than it has in the past. Discussions with Bombardier's owned service centres and authorised service facilities "are just happening now", but the CSeries programme is expected to be inclusive of elements like parts pooling and rotables management.

EXPANDED SERVICES

It could be expanded "on the basis of what we do now in the way of service and support for maintenance, maintenance planning, or other elements to be able to customise a service offering for each of our customers to satisfy what they want to do in-house versus what they want engaged on a contract basis", says Kanaley. He also notes that once you have aligned the supply chain and service delivery network, "it has the potential to be back-fitted into certainly the existing product lines".

Bombardier's rival Embraer is also open to delivering support in a variety of ways. It provides maintenance services for its E-Jets family either through its own facilities, such as the Embraer Aircraft Maintenance Services centre in Nashville, Tennessee, or through partially owned centres such as its OGMA facility in Portugal. The Brazilian company's strategic view is that the airframer must make it "easy and cheap for the operator to fly the airplane", says Embraer vice-president aircraft maintenance services Evandro Braga.

As the number of E-Jets operators continues to grow in larger developing markets, particularly Asia, Embraer is starting to craft its strategy of customer support in those regions. Braga says the airframer will formalise its plan forE-Jets support in Asia in about a year either by opening its own maintenance centre or through partnerships. With the level of demand and growth in that market, especially in China, Braga says: "We have to do something there."

While offering total support packages for components and airframes might take a manufacturer beyond its traditional role of simply designing and building airframes, the positive return comes in two forms, Braga says. Firstly, additional profits are generated. Secondly, as an airframer supplies quality maintenance at an attractive cost, "that will help sell the aircraft".




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