Aircraft Maintenance Management Module Aircraft Maintenance Introduction 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module General definition Maintenance cost is broadly defined as the sum of incurred labour, material costs and various overheads otherwise known as indirect maintenance costs. The labour is normally a process time controlled and productivity related where certain tools such as lean processes or “Six sigma” can be employed to enhance productivity and consequently improve consumed labour. The material element is dependant on negotiated supplier’s contracts and products reliability programs. 4/20/2017 Aircraft Maintenance Module

1. Aircraft Maintenance Cost Philosophies & Economics The maintenance costs represent 10-20% of the worldwide airlines direct operating costs. These costs are growing in view of introduction of new more expensive material, highly sophisticated repair schemes especially those associated with structural parts and core Engine parts, and increasing labour costs. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Boeing suggests that there are many other influencing factors to the maintenance costs such as Aircraft utilisation, Environment and Age. Furthermore, Airlines influence costs of its operations and maintenance support practices; similarly component Manufactures influence product support and reliability. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module The Airlines overall maintenance costs are categorised as Controllable and Non Controllable Costs. The controllable cost element is further split into contractual and non contractual costs. The contractual cost elements are either outsourced or accomplished In-house depending on potential benefits or savings in the short or long runs. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Thus it is of extreme importance to understand all elements of airlines maintenance costs and contain such costs where practicable through introduction of processes and manpower improvements, enhanced training and optimisation of maintenance interval requirement for both ON/OFF aircraft maintenance in liaison with the OEMs. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module The Airline industry currently under tremendous pressure in light of the current downturn reducing demand especially on premium cabin, hence the competition which resulted in fares reduction and subsequently low yields than breakeven costs. 4/20/2017 Aircraft Maintenance Module

2. Maintenance Costs (Direct /Indirect) Breakdown The Maintenance costs are the sums of total costs pertain to Direct and Indirect Maintenance. Per IATA, Direct Maintenance comprises the following, by Cost segment: - Airframe, Engines and component maintenance. And by cost element: Labour, Material and Outside repair Where, Indirect Maintenance includes the Overheads costs. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Boeing elaborates on these definitions further as follows: Direct Maintenance Cost is, the direct airframe and Engine maintenance which consist of the labour and material required to perform service, repair, modification, restoration, inspection, test, and troubleshooting tasks during on-airplane and shop maintenance activities. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Maintenance Overhead consists of maintenance supervision, maintenance training, maintenance planning, unallocated labour costs, rentals and Utilities. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module We have to understand the elements that comprise the Direct Maintenance Cost (DMC) and Indirect Maintenance Cost (IMC). The breakdown of these costs is: 2.1 Direct maintenance costs 2.2 Indirect maintenance costs 4/20/2017 Aircraft Maintenance Module

2.1.1 ON aircraft maintenance This type of maintenance is normally carried out during the scheduled aircraft checks as defined by the Manufacturer’s MPD documents where an extensive part of Labour Man-hours is expended as compared to materials consumed such as filters, oil, greases, fittings and minor structural parts. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Additionally, allotted portion of check time is dedicated to tests, inspection, minor airframe corrections and components removals which are due for routine maintenance. IATA as shown in Figure (1) below refer to this maintenance category as 1st Level Maintenance costs segments that include Airframe and Engines Labour, materials and subcontracted work. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module 4/20/2017 Aircraft Maintenance Module

2.1.2 OFF Aircraft Maintenance This is normally carried out away from aircraft on Engines and components in either In house or outsourced overhaul shops as these costs comprise expended labour, material, testing and modifications. The above two categories are generally split as per below percentages. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module The ON aircraft Maintenance checks are further summarised as follows: Aircraft Transit checks- this is a normal minor check that occurs every flight where walk around is conducted by the Engineers to detect any obvious damage and/or discrepancy which my obstruct aircraft despatch or serviceability for further flights. Also aircraft Log books will be reviewed to clear or defer all recorded snags. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Aircraft Service or Weekly checks- This check is a little more extensive hours are expended in general visual inspections and overall Aircraft condition. Minor modification (Engineering Orders) can be conducted and additional defects clearances which require extended times can be accomplished during this check. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Aircraft “A” checks- This is a routine MPD check that occurred almost every three months or 500 flight hours with various tasks scheduled for accomplishment. Few access panels, Engine cowlings and other doors will be opened to perform certain visual inspections and rectifications. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Aircraft “C” checks- within this check the aircraft is grounded for an extended time where many routine MPD tasks will be carried out. As majority of access panels are opened, a detailed visual inspection will be carried out on airframes linkages, structural fittings and main systems (such as oil, hydraulic and fuel) functional or leak checks and major components defect rectification. The interior cabin such as seats will be removed fro refurbishment. Galleys and toils will receive servicing and repairs. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Heavy Aircraft checks or “D” checks as some airlines call it. The aircraft will undergo a detailed visual inspection almost in every area including main structure where a NDT and application of special die pent rants will be carried out to detect possible skin cracks. Within the cabin the primary structural parts removed for corrosion treatment especially galleys, floor panels and seat main frames. 4/20/2017 Aircraft Maintenance Module

OFF Aircraft Maintenance The OFF aircraft Maintenance are further summarised as follows: a) Engine Repair and Overhaul Maintenance – during aircraft operations, The Engines are the most stressed items where every time the aircraft takes off, Engines parts rotate at a very high speed with thrust causing certain wear to such parts at an accelerated pace. Engine internal parts especially turbine and combustion chambers are manufactured from special materials in order to withstand the high temperatures and pressure put on the engine during operations. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Hence, the maintenance is often significant and expensive and that is the reason where majority of airlines outsource engine maintenance to OEMs/MROs to alleviate the burden off airlines from investment in development of such highly sophisticated overhaul shops with special required repairs. Normally the Engine initial shop visits expenses from Aircraft induction to maturity is relatively less expensive than aging Engine maintenance as main LLP parts requires replacement then and such parts impose a high cost to the Engine Maintenance. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module In general terms, the difference between engine and airframe maintenance is that Engine material costs will exceed 80% of the total maintenance while airframe maintenance will equally share labour and material by 50/50%. The Engine performance maintenance costs optimisation is measured by the time it stays on wing as achieved by the continuous OEM development causing less removals and subsequently lower maintenance costs. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module Component Repairs, Modifications, and Replacements This maintenance includes normal scheduled and unscheduled components repairs to restore its serviceable condition. The parts are often categorised into rotables, repairable and expendables whereby a multiple number of repairs/resets is possible to rotables parts and considered as assets for the airline. The maintenance costs associated with this part depend significantly on whether these can be repaired In house or outsourced. This decision highly depends on two factors, the Turn around time and the Warranty aspect. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module In other words, if the OEM TAT is reasonable, then it is quite sensible to despatch such components for repairs outside under warranty without spending much hassle to develop such capability and waste Engineers energy on warranted components especially during the initial five years from Aircraft induction. There are occasions where rotables or repairable parts are scrapped due to economic conditions BER ,i.e. Where the Repair cost exceeds the 65% threshold of the unit cost 4/20/2017 Aircraft Maintenance Module

In-Direct Maintenance Costs The Indirect maintenance cost or otherwise known as Overhead cost is defined as the sum of all labour and material costs for support services which add to the total maintenance of the aircraft. The elements of IMC include the overhead costs of but not limited to, Facilities, Stores, Equipment, administration, Engineering technical services, Materials management and Engg training. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module The IMC costs vary significantly amongst airlines subject together with organisational structure and the level of In/outsourcing plus work efficiencies. Therefore The IMC costs fall within the category of controllable airline maintenance costs but this factor cannot be controlled nor quantified by Aircraft manufacturers. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module The use of automation and sophisticated control system especially in the tech records, planning and materials management, drastically reduce the labour requirement and size of these support services departments and subsequently slash the IMC costs. Therefore, the IMC costs overheads need to be reviewed frequently to envisage possibility of introducing processes improvements. 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module The ideal tool for this exercise would be Six Sigma which looks at the work environment to analyse the adopted processes, then propose solutions for the purpose of working smarter and cut inefficiencies (Turner 2005). 4/20/2017 Aircraft Maintenance Module

Aircraft Maintenance Module 4/20/2017 Aircraft Maintenance Module

Operating Cost Breakdown Total Operating Cost (TOC) Airplane Related Operating Cost (AROC) Payload Related Operating Cost System Related Operating Cost Cash Airplane Related Operating Cost (CAROC) Ownership Cost Passenger Related Cost Cargo Related Cost System Related Cost 10% - 25% Fuel Cockpit crew Cabin crew Maintenance Landing Navigation Ground handling Depreciation Financing (airplane and introductory investment) Operating lease cost Hull insurance Food In flight services Handling Baggage handling Commissions Reservations and sales Advertising Handling Commissions Reservations and sales Advertising Airplane general and administrative Passenger general and administrative Cargo general and administrative Blue is airline operation DOC – Direct Operating Cost Per the WATOG defines the following categories of costs: Direct Operating Cost (DOC) - Those costs incurred as a result of operating an airplane, including such as flight crew, fuel and oil, insurance, maintenance, landing fees and navigation charges. Direct Maintenance Cost (DMC) -Those maintenance labor and material costs directly expended in performing maintenance on an item or airplane. Indirect Maintenance Costs (IMC) - Those maintenance labor and material cots not considered to be direct maintenance cost, but which contribute to the overall maintenance program cots through overhead operations, administration, record keeping, supervision, tooling, test equipment, facilities, etc. Indirect Operating Cost (IOC) - Those costs not considered to be direct operating costs but which contribute to the overall operating costs of the airplane, including such costs as general administration and finance, passenger service, marketing, and airplane and passenger handling services. Cost of Ownership - The sum of acquisition plus the operation and support costs incurred during the period of ownership of the item. Acquisition includes one-time or non-recurring costs, such as purchase, initial provisioning, special tools and equipment, and disposal cot, if any. Operation and support costs include both direct and indirect operating costs. 4/20/2017 Aircraft Maintenance Module