1. Aviation Maintenance Industry Update Christian A
Aviation Maintenance Industry Update Christian A. Klein Executive Vice President Aeronautical Repair Station Association Aviation Council of Pennsylvania 38th Annual Pennsylvania Aviation Conference Scranton, Pennsylvania
Sept. 17, 2018
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2. Overview ARSA and Industry Overview State of the Industry
Risks and Opportunities
ARSA Action for Industry
Moving the Ball Forward
Sept. 17, 2018
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3. ARSA Background: About the Association
The trade association for the global aviation maintenance industry
Based in Alexandria, Virginia (across the Potomac River from Washington, D.C.)
Regular members are companies that hold FAA part 145 certificates or equivalent certification from a civil aviation authority
Membership also includes airlines, manufacturers, other companies with interest in maintenance, schools, individuals
More than 400 members representing 520+ certificates
Managed by law firm of Obadal, Filler, MacLeod & Klein, PLC
Sept. 17, 2018
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4. ARSA Background: What Do We Do?
Regulatory advocacy, compliance assistance, and training
Legislative advocacy/lobbying
Public relations for aviation maintenance industry
Workforce development (policy, promoting industry careers, supporting recruitment, training)
Services to reduce member costs of doing business
Sept. 17, 2018
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5. ARSA Background: Industry Profile
Maintenance Industry U.S. Footprint:
185,000 repair station employees
$46.8 billion in total maintenance sector economic impact in United States
Positive balance of trade in component services (more work comes here than we send overseas)
Pennsylvania ARSA Member Locations:
AgustaWestland
NFF Avionics Services, Inc.
Pennsylvania State University
Quality Aviation Instruments, Inc.
Scott Richard Aircraft Maintenance
Stein Seal Company
Triumph Brands, Inc.
Triumph Controls LLC
Maintenance Industry Footprint in PA:
94 FAA-certificated repair stations, 2,706 repair station employees, $419 million in annual economic impact
20 repair stations w/ EASA approval underscores international trade impact
Sept. 17, 2018
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6. State of the Industry
These are “heydays” for commercial aviation industry: U.S. air carriers had three years of record or near record profit for the first time in history thanks to lower fuel prices and operational efficiencies
Rising demand for air travel leading to increased demand for aircraft, which is keeping production lines busy; low fuel prices mean airlines are hanging on longer to older jets, which is increasing demand for MRO services
Demand for air travel growing faster than GDP in developed and developing world due to rising disposable income in emerging markets, expanding numbers of well-off retirees, increase in digital connectivity worldwide and spike in the number and size of low-cost carriers and ultra-low-cost carriers (which has created downward pressure on airfares and other travel costs)
Global fleet expected to grow 3.7 percent annually over the next decade
Narrow-body aircraft will be 2/3 of global fleet by 2028 due operating costs, range, and capabilities that allow them to encroach on territory once reserved for wide-bodies
OEMs pushing into the MRO space (Boeing has goal to provide $50 billion in MRO services)
Risks: Fast growth can lead to strained capacity, which can lead to higher prices, upward wage pressure and labor shortages
By 2027, nine percent gap between number of technicians and demand; Boeing projects need for 189,000 new technicians in North America over the next two decades
Source: Oliver Wyman 2018 Global Fleet & MRO Market Assessment (prepared for ARSA)
Look for shift in relative distribution of passenger traffic from North America to China. ME airlines will gain long-haul share.
This past year, non-Boeing/Airbus aircraft made up only 17% of all deliveries, a significant decline from a high of 29% in Smaller aircraft manufacturers are likely to see even stronger headwinds as they lack the scale and offerings to meet the desire for larger aircraft.
Sept. 17, 2018
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7. Risks and Opportunities: 2018 ARSA Survey
50% of ARSA members report unit margin/profitability has increased in past two years (vs. 14% reporting decrease – last year was 46% versus 33%).
67% expect revenue and markets to grow (vs. only 2% expecting contraction – last year was 59% versus 8%).
68% expect to add workers (vs. two percent planning layoffs – last year was 55% versus one percent).
But 82% report difficulty finding qualified technical workers over past two years (same as last year).
Impact of technical worker shortage: 80% report it has taken longer to complete work for customers, 28% have not added new capabilities, 20% have turned down work, 11% have decided against facility expansion
ARSA projects members have 2,500 unfilled technical positions and will forego between $333.5 million and $642.5 million in revenue this year if those vacant positions remain unfilled
Sept. 17, 2018
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8. Risks and Opportunities: 2018 ARSA Survey
Biggest threats identified by members:
Difficulty finding and retaining technical talent (tie)
1. Availability of maintenance information (aka, repair manuals or instructions for continued airworthiness)
3. Regulatory costs/burdens
4. Inconsistencies between national regulatory systems
5. Restrictions on international trade and markets
Sept. 17, 2018
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9. ARSA Action for Industry
Challenge/Opportunity
Recent ARSA Action
Reducing regulatory costs/burdens
Leading FAA Aviation Rulemaking Advisory Committee (ARAC) to leverage Trump administration focus on regulatory reform (esp. Part 145 guidance rewrite)
Fighting for repair stations in FAA reauthorization
Expanding online regulatory training (human factors)
Remote connectivity AC (will publish in Fall 2019)
Technician shortage
Pursuing amendments to FAA reauthorization bill to:
Enhance value of 14 CFR part 65 repairman certificates.
Create new grant program to support collaboration between aviation companies, schools, and government
Direct GAO report to study causes of, solutions to skills gap
Aerojobs.org website (with “You Can’t Fly Without Us” documentary)
Availability of maintenance information
Small Business Ombudsman complaint to shine spotlight on FAA’s lack of enforcement of 14 CFR 21.50(b) while aggressively enforcing 14 CFR (d)
Inconsistencies between national regulatory systems
Participating in EASA STeB and FAA-EASA-TCCA- ANAC CMT to improve coordination between U.S. and foreign regulators
ICAO engagement
International market access/reducing barriers to trade
Fighting to prevent anti-trade language in FAA bill
Guidance clarifying duty-free status of parts imported for repair
• Oversight – both the agency and industry provide oversight to certificate holders and/or vendors. Depending upon the work the maintenance vendor (or certificate holder) may be performing, often, a review of a particular situation, event, finding, query, etc. is needed. For example, if a non-certificated maintenance provider had a question about a part or how to accomplish a process, if the FAA (or airline or maintenance provider) had a finding and wanted to check that a corrective action had been accomplished.
• Verification of work performed – a repair station or mechanic could inspect or directly supervise an action by another person anywhere in the world. A repair station could do so under “working away from the fixed location”.
• Maintenance control – airlines would (and already do) have direct access to the issue or problem area during line maintenance or if there had to be a diversion.
• Hangar maintenance inspections – using “drones” to conduct visual or non-destructive inspections of aircraft in hangars, or verify work was performed properly as mentioned above.
Sept. 17, 2018
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10. Moving the Ball Forward
Join ARSA
Contact Congress in support of maintenance workforce bill
Use regulatory tools (publications, training, etc.) to improve your efficiency and compliance
Attend meetings and conferences (March is ARSA Legislative Day & Symposium)
Engage with government (collectively and individually) by meeting with lawmakers, hosting them at your facility, etc.
Respond to requests for information (surveys)
Follow us
Support your local technical schools!
Sept. 17, 2018
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11. Keep in Touch…
Christian A. Klein Executive Vice President Tel
Sept. 17, 2018
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