1. 10/8/2015 Aircraft Maintenance Module1 Aircraft Maintenance Management Module Aircraft Maintenance Costs Factors

2. Maintenance Costs influencing factors Aircraft Maintenance in General There are many factors impacts aircraft maintenance cost that must be understood, reviewed and managed properly as the DMC is a key indicator required for assessing incurred costs when for example validating OEM/MRO maintenance proposals. These factors are almost standardised in the industry and are best described by the two major Aircraft OEMs Boeing and Airbus. These factors were listed as shown in figure (2) below in a detailed manner as part of Boeing presentation in Dubai (Boeing, 2008). 10/8/2015 Aircraft Maintenance Module2

3. Maintenance Costs influencing factors Cont’d These factors are divided into two main categories where: a) Airlines influence the costs of: - Airline operations and Maintenance practices - Accounting and Support practices b) Airframe and Engine manufacturer designs influence the costs of: - Product support - Airplane reliability and Maintainability 10/8/2015 Aircraft Maintenance Module3

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5. Airline policy factors For a better understanding of those factors, further elaboration is itemized below : 2009). i- Airline Policy a) Maintenance Policy: - Maintenance programs, In-house and Outsourcing, b) Modifications and reliability improvement c) Cabin standards based on Commercial Policy d) Outstation Aircraft handling e) Human resources efficiency f) Inventory and operation service levels 10/8/2015 Aircraft Maintenance Module5

6. Aircraft design related factors ii-Aircraft Technical Specification a) Engines thrust b) On board maintenance and troubleshooting system (e.g. A380 NSS/OIS) c) Standardisation of Aircraft systems d) Electrical distribution and In Flight Entertainment systems e) Technology evolution- On board Mobile Telephone and SATCOM. f) New components and systems design with less maintenance requirements 10/8/2015 Aircraft Maintenance Module6

7. Aircraft Operation factors iii- Aircraft Operations a) Utilisation and stage length b) Average Take-off and landing weight c) Average load factors a) Environment – Dusty, sandy and hot b) Runway conditions c) Maintenance Facilities distance from Aircraft Ramp. 10/8/2015 Aircraft Maintenance Module7

8. Aircraft Age/Quality factors iv-Aircraft Quality and Maturity-Aging During the initial five years, we have new induction aircraft with lower maintenance costs considering the warranty effect. As shown in figure 2.3, from 5-15 year, the aircraft maturity period of almost steady maintenance high costs. Thereafter 15 years and beyond aging period of the aircraft starts where corrosion would be found more often on the airframe, structural fatigue inspections will commence and engines will require LLP replacements and higher shop visit rates. 10/8/2015 Aircraft Maintenance Module8

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10. Power Plant Maintenance Costs Influencing factors The Power plant consists of Engines, APU, Cowlings, and thrust reverser. The maintenance costs of these items have been historically high. The main Engine Cost drivers are Off/ON Wing where the influencing factors are similar to those of the aircraft such as design, materials properties, flight length, de-rate and aging. These are best described by Airbus extracted slides below from a maintenance cost presentation report below figures 2.4 – 2.6.(Airbus, 2009). 10/8/2015 Aircraft Maintenance Module10

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14. Maintenance costs Benchmarking Highlights Benchmarking is the process of comparing the cost, cycle time, productivity, or quality of a specific process or method to another that is widely considered to be an industry standard or best practice. (Six Sigma: 2009). In the airline industry benchmarking becomes vital due to the continuous improvement in the maintenance processes and modifications by the OEMS for the purpose of enhancing safety and performance of the aircraft and that is why Airlines do benchmarking exercise to themselves first at an envelop of two or more periods in different years or with others in the industry. 10/8/2015 Aircraft Maintenance Module14

15. Boeing states that Airlines must define the reporting and accounting standards that are needed to benchmark and enable an airline to more fully understand, control, and optimize those key performance indicators and financial metrics. Benchmarking reports are generated to assist airlines in understanding their technical operation performance to give visibility of areas for potential maintenance cost reduction. Within the context of benchmarking, the maintenance cost data and KPIs (Key Performance Indicators) are used regularly to specify high cost areas, identify gaps for possible investigation and induction of potential solutions or improvements to existing processes, review progress and outcomes. 10/8/2015 Aircraft Maintenance Module15

16. Benefits of benchmarking The benchmarking exercise would achieve the following benefits: 1. Assist the airline to pin point the inefficiencies in its processes and introduce corrective measures in a timely manner. 2. Identify cost optimization opportunities when compared to other best in class. 3. Work in groups or forums together with OEMs(Original Equipment Manufacturers), MROs( Maintenance & Repair Organizations ) and other airlines to jointly arrive at the most effective solution towards industry known technical problems. 10/8/2015 Aircraft Maintenance Module16

17. Benefits of benchmarking cont’d 4. The airline can review the structural organization of other airlines and MROs in order to apply the most efficient structure to its own departments. 5. Analyze the airline KPIs so as to alter or amend based on latest industry trends. 6. When compared to others’ maintenance practices in industry, an airline works aggressively to reduce the waste in terms of labor and materials used. 7. A Regular benchmarking exercise helps the airline to gain and sustain competitive advantage and match the best in class. 10/8/2015 Aircraft Maintenance Module17

18. Elements of Benchmarking In the airline industry these elements are used in the benchmarking exercise: 1. Incurred DMC per flight hour (FH). 2. Man-hours consumed per FH. 3. Material per FH. 4. Overhead Cost per FH. 5. Line & Base Maintenance events cost per FH. 6. Engine cost per FH. 7. The top 25 components cost per FH. Major cost drivers 10/8/2015 Aircraft Maintenance Module18

19. Implications of Benchmarking Despite the abovementioned benchmarking benefits, airlines must be cautious while conducting benchmarking review as there are many implications associated with benchmarking such as: - It can affect the airline competitive edge. - It can breach the contractual Non disclosure Agreements (NDA). 10/8/2015 Aircraft Maintenance Module19

20. - It can give provide false results if comparing airlines have different fleet sizes and or unique maintenance or on board service standards. We cannot for example compare Emirates that have high cabin and maintenance standards with perhaps Air Arabia which is a low cost carrier with no frills. - If the benchmarking results or recommendations are not taken into consideration, then the whole exercise would be a waste of time and effort. 10/8/2015 Aircraft Maintenance Module20

21. This whole chapter is aimed to have a better understanding on the maintenance cost elements and breakdown in terms of direct or indirect and significance of such costs implications on overall airline Direct Operating Costs (DOC). The Maintenance costs se are further analysed to understand the ON/OFF maintenance elements with regard to Line, Base and Shops activities. Furthermore, we have reasonably touched on the influencing factors on the maintenance costs mainly from Aircraft and Airline operations aspects. 10/8/2015 Aircraft Maintenance Module21

22. The maintenance costs optimisation is with no doubt a primary goal of airline community where they ought to understand their processes and KPIs very well in order to reduce inefficiencies where possible, hence effects of optimisation on the Airline maintenance practices was reviewed. 10/8/2015 Aircraft Maintenance Module22

23. 10/8/2015 Aircraft Maintenance Module23 Benchmarking examples- Aircraft and LRUs Reliability Operators need to collect, organize and report reliability data to many different organizations : Manufacturers, suppliers, regulatory authorities. Some of the benefits of reliability data : Assist operators and manufacturers to attain and maintain higher reliability through trend monitoring. Facilitate maintenance program development, escalation and de-escalation.

24. Determine which modification has a better payback by comparing removal and failure rates of operators incorporating various Service Bulletins/modifications. Determine if certain problem areas are unique to an operator or if others are experiencing the same problems. Assist the Operator to obtain remedies from suppliers due to the shortfall in achieving contractual MTBUR targets. $$ Millions annual savings from reduced delays and cancellations, reduced non-routine maintenance. 10/8/2015 Aircraft Maintenance Module24

25. 10/8/2015 Aircraft Maintenance Module25 Benchmarking- ATA SPEC 2000 chapter 11 ATA Chapter 11 has 9 records : 1. LRU Removal record Purpose : Collect details of the components removed from an aircraft as well as reasons for removal and details of component being installed. Fields include elements such as the manufacturer part and serial numbers, the operator’s unique part and serial numbers if applicable, hours and cycles data for the removed and installed components.

26. 2. Shop Findings record Purpose: Collect detailed component tear down reports from an airline’s shop or other repair facilities. Fields include elements such as fault found, part numbers of the piece parts that are replaced, modifications incorporated in the shop visit. 10/8/2015 Aircraft Maintenance Module26

27. 10/8/2015 Aircraft Maintenance Module27 ATA SPEC 2000 chapter 11 cont’d 3. Aircraft Hours and Landings record Purpose: Collect detailed hours, cycles and utilization data from operators. This data can also be used as the basis for MTBUR calculations, etc. Fields include elements such as days out of service counts and ETOPS specific hours and cycles, etc. 4. Aircraft Event record Purpose : To capture aircraft event data such as delays, cancellations, incidents, etc. Fields are very comprehensive and can capture all elements of a schedule interruption tracking system. Attributes specific to ETOPS operations are also captured with specific data elements.

28. 10/8/2015 Aircraft Maintenance Module28 ATA SPEC 2000 chapter 11 cont’d 5. Aircraft Logbook record Purpose : Collect technical/journey log entries such as pilot reports, maintenance corrective action, etc. Fields include elements such as discrepancy symptom code, corrective action codes, findings code. 6. Scheduled Maintenance record Purpose : Collect scheduled (heavy and line) maintenance data, findings and corrective action, and provide reference ability back to the operator’s maintenance program. Fields include elements such as OEM MPD task number, operator unique task number if applicable, task inspection method and associated findings.

29. 10/8/2015 Aircraft Maintenance Module29 ATA SPEC 2000 chapter 11 cont’d 7. Service Bulletin/Modification record Purpose : Provide data on service bulletin/mod incorporation and un-incorporation. 8. Aircraft Status Change record Purpose : Capture changes in aircraft ownership, operator, long term storage disposition, engine model changes, etc.

30. 9. Summary Counts record Purpose : Collect summarized rate and count information on an operator's fleet, e.g. schedule interruption counts by ATA, etc. 10/8/2015 Aircraft Maintenance Module30