When to Adjust Engine Maintenance Coverage (Part 3)

Just because an owner wants to change the maintenance-plan coverage level for the aircraft’s engines doesn’t mean that it can be accomplished automatically. In some cases it can’t be accomplished at all.

This is because the chosen plan provider “will want to see some basic engine parameters” before deciding whether or not it is prepared to offer maintenance coverage on the engines, notes Sean Lynch, Program Coordinator for Engine Assurance Program (EAP).

During the pre-purchase inspection conducted on the aircraft, the plan provider will require physical evidence of the condition of the engines — such as performing a spectral oil analysis, checking all of the aircraft’s logbook entries for reports of engine issues and condition, and conducting a borescope inspection of each engine to look for potential FOD damage.

Steve McManus, Senior Sales Directors for the OnPoint program in GE Aviation’s Business Aviation division, says GE requires even more evidence of the aircraft’s past and likely future operating history before it decides whether or not it is able to offer OnPoint coverage for the engines. The first step for GE is to determine whether the engines were previously ever covered under an hourly maintenance plan.

GE then requires borescope inspections of all three engine modules (fan, compressor and hot section); no current engine-unserviceability findings in the aircraft’s maintenance records; a ground power run of the engines; an inter-stage turbine temperature margin of at least 18°C between the high-pressure turbine stages and the low-pressure turbine stages; data on the engines’ past performance trends; details of where – and in what climatic environments – the engines were previously operated; and where and how the aircraft is expected to be operated in the future.

Evaluating all this information, if GE then finds the engines suitable for OnPoint coverage, it will offer an individually priced plan.

When Does Adjusting Coverage Make Sense?

Most of the time, customers who contract for an OEM such as Pratt & Whitney Canada to provide hourly engine maintenance plan coverage maintain the same coverage throughout the entire time they continue to own the aircraft.

“We don’t really see customers changing levels, because our coverage is so comprehensive,” says Delray Dobbins, ESP Sales and Global Strategy, P&WC. “Over 20 years, programs have become more and more comprehensive.

“Coverage stays the same, for the most part, through the life of the aircraft” — particularly when an hourly plan can be passed on when the aircraft is sold to a new owner, though in some cases this might require the new owner to pay a program buy-in amount up front.

However, there are a couple of important exceptions to this rule of thumb. “Really the only midstream tweak” that P&WC sees, is for customers to make their coverage more comprehensive (upgrading to ESP Platinum coverage, for instance) to provide maintenance coverage for any corrosion found in their engines, and to cover the costs of line maintenance.

“Everybody wants AOG, freight, engine removal and corrosion coverage,” says Dobbins. However, in some cases — particularly where owners have more than one aircraft they can use to fulfil a required mission — some customers choose to dispense with ESP coverage for “alternate lift”, otherwise known as “supplemental lift”.

This coverage comes into effect when a customer needs to lease an engine for a short term from P&WC in order to replace an engine which has been removed for repair, allowing the aircraft to keep operating.

But if P&WC doesn’t have a spare engine available to lease, it will provide a reimbursement to the customer, allowing the customer to charter a suitable alternate aircraft.

More generally, according to all four experts interviewed, there is one common situation in which reducing coverage levels, or dropping coverage entirely can make sense. This is when an aircraft and its engines are approaching the ends of their operating lives and a new (or an existing) owner recognizes that he or she is almost certainly going to be the aircraft’s last owner.

Dobbins cites the hypothetical example of a 70-year-old owner whose aircraft is 25 years old, and the engines have always been on an OEM’s hourly maintenance plan. If the engines are, say, 4,000 hours away from their next overhaul, but the owner is only flying the aircraft for an average of 100 hours per year, Dobbins asks, “does it make sense to put 300 hours [of coverage] a year into it?

“You might make a change then. Marketability is not really an issue. Would it make sense for AOG-only catastrophic support? It’s an end-of-life question, and the answer is different for every owner.”

Advice for Owners

McManus sees things similarly to Dobbins. “The only time you want to think hard about a program is when your engine gets very old,” he says. “The whole aircraft is worth maybe $1m, and you’re probably the last owner.

“That end of life is when programs start to be worth thinking a little harder about. You can’t get cycle parts or LLPs anymore. That’s about the only time we’ll turn people away [as potential customers].”

“It comes back to that reputational thing,” says Greg Ryan, Senior Sales Director in GE Aviation’s Business Aviation Division. “We’d rather have that heart-to-heart talk with the owner of the airplane than mislead the owner into thinking it is worth paying for several hundred hours of comprehensive engine maintenance coverage a year.”

One other way in which OEMs are prepared to adjust coverage on engines installed on a used aircraft bought by a new owner is when the aircraft’s operating circumstances and mission profile are likely to change materially.

For instance, says Ryan, GE is quite happy to adjust coverage for an aircraft’s engines when under its new owner it is moving from operating, say, 400 hours a year on five-hour average segments in North America to operating 150 hours a year on segments averaging 90 minutes in the Middle East.

“Then you don’t need the 400-hour minimum, and we’ll adjust the hours per year down and make the associated rate adjustment. We’ll go down to 100 hours and below.”

However, because the variable unscheduled maintenance cost risks associated with such low plan levels far outweigh the plans’ fixed costs of scheduled maintenance and continuing airworthiness compliance, GE can’t charge less than the price of its 150-hour minimum plan, “So you might as well go to 150 hours,” Ryan adds.

“Any time you are shaving off coverage, you are just cutting corners,” Lynch says. “Don’t give away engine rentals and shipping unless you are in the same city as the MRO shop. And pay attention to yearly minimums.

“There is no need for a high yearly minimum [of covered operating hours] with engines that aren’t on calendar overhaul. You’ll get a bill if you don’t meet the minimum engine hours covered under the plan,” he concludes.

• Read When to Adjust Engine Maintenance Coverage (Part 1)
• Read When to Adjust Engine Maintenance Coverage (Part 2)

More information from:
• Engine Assurance Program: www.eap.aero
• GE Aviation: www.geaviation.com/bga/services/onpointbizjets
• Pratt & Whitney Canada: www.pwc.ca

Read more about Engine Maintenance on the AvBuyer Engine Maintenance Hub