Which Engine Maintenance Program: OEM or Third Party?

Should you select an OEM-provided engine maintenance program, or go with a third-party provider? Chris Kjelgaard discusses the merits of each…

Chris Kjelgaard  |  23rd July 2020
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    Chris Kjelgaard
    Chris Kjelgaard

    Chris Kjelgaard has been an aviation journalist for more than 40 years and has written on multiple topics...

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    Private jet engine and fan blades

    Many business aircraft operators feel it makes sense to subscribe to hourly engine maintenance program coverage. Business aircraft brokers agree, says Brian Foley, founder of Business Aviation consultancy Brian Foley Associates.

    Not only does hourly engine coverage enhance your aircraft’s operational availability and dispatch reliability, but it makes MRO and operational budgeting more predictable. It can also enhance the aircraft’s resale value and often enables operators to sell their aircraft more quickly than if the engines weren’t covered.

    There can be other benefits, says Foley. For example, some programs allow specific serial-number engines to retain the coverage when the aircraft is sold to a new owner as long as that buyer continues to subscribe to the program.

    Similarly, even if the engines aren’t covered when an aircraft is sold, the new owner can begin having them covered—often by paying a pro-rated hourly amount based on the number of flight hours or cycles remaining before each engine’s next scheduled overhaul or inspection.

    Which Program is Best?

    An important decision remains, though. In many cases, both the engine manufacturer and one or more third-party plan providers offer coverage—so whose does it make most sense for owners and operators to choose?

    According to Foley, the answer often depends on two, sometimes competing factors: Plan cost, and perception of brand-name value. (Other factors can also influence an operator’s decision, such as where a choice exists between comprehensive coverage and a plan offering cost flexibility by making some services optional.)

    Another factor (in favor of third-party providers) is that some third-party plans let customers transfer coverage directly from one engine to another – even one of a completely different model. This might happen when a customer sells an aircraft and buys a different aircraft type, or a similar aircraft with different engine serial numbers.

    Usually less of an important factor is the network of MRO facilities a plan provider uses to perform the maintenance whose costs are covered by its hourly engine plans.

    Third-party providers largely use the same networks of MRO shops the OEMs use, so the maintenance provided under third-party plans is performed to the same standard and uses the same OEM-manufactured parts as OEM plans.

    How OEM and Third-Party Coverage Differs

    Some differentiation can exist between OEM and third-party coverage. For example, a third-party provider will need to spend time negotiating a rate with an OEM to be able to have MRO performed at that OEM’s owned facilities. So the OEM often can perform a repair more quickly on an engine covered by its own plan, says Andrew Robinson, senior vice-president customers and services, Rolls-Royce Business Aviation unit.

    Also, an OEM may use only new parts in performing repairs and overhauls—particularly on engine types it is still producing—while third-party providers may allow greater use of used serviceable parts.

    Much depends on the engine’s production status, its age, and where it is in its life cycle: The engine operator may only want a partial-renewal rebuild, to get the engine to its next scheduled overhaul or to its retirement. In such cases used parts make sense.

    “Our number one competition is not the manufacturers, but people who no longer want to accrue for their engines,” says Sean Lynch, program coordinator for third-party plan provider Engine Assurance Program (EAP). “There’s a fallacy out there that there are all these good engines just waiting to be snapped up [cheaply]. There aren’t.”

    Third-party providers’ plans can cost somewhat less per hour than those offered by the OEMs, but in many cases OEMs and third-party providers offer different levels of coverage to suit different owners’ requirements.

    For instance, for some of its Business Aviation turbofan engines Pratt & Whitney Canada offers up to five differently priced levels of its Eagle Service Plan coverage. Similarly, third-party plan provider JSSI offers various optional services covering different aspects of the overall engine maintenance requirement, allowing operators not to pay for services they don’t want.

    Rolls-Royce covers Rolls-Royce engines for business jets of Cessna Citation X size and above, while EAP specializes in six models of older, legacy business jet engines that are no longer in production but still power 15 business aircraft types in widespread service.

    Comprehensive Coverage

    Despite their different hourly-plan business models, these companies focus on providing the highest levels of premium comprehensive coverage. “We believe that if you focus on one top-tier program, you’re good,” argues Lynch. “We just go for the crème-de-la-crème coverage.

    “When people see the ‘EAP Comprehensive’ tag and the aircraft is for sale, buyers will know the engines are covered.” According to Lynch, where EAP differs from OEM comprehensive plans is that “there are inherent savings that we have been able to negotiate because of the large fleet of engines that we manage.”

    “What we look to do is to deliver a premium level of service, given that we take full cost risk where third parties don’t,” Robinson says of Rolls-Royce’s CorporateCare and CorporateCare Enhanced plans. “There are no additional costs or surprises to the customer. If we produce it, we cover it.

    “Rolls-Royce covers the entirety of the [maintenance] event. We have designed the organization around what Business Aviation customers want: Convenience, speed, asset value and asset protection,” he says.

    Launched 18 months ago, CorporateCare

    Enhanced plans include maintenance and repair of the engine’s nacelle—even for nacelle corrosion and erosion (a common issue rarely covered by other hourly plans).

    The coverage doesn’t automatically include Life Limited Parts (LLPs) because a typical large business jet engine doesn’t accumulate enough flight-hours to reach its LLP expiry limits, according to Rolls-Royce, but the company does offer optional LLP coverage for operators of high-usage aircraft.

    “We cover everything except negligence,” says Robinson. 

    “We know our engines better than anybody. We know all the pressures, temperatures and speeds and we know what each engine is designed to do. So we can identify trends and reliability issues better, before they can disrupt an operation.”

    According to Lynch, “the biggest difference with [EAP] is the highly personalized experience” his company offers customers. The company polls its customers to find out what their most important priorities are for their engine maintenance coverage and what they like most about EAP’s coverage and service levels.

    Pilots and operations staff clearly rank “personalized and immediate customer service” as EAP’s top attribute, says Lynch.

    When One or Other Makes More Sense

    Ultimately, it probably makes most sense for a Business Aviation operator to choose OEM hourly engine maintenance coverage when covering engines powering newly- or very recently manufactured aircraft,” Foley says.

    “The data-capture and data-streaming capabilities today’s new engines offer allow OEMs to collect terabits of engine-health and performance data on every flight, enabling them to perform predictive maintenance analytics and proactively inform plan customers of advisable early MRO actions,” he explains. “Timely maintenance then keeps customer engines available for flight whenever required.”

    For some customers the maintenance-plan decision may be as simple as sticking with the brand name on the engine. However, customers with older or out-of-production engines powering still-widely used aircraft types can benefit from the lower hourly costs and personalized attention third-party providers offer.

    For instance, EAP offers an annual 75hr minimum for its plans from the get-go, whereas “with others, you typically have to negotiate or work your way down to that,” Lynch says. And in the COVID-19 crisis, EAP has even deferred its 75hr/year minimum requirement, letting customers average out to the end of 2021 a 100hr/year minimum over two years.

    There are major differences in the markets for hourly coverage of old and new engines. In the markets for which Rolls-Royce’s CorporateCare coverage is available, Robinson says approximately 70% of the entire fleet is covered by its plans, whereas third-party plans account for 7-9% of the fleet (the remaining aircraft aren’t covered).

    However, of 200-plus Dassault Falcon 10s still flying, only about 40%-50% have hourly engine-plan coverage, according to Lynch. Yet the importance of covering older engines is clear, he says: “The number one predictor of Falcon 50s, Falcon 900s and Falcon 2000s being parted out is their not being on an engine program,” he concludes.

    Do you have a specific aircraft maintenance, upgrade or repair need?

    Use Advantage to outline your maintenance requirements by completing our quick form, and your enquiry will be passed to qualified service providers. Receive the feedback you need to help you choose the right partner and the best deal.
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