Are engine maintenance programs right for all operator types? How can flight departments select the best one for them? Andre Fodor, aviation director at Johnsonville Sausage, offers insights from his own experiences…
Built from the sand up, Dubai is a mesmerizing location. Diligent investment in infrastructure and knowhow secured the UAE’s place as a major international hub for aviation. While there, I recently met a former colleague who is now an instructor for a major airline’s pilot cadet program, and we discussed the effects that the high temperatures and fine sand have on an aircraft’s reliability.
I learned that although many components (especially mechanical valves) malfunction more frequently in that environment, the engine’s manufacturer had not set any limitations or special practices to safeguard its engine coverage losses for aircraft based - or frequently operated - in the region.
Having previously managed a fractional ownership operation where the focus was on keeping operating costs predictable, I continue to negotiate maintenance deals that deliver a predictable operational cost in my current operation.
Since the powerplants are one of the costliest components of an aircraft, enrolling on a well-tailored program that provides on-going overhaul and loaner engine services based on fixed monthly fees certainly help to manage the risks, and deliver a predictable budget.
Moreover, aircraft enrolled on engine programs tend to have higher resale values and sell more quickly than aircraft that are not.
With that said, there are some circumstances where self-insuring engine coverage may make better sense for certain operators. For example, large fleet operators (particularly those with fleets of the same aircraft type) might have the fleet redundancy to cover one of their aircraft being grounded by an engine problem, diluting the high cost of an engine repair across the wider fleet’s budget.
When Engine Maintenance Programs Pay
A previous experience highlighted the benefits of engine coverage to me, however. Operating a new aircraft with less than 150 hours total time, just after take-off the crew noticed cabin smoke. After following the smoke checklist, the crew declared an emergency and returned safely to the maintenance facility.
A borescope inspection revealed the cause to be a seal that had been installed incorrectly during assembly. To fix the problem, the manufacturer required the removal of the engine so the powerplant could be shipped to an overhaul facility.
Though the engine was still under warranty (and as such the repair was covered), without the engine maintenance program we were enrolled with we would have been grounded for many weeks without a loaner engine.
Adding to the learning curve, insurance coverage was required for the loaned engine, which cost $3.7m (equivalent to 14% of the cost of the new aircraft).
Choosing the Right Engine Maintenance Program
When buying into an engine maintenance program, the coverage that a savvy operator chooses will depend on far more than cost alone.
There are typically two choices in coverage: That offered under the engine manufacturer’s program, or coverage from a third-party provider. But how can operators decide which suits them best?
First, what are the travel needs of your operation? If you operate on a global scale, you will need to ensure your program provider has the experience and reach to service you at remote locations and has the logistical wherewithal of getting maintenance personnel, parts, tools and the replacement engine to wherever you could potentially be grounded.
Next, the availability of loaner engines should be balanced with the number of aircraft enrolled on the engine maintenance program, and there should be a global network of mechanics that can quickly be dispatched to aid you.
It's worth noting that engine maintenance programs may offer standardized contracts, leaving little open to negotiation. Thus, unless you buy additional coverage, thrust reversers, engine assemblies, seals, oil and shop supply costs may not to be covered.
Essentially, you’ll need to know what is and isn’t covered, and what can and cannot be negotiated into your coverage.
You should make sure the hours on the contract meet your predicted annual utilization. Otherwise, you will pay for too many unused hours. Seek to limit the penalties for time flown beyond annual contracted hours. And you should negotiate the contract's transferability should you choose to sell the aircraft during the term of coverage.
Most importantly, be sure to clearly understand all aspects of your contract. Make sure that you do not end up with reduced, or no coverage.
As an example, during a pre-purchase inspection one seller’s aircraft engine had met all its run-up numbers but the prospective buyer insisted on a borescope inspection. What they didn’t realize was that by conducting the borescope inspection without pre-approval they voided the engine contract, subsequently removing coverage on the engines.
That one gray area has caused many operators distress, and highlights that there are many engine maintenance program caveats that an operator needs to understand, pre-agree with the program provider, and carefully navigate with seasoned professionals at their side.
Engine maintenance programs ultimately provide peace of mind to owners and operators, and assurance of continued operation in the case of a malfunction, bird ingestion or foreign object damage.
The reality is that they will not be cheap. Although they need to be considered during your budget analysis and prior to committing to an aircraft’s purchase, this may help lead your operation to right-size the acquisition of an aircraft that better suits your budget and need.
And as expensive as engine maintenance programs might seem, the assurance they offer is vital to delivering a well-balanced, more predictable budget that cements the foundation of a well-managed flight operation.
Read More About:
Engine Maintenance Programs |