WHAT DIFFERENTIATES THE MOST SUCCESSFUL AIRCRAFT TRANSFERS – AN OPERATOR’S PERSPECTIVE
Aircraft transfers were increasing and are now at all-time highs due to COVID-19 as airlines right size their operation for the ‘new normal’.
The effectiveness with which aircraft transfers are executed impacts sellers, buyers, lessors, and regulators. Poorly executed transfers can be costly for all parties involved and can negatively impact the buyer’s operation for months after an aircraft enters into service.
Five factors differentiate the successful operators who quickly and effectively enter aircraft into service and have them generating revenue.
THE VOLUME OF USED AIRCRAFT TRANSFERS IS SURGING
Between 2010 and 2020, more than 1,000 aircraft were delivered annually by Original Equipment Manufacturers (OEM), roughly half of which were leased. Almost one in five were OEM financed. This volume, and the popularity of leasing, created a sizeable and active used aircraft market for opportunistic airline operators. Right sizing fleets because of COVID-19 has resulted in a record number of sales and lease returns.
BUYER BEWARE - CONSIDERATIONS AND CONSEQUENCES
Transfers (from contract execution to aircraft in service) can take between 5 and 11 months for a single aircraft. Packages of aircraft, or contracts which initiate the transfer of multiple aircraft, can stretch the timeline significantly further. Variation in elapsed time of transfer can be a function of many variables, not all of which are predictable or within the control of the buyer. This, coupled with the need to surge with dedicated specialist resources for a defined period, is why many airlines contract out the process or engage support.
Executing a transfer involves fleet planning, revenue management, and the engineering organizations of both the buyer and the seller. How well a transfer is executed can have significant regulatory compliance implications for the specific aircraft being transferred and, in some instances the buyer’s entire fleet.
The risk of an extended transfer (delays) is generally borne by the buyer, or in the case of a lease return the lessee, but it can be mitigated. Friction between buyers and sellers is common and often related to universal complexity and pain factors which can be managed with proper planning and resourcing.
Focusing on the engineering perspective of a transfer, 5 steps follow a purchase decision and culminate in an aircraft’s entry into service.
In our experience multiple complexity factors must be considered during planning for a transfer:
- Fleet type not currently operated
- Fleet age
- Condition (new or used, operational history)
- Number of previous operators and location (US domestic with FAA certification, or international with/without FAA certification)
- Physical condition of the aircraft
- The quality and the format of the aircraft records (format of the data (Spec 2500), language, and completeness of the records)
We also observe the following pain factors as consistently impacting aircraft transfers:
- Physical condition relative to the contracted condition
- Differences in configuration (mods/ICAWs/program differences) of the acquired aircraft relative to the existing fleet
- Ops Spec, pre-coordinating with FAA for acquiring a used aircraft; coordinating ferry requirements
- Differences in maintenance programs
- Setup of data, inventory, supply chain, manuals, task cards, maintenance agreements, etc. (a byproduct of config work)
Individually and collectively these factors determine the transfer timeline. Having the experience and ability to assess, plan for and mitigate the consequences of these factors determines seller and buyer satisfaction and how quickly the aircraft is available to begin generating revenue.
For inductions of multiple used aircraft, the level of effort can be reduced by streamlining repeatable tasks e.g., the incorporation of operator’s technical manuals and the revision of maintenance work instructions. The incorporation process can be labored and challenging. Streamlining with signature requirements and revision controls applied to a block of aircraft reduces the impact on the program.
The level of effort for inductions of multiple aircraft from the same previous operator or leasing company can be reduced by streamlining how aircraft records issues are discovered and solutioned. This process enables the lessee/lessor to establish precedents in transfer agreements for follow on aircraft reviews and transfers.
WHAT DIFFERENTIATES SUCCESSFUL OPERATORS
The core competencies required to execute aircraft transfers are well established and embedded in most airlines. However, aircraft transfer programs are typically infrequent, have uncertain timing, and require a dedicated program manager and technical subject matter experts.
In our experience five factors differentiate the most successful transfers:
- How well the process is planned, documented, and estimated
- Use of tools, checklists, and metrics to monitor progress and identify process acceleration opportunities
- Experience with electronic data transfer including Spec 2500 and capacity to manage, clean, and interpret large volumes of data
- The ability to surge with dedicated experienced resources
- Experience with pain factors, their solutions, and a diversity of aircraft types and conditions
Ultimately, organizational structure and size will determine whether investments into these differentiators are made. For most airlines the preferred approach is to outsource the activity entirely, in part, or augment the team with external resources. This approach is proven to deliver aircraft into service in a safe, effective and timely manner and enables the maintenance and engineering organization to remain focused on safety and reliability.
HOW TO MANAGE THE RISKS
A poorly executed transfer can debilitate an operation. Issues can take months to surface, disrupt the flight schedule, add costs for accelerated surplus and hangar space, and impact customer satisfaction and regulator confidence. Ensuring all issues are discovered and remedied before technical acceptance will protect the integrity of the operation.
Operators acquiring used aircraft must:
- Ensure the transfer processes address the complexities and pain factors described
- Consider whether the organization is capable and has resources for the sustained surge effort
- Assess, realistically, whether they have full command of the five factors which determine the success
Any operator buying, leasing, or selling used aircraft should consider whether it has the capabilities, tools, resources, and experience on hand to complete a transfer in the shortest possible time.
SeaTec is an industry leader in Aircraft Transfers, Entry into Service, Lease Returns, and Technical Records, and actively participates in the ATA Aircraft Transfer Records Working Group.
For more information about Aircraft Transfers or related topics contact or the authors and follow us on Linkedin.
MAINTENANCE PROGRAMS – HOW OPTIMIZATION CREATES VALUE
Maintenance programs have a material impact on how an airline operates, its costs, and its revenue.
Airlines have a choice with regards to Maintenance Programs – use the Original Equipment Manufacturer (OEM)’s MRBR/MPD or customize it and optimize for their unique operation and environment.
Maintenance Program optimization is a commonly employed strategy that has contributed to increased profitability without compromising safety.
Greater Customer Satisfaction
Improved on-time performance
Increased aircraft availability
Less maintenance hours and hangar time
- Take full advantage of planned maintenance events and schedule tasks for common access – reducing the frequency with which maintenance tasks require access to or removal by technicians of an assembly, part or panel
- Perform maintenance at its highest effective interval
- Adjust program requirements to address reliability drivers
- Move maintenance effort out of operational line stations and into controlled hangar environments
- Simplify maintenance packages to reduce the planning burden and take advantage of aircraft access
- Develop a lowest cost check structure for life of the unit, taking into account the fleet life cycle
Reducing the number of maintenance units (aircraft) on the ground or in the hangar results in more aircraft available to fly and earn revenue. A SeaTec optimized program for a regional airline brought 1 additional aircraft onto the flight schedule.
Optimized Maintenance Task content and check intervals reduces maintenance and engineering labor hours / costs. For another airline, the SeaTec optimized program reduced the number of C Checks which yielded a 20% maintenance cost saving per aircraft for the life of each aircraft.
Remaining compliant with ‘one size fits all’ MRB programs requires a significant investment in infrastructure and resources. Underinvestment can lead to overruns. Simplification reduces complexity and costs.
Robust data analysis informs program enhancements and reduces maintenance effort which improves aircraft reliability and availability.
Optimization of all checks reduces the utilization of scarce line and hangar resources and addresses bottlenecks in MRO maintenance execution.
Reductions in maintenance touch time directly reduces human factors risks.
FAA REQUIREMENTS AND EXPECTATIONS
For airlines regulated by the FAA, Advisory Circular No.120-16(X) Air Carrier Maintenance Programs describes the mandated scope and content of an air carrier’s aircraft maintenance programs.
Use of the Original Equipment Manufacturer (OEM)’s MRBR/MPD is mandated for the first year of operation for any new fleet added to an operators OpSpec. One year is specified to collect the minimum data required to support an operator’s Continuing Analysis and Surveillance System (CASS) program which amongst other things, ensures maintenance decisions are driven by a consistent baseline of data.
After one year, AC 120-16(X) Chapter 6 requires an operator to maintain an effective program customized to their unique operation using specific data analysis. This is often misinterpreted as meaning the MRBR/MPD and subsequent revisions are the most effective and optimized program, however, the exact opposite can be true.
…doing more maintenance is not necessarily a good thing as human factors risks are exposed every time maintenance is performed. Doing the right maintenance at the highest optimized effective interval based on a robust data analysis should be an operator’s ultimate goal to flying a safe, reliable and cost-effective fleet.”
– Federal Aviation Authority (FAA)
HOW CAN AN OPTIMIZED MAINTENANCE PROGRAM HELP YOUR AIRLINE?
Any aircraft operator – commercial passenger, private passenger, cargo, or defense – can benefit from an optimized maintenance program. The scale of the benefit varies and is typically a function of five factors:
- Fleet size
- Fleet configuration
- Fleet utilization
- Operational environment and conditions
- Experience of the Maintenance and Engineering teams with program optimization
Any operator that is not doing maintenance at the highest effective level or has flight operations constrained or otherwise negatively impacted by maintenance should consider maintenance program optimization.
SeaTec is an industry leader in developing and optimizing Maintenance, Reliability and Predictive Programs.
For more information about Maintenance Program Optimization or related topics contact or the authors and follow us on Linkedin.
BUILDING A MISSION CRITICAL APPLICATION IN THE CLOUD
THE CUSTOMER PROBLEM
Our customer, one of the world’s largest airlines, knew its legacy mainframe system was constraining its ability to drive operational improvements. Data resided in and was replicated across a fragmented ecosystem of applications and databases. Format, timeliness, and completeness of data varied according to application. Expert users of the legacy system were becoming harder to find, workarounds were common and creating analytical insights was expensive.
THE CUSTOMER BENEFIT
Single Source of Truth – Data from more than 10 legacy applications was consolidated and updated in real time enabling new and advanced analytics. A new architecture provided better performance and the ability to provide an API for accessing data.
Data availability – Data was made available in real time after being ingested and formatted. Data availability improved from minutes to milliseconds.
Easier Access to Data – The single source of truth was made available to new and existing applications. The use of API’s coupled with a non-relational database simplified the process of accommodating high volume data requests from applications and analysts.
Flexible Architecture – The architecture now facilitates the creation of individual applications that leverage components and backend services to better manage complex customer requirements and maximize UI performance.
Improve Efficiency of the Operation– Incorporation of exception-based alerting and the ability to model decisions prior to execution delivered quantifiable benefit to the customer.
THE SEATEC SOLUTION
We helped our customer visualize an outcome, develop a roadmap, and craft a business case to invest in the infrastructure and applications required to migrate off the legacy system and unlock the potential of its data. SeaTec architected a solution, specified and supported procurement and the standup of new technologies and infrastructure.
We established and led an agile development program with teams staffed by SeaTec, customer and third-party vendor SMEs.
Front and back end applications were developed using a code base designed to maximize re-use but flexible enough to enable customization to address complex business rules and requirements which emerged during development.
Our solution was delivered and production ready on-time and selected to prove the customer’s new and untested cloud-based platform-as-a-service and deployment processes.
MERGER SUPPORT & SYSTEM INTEGRATION
THE CUSTOMER PROBLEM
A customer undertook a merger with another airline to become the largest airline in the world. Both companies had extremely large portfolios of IT applications. Rationalization was necessary to maintain focus on the operations and to achieve the benefits associated with the merger.
One central rationalization effort required the integration of the two company’s Maintenance & Engineering (“M&E”) systems and processes.
Significant revenue and cost savings gains, systems and process integration, business continuity, and legal & regulatory issues. They needed expert help to address this multi-year program
THE CUSTOMER BENEFIT
- Optimized solution – our consultants worked closely with our customer’s stakeholders and our own digital team to ensure processes and systems were optimized. The approach of standardizing onto a common platform with carefully managed deployment and change processes de-risked change management.
- Improved productivity and efficiency – streamlining and then integrating systems made the solution significantly easier to use and support.
- Reduced time to market – leveraging our deep domain experience with similar systems and operations reduced trial & error and related rework.
- Ensured reliable, clean data – use of automation, manual techniques proven on similar projects, and a robust quality assurance methodology improved data quality.
- On time – the ability to augment customer resources with experienced software architects and engineers enabled the project to maintain velocity and surge as required.
THE SEATEC SOLUTION
- Analyze opportunities to standardize, streamline, and consolidate the portfolio
- SeaTec provided program leadership, and domain-specific engineering, technology and systems integration expertise for a multi-year program to integrate two M&E systems and the ecosystem of applications which interfaces with and depended on them.
- Merger experience suggested an approach encompassing analyze, standardize, streamline, and consolidate was optimal. It was defined and agreed.
- Documentation including business requirements, architecture, process and system designs test cases and plans, and implementation plans were developed.
- Facilitated change management process and coordinated the harmonization of business processes
- Analysis of the IT architecture & platform identified a need for investment in order for it to scale. SeaTec architected the requirements, specified, and supported setup of new technologies and infrastructure.
- Designed and developed legacy system interfaces & bridges to support integration and then automated the data migration activities for materials, aircraft, and technical publications.
- Functional system gaps and desired improvements including enhancing the user experience were identified and addressed by the development of new GUI applications.
IMPROVING THE OPERATION WITH DATA DRIVEN INSIGHTS
THE CUSTOMER PROBLEM
One of the world’s largest airlines knew its current-state data architecture fell short of meeting the demands for high-value, near real-time decision support. Data was available but required heavy, manual and time consuming manipulation in order produce the analysis that would better inform the planning and forecasting decisions which would make operational improvements.
THE CUSTOMER BENEFIT
- Operational improvements – Improvement opportunities became known and actionable. analysts and business users through the use of an operations simulator capable of representing aircraft, crew, station, and schedule interactions/data.
- Better and faster decision-making – Automated data capture and analysis processes reduced the time taken (and errors associated with manual entry) for analysts and business users who could now use an operations simulator capable of representing dynamic, real time operational data.
- Enhanced planning and forecasting – Better data enabled the business focus to shift to the development of new and improvement of existing simulation-based models
- Repeatable and sustainable solution – Adoption of a reusable framework and components and a database designed for scalability and reliability shortened delivery time, de-risked delivery and made the solution more easily supported.
THE SEATEC SOLUTION
We provided technical leadership for the design of a scalable, sustainable architecture that combined simulation data structures, routines, and processes to support effective data science models.
The SeaTec team developed data, performance and operability requirements and rules and then architected and developed a Database. Interfaces to data sources and APIs to support customer applications and external data consumers were developed.
Best practices for sustainability and repeat ability were designed into the applications with reusable components.
Automation was deployed to streamline the orchestration of application processes.
SELECTING THE BEST ENGINE MAINTENANCE CONTRACT
THE CUSTOMER PROBLEM An airline needed to understand its options for outsourcing engine maintenance. A market strategy, fleet analysis and a sourcing process that would deliver a new maintenance agreement was required. Options including comparing maintenance by the flight hour and by the time and materials per shop overhaul were important. The objective was to leverage its position as […]
IMPROVING INTERNET CONNECTIVITY AT 35,000 FEET
THE CUSTOMER PROBLEM A large airline had selected a wireless Internet service provider in the cabin and had operated the system for nearly two years. The service performance met many passenger expectations, however some customers reported outages, slow response times and other inconsistencies. Passenger dissatisfaction lead to customer complaints and costly passenger refunds which negatively […]