WHAT DIFFERENTIATES THE MOST SUCCESSFUL AIRCRAFT TRANSFERS – AN OPERATOR’S PERSPECTIVE
THE TAKEAWAY
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.
Sara Treon
Director
Aircraft Transfers
Co Chair, Air Transport Association of America (ATA) Aircraft Transfer Records Working Group
Steph Alcivar
Managing Partner
Engineering & Technical Services
MAINTENANCE PROGRAMS – HOW OPTIMIZATION CREATES VALUE
THE TAKEAWAY
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 Revenue
Increased aircraft availability
Lower Costs
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
Aircraft availability
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.
Maintenance costs
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.
Complexity
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.
Reliability
Robust data analysis informs program enhancements and reduces maintenance effort which improves aircraft reliability and availability.
Maintenance Capacity
Optimization of all checks reduces the utilization of scarce line and hangar resources and addresses bottlenecks in MRO maintenance execution.
Human Factors
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.
Ron Little
Technical Fellow
Consulting
Jeff Pauls
Director
Engineering & Technical Services
