A question of quality
One way to ensure the most efficiency at an MRO is to specialize, said Commercial Jet’s Kamenz. Through repetition and attention to detail, a good MRO will develop strong processes. “The MRO industry, as a beast, is a pretty cutthroat, lower-margined animal,” he said. “But when you establish a line of aircraft with an operator that has a certain operating profile, you get to know how to be efficient around the parts flow. Once you get efficient with a customer in their needs, then it becomes, through volume, more profitable.”
In one of the more unusual maintenance arrangements, U.S.-based Air Transport Services Group (ATSG) – parent of cargo carriers ABX Air and Air Transport International, and aircraft lessor/manager Cargo Aircraft Management – has its own MRO subsidiary, Airborne Maintenance and Engineering Systems (AMES).
Rich Corrado, chief commercial officer of ATSG, said he must contract some maintenance work to the likes of MRO giants AAR or HAECO, but has AMES do most heavy maintenance and C-checks. “I haven’t seen another entity that combines leasing with these ancillary services,” he said.
Under this arrangement, ATSG can offer potential lessees the services of a full-time MRO via AMES to provide certain perks, such as cockpit and other interior upgrades. “What we’re trying to do here is to lease airplanes – that’s the core of our strategy,” Corrado said. “Having AMES gives us a competitive advantage by providing services to add to the value of the aircraft.”
Brady Templeton, president of AMES, said that 737s, 757s and 767s are its “sweet spot” for maintenance, but one of its more unique clients is Delta, which, despite its large Delta TechOps MRO business, has contracted AMES to provide maintenance checks on the carrier’s relatively young 717 passenger fleet.“Years ago, for major carriers like this, the level of outsourcing was something like 50 percent,” he said. “Now it’s south of 10 percent that are doing: MRO work in house.”
All of this outsourcing of MRO work today has had a positive impact on overall quality, Precision’s McCarthy said. “Independent MROs are good for business and safety,” he added.“For MROs that can generate a sufficient number of man-hours, one can see the margins come up a bit more.”
Sophistication in the MRO business, he said, has reached a level where fly-by-night operations can no longer compete. “They’ve gotten a lot smarter about getting paid for what they’re doing,” he said. “MROs are adopting more capable accounting practices and can better justify their expenses. Maintenance finance attorneys got much more cutthroat.”
“Every MRO has to keep in mind that they’re only as good as their last check,” Kamenz said. “You start screwing up on an aircraft check, or your quality drops off because certain personnel have changed, you will suffer – it’s black and white.”