The 2012 MRO Americas Conference was held last week at the Dallas Convention Center. The opening keynote address was delayed over an hour because a number of tornadoes touched down around Dallas, which forced everyone to shelter in the lower levels of the facility. The tornadoes outside foreshadowed the storms that would soon be raging inside, caused by OEM restrictions on sharing critical MRO information.
During a session titled “Customers Speak Out,” executives from FedEx Express, TAP, Spirit Airlines and Atlas Air shared their concerns regarding the current MRO environment. George Silverman, VP Materiel at FedEx Express described how certain suppliers are unwilling to share data with airlines and MROs, which increases costs and inventory levels. Valter Fernandes, EVP Operations at TAP described the difficulties they experience when performing repairs outside of documented manuals. When performing heavy maintenance TAP sometimes needs help from the OEMs, however they often wait more than 10 days (and sometimes more than 30 days) without receiving an answer. (Similar to TAP, FedEx's Silverman claims that out of 30,000 service requests addressed to the OEMs, 50% are not returned on time.) Fernandes said he believes the OEMs are trying to achieve a monopoly in maintenance, which harms both the independent MROs and the airlines. Guy Borowski, VP Technical Operations at Spirit Airlines, said that the OEMs seem to be withholding technical information to help them dominate the MRO service business.
George Silverman offered a very specific and timely example of how the OEM’s strategy is causing delays and driving up costs. It turns out that the violent weather that caused tornadoes in Dallas also dropped a lot of hail at DFW International Airport, which damaged a number of elevators on FedEx aircraft. Because FedEx does not have access to the necessary Airbus repair data they must ship these elevators to Spain for repair, which will take 9-12 months to complete. (Aviation Week’s Frank Jackman posted a blog titled “OEMs Criticized For Not Sharing Data,” which described the same story.) As a result, Fed Ex will probably need to purchase replacement elevators to repair these aircraft. Following this session, I asked Silverman how long it would take FedEx to fix the elevators if they had the data and he said, "less than two months." Furthermore, Silverman has heard reports that the facility in Spain is running 12-24 months behind on repair work, so the estimate he received may not be accurate. This is an example of how the information policies of certain OEM’s is increasing MRO costs and delaying aircraft from being returned to service.
During a session titled “In or Out? Knowing When and What to Outsource,” Bill Meehan, CEO of Pemco World Aviation Services and Kent Horton, Director of Aircraft Programs for Southwest Airlines both agreed that access to technical information is the key to making critical MRO decisions. Without this data, airlines have very few alternatives for what, when and where to outsource maintenance—and likewise very little control over costs.
In the closing keynote session titled “Global Markets, Financial Instability, and MRO,” Jim Keenan, SVP Technical Operations at United Airlines said that he understands the OEM’s business motivation to restrict maintenance and repair information. However, he also said the issue of technical content must be resolved because the current strategy is counterproductive to the industry and is increasing costs unnecessarily. He said that when fuel is removed from the cost of operations (CASM ex-fuel) MRO activities are the single largest driver of cost—at 15-20% of total. During the Q&A time, someone in the audience suggested that OEMs have no alternative to monopolizing MRO because they must recoup the billions of dollars they invest in R&D. Keenan’s response was fairly blunt, saying he has very little sympathy for OEMs that engaged in a market share grab (to drive competitors out of business) by under pricing their products. The airlines didn’t force OEMs to do this and for OEMs to try to cover their R&D investment by employing a “razor blade” business model is unfair to their customers. Trying to dominate the MRO space by using a “have vs. have not” approach with maintenance information doesn’t serve the industry well and won’t work in the long run. Keenan finished by saying that the current inequity in profits—OEMs gaining at the expense of airlines—causes him to be very concerned for the future of the industry.
While MRO Americas 2012 had plenty of dialog about OEM information policies, it didn’t resolve the current impasse between OEMs, airlines and MROs regarding access to technical content. The people I spoke to agreed that OEMs have a right to protect their intellectual property but there is significant disagreement regarding whether or not MRO information constitutes intellectual property. Unfortunately, just as the automotive industry is now grappling with “right to repair” laws, the aviation industry seems to be headed in the same direction. It would be better however, if all three parties could find a way to work together to avoid legislation and lawsuits.