Nicoeddf
Topic Author
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Engine MRO And Its Development In Todays Market

Fri May 16, 2008 9:40 am

Hi together,

I just started writing my diploma thesis at LH Technik engine service in HAM.
While constantly learning new things about the whole process, the market, procedures and other relevant issues in the field of engine MRO, I wonder about the development the market has taken during recent (or not so recent) years.

I was hoping to start a discussion on how well this specific business developed over the years and was also hoping to get some insights into the doing of other large (independent, OEM, airline shops) MRO facilities for aircraft engines.

Maybe there is one or another to share his (40yrs+  Wink ) knowledge in engine MRO.  Smile

To start with:

I know LHT Engine Service is doing quite good in the market, having the LH fleet as 40% basic load for their maintenance line (V2500, CF6-50/-80, CF34, CFM56, PW4000-94'', PW100) with 60% external customers.

How is that compared with other large provider? Delta Tech Ops, United and so on.
What are the largest problems MRO provider are confronted?

regards
Nico
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ncelhr
Posts: 258
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RE: Engine MRO And Its Development In Todays Market

Fri May 16, 2008 10:22 am

Largest problem MROs are facing is the incoming wave of "DER" maintenance companies.
DER = Designated Engineering Representative.

A DER is to an MRO what a PMA spare is to an OEM spare.
 
Nicoeddf
Topic Author
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RE: Engine MRO And Its Development In Todays Market

Fri May 16, 2008 10:34 am

AFAIK the PMA parts still only have niche market share, as many customers don't want PMA parts in their engines due to guarantee and aftersales support and the loss of OEM support in case of engine failure due to PMA part usage.
Is that still the case?

so DER = independent Service shop? Like SR Technics, AMECO Bejing and so on?
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ncelhr
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RE: Engine MRO And Its Development In Todays Market

Fri May 16, 2008 1:01 pm



Quoting NicoEDDF (Reply 2):
so DER = independent Service shop? Like SR Technics, AMECO Bejing and so on?

No, the ones you quote are actually still considered MROs. DER are yet smaller operations now mostly dealing with minor structural repairs & maintenance. We're looking at the lower end of the market. The pattern by which they are entering the market is similar to the pattern for PMA parts - initial entry on cheap consumables / rotable parts & low margin - ie. the market which the MROs are "allowing" them to have today because of its low margin.
 
MarkC
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Joined: Tue Apr 25, 2006 8:10 am

RE: Engine MRO And Its Development In Todays Market

Sat May 17, 2008 1:57 am



Quoting Ncelhr (Reply 1):
Largest problem MROs are facing is the incoming wave of "DER" maintenance companies.
DER = Designated Engineering Representative.

I'm really not sure what you mean by DER maintenance company. I've never heard of that term, and I work for an engine MRO. A DER is used to approve a non-manual repair, or a repair for which there is no approved technical data. All engine MRO's write and approve their own repairs, some using DER's. The bigger you are, the more you write. I bet Lufthansa writes hundreds per year in Hamburg alone.

Are you saying that a small company who uses a DER to approve their own repairs is not as good as an MRO who uses a DER to approve repairs? Those guys are appointed by the FAA, just like all DER's. They are personally liable for their repairs. I worked for a piece part MRO. I authored repairs signed by an independent DER. There's nothing wrong with it.

If you are an operator, who calls the OEM, and asks for a new repair, it will most likely be approved by an OEM DER. Nothing wrong with DER's. Believe it or not, the engine manuals are not even FAA approved (except for chapter 5).

As to the original question, I think the largest problem is the getting the work. You are starting to see multi-year contracts with operators and MRO's. Price is becoming a huge thing. There is a lot of pressure to lighten up on the work done. You are also starting to see more consolidation, with some giants continuing to buy up smaller shops.
 
Nicoeddf
Topic Author
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RE: Engine MRO And Its Development In Todays Market

Mon May 19, 2008 12:55 pm



Quoting MarkC (Reply 4):
A DER is used to approve a non-manual repair, or a repair for which there is no approved technical data. All engine MRO's write and approve their own repairs, some using DER's. The bigger you are, the more you write. I bet Lufthansa writes hundreds per year in Hamburg alone.

Yes, that is exactly the use of the word I learned to know now in HAM.

Quoting MarkC (Reply 4):
As to the original question, I think the largest problem is the getting the work. You are starting to see multi-year contracts with operators and MRO's. Price is becoming a huge thing. There is a lot of pressure to lighten up on the work done. You are also starting to see more consolidation, with some giants continuing to buy up smaller shops.

So it all comes down to pricing (and lead time). The pricing is mainly dependent on:

- spares cost (by OEM, as PMA)
- labor cost
- ?

As I have heard, the most pressure is on spares issued by OEMs, as they are earning a huge amount of their money not by selling engines but by actively ruling the aftersales market with (too) high spares prices.

Is that true for your company also? In which do you work, if I may ask  Smile
Do European MROs face higher pricings for spares as their north american competitors do?
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YWG747
Posts: 53
Joined: Mon Feb 11, 2008 2:19 am

RE: Engine MRO And Its Development In Todays Market

Tue May 27, 2008 11:51 am

Risings costs are the biggest factor, like replacement parts (if the OEM will even give you them), even in house part repairs are going up in cost. Simply because labour, and utility costs are going up.

We are not allowed to put in PMA parts or we will get slapped pretty hard. Some potential customers have their engine work done in bucket shops just simply because they are a cheaper solution... definately not a better product in terms of quality.

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