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Airlines in CIS and Baltic countries to spend US $1.42 billion before 2015 to repair engines for average-haul air vessels

Gediminas Ziemelis - Airlines in CIS and Baltic countriesExperts from the Avia Solutions Group predict that in 2012-2015, airlines of Russia, CIS and Baltic countries will spend more than 1.42 billion U.S. dollars for capital repairs of engines for  medium-range aircraft (Boeing 737 Classic, Boeing 737 NG, Airbus A320), which will be about 5% of the total world market of engine repair. In this relation, almost half of that amount will be spent on repairing heavy engines of new generation, CFM56-5B/7B, despite the fact that the projected number of overhauls on them is less than the previous generation of CFM56-3engines.

At present, the majority of aircraft, such as Boeing 737 and Airbus A320, operated by airlines in Russia, CIS and Baltic countries, are equipped with the previous generation engines, such as CFM56-3 and CFM56-5A – over 52% of all engines. However, as we update our fleet of aircraft carriers will give more preference for a new generation of engines, such as CFM56-5B/7B and V2500-A5. This is certainly reflected in the market servicing engines – if today more than 56% of the capital repair of engines is carried out for the CFM56-3 and CFM56-5A, in the next few years, the picture on the market change towards a new generation of engines.

In 2012-2015, many airlines that operate aircraft equipped with engines of new generation, CFM56-5B/7B and V2500-A5, will face with the necessity of the first major overhaul of these engines. To avoid unnecessary problems and costs due to lack of experience in organizing these activities, airlines must get serious about the issue, conduct market research or to turn to independent experts who can help companies save an average of about 10-15% (and in some cases up to 30%) of the total cost of repairs.

“The experts from specialized companies for maintenance have necessary knowledge and experience and may delve into the repair process itself, constantly accompanying the process of repair. They know very well the company to repair engines, their strengths and weaknesses and can freely choose their suppliers of parts and companies repairing components, and thereby, forming an optimal offer for a client. Furthermore, by controlling the repair of a large number of engines, independent organizations can provide a lower cost of spare parts, repair components, which can significantly reduce the cost of repair work in general, and to change providers if their conditions do not satisfy the customer,” said Gediminas Zhiemyalis, Chairperson of the Avia Solutions Group’s Board of Directors.

In 2012-2015, the total costs for repair of engines will be split between the cost to replace the units with a limited resource (Life-Limited part – LLP) and the repair and replacement of other parts (Non-LLP segment), as follows: the cost of replacement of the LLP part will come to about US $400 million, the cost of Non-LLP segment, which includes the parts that are changed or repaired, depending on their condition and work on the assembly and disassembly of the engine, – US $1.02 billion. Despite the impressive cost of overhaul of engines, with proper planning the repair process, taking into account the history of a particular engine and the specifics of his generation, airlines can save up to 15-20% of all jobs’ cost.

In 2012-2015, over 55% of the cost of replacing the LLP parts will include a new generation of engines, CFM56-5B/7B. At the moment, the LLP-market components for CFM56-5B/7B and V2500-A5 are limited, but as it develops the airlines will have more opportunities to reduce costs through the use of previously used parts, the last overhaul. Carriers that operate aircraft equipped with engines of the previous generation, CFM56-3/5A, have far more opportunities to reduce costs – there are is lots of used parts available at the market, so an airline may choose the best option with the necessary resources of the unit, taking into account the terms and conditions of lease agreements and statutory requirements for flight operations.

According to experts from the Avia Solutions Group, the cost to repair the previous generation of engines (CFM56-3/5A, V2500-A1), excluding replacement of the LLP parts (Non-LLP segment) will be US $490 million, a new generation of engines (CFM56-5B / 7B, V2500-A5/D5) – USD 550 million in the period of 2012-2015. The bulk of the cost of the Non-LLP segment includes the gas generator repairs – the expenses on this come to more than 50% of total expenditure on the Non-LLP segment.

With proper analysis of the available options on the market and choosing the right service provider, airlines can save about 13-15% of the Non-LLP works through the use of the used  parts in good condition or after repair, as well as non-original spare parts PMA-(Parts Manufacturer Approval) approved by the aeronautical authorities. This method is especially effective for the previous generation of engines – using the used parts can save airlines an average of about 8% of total costs. The secondary market for aviation spare parts on new generation of engines is still poorly developed in general, but experts predict the situation will be changed during the next few years, and the airlines will have new opportunities to reduce costs.

For airlines, aircraft of which are equipped with engines of new generation, it would be efficient to use DER-repairs (Designated Engineering Representative Repair), carried out in accordance with technical data approved by the aeronautical authorities, to increase the maintainability of parts per engine overhaul – choosing this way, the company can save up to 7% of the cost of engine overhaul. Also, the airlines need to pay attention to the cost of repair of some units, because sometimes the replacement of a component may cost significantly less expensive than its repairs – in this case, it would be an effective way to rent or purchase a replacement unit.

 

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