Growth in fleet size and operations of A320 and 737-family...

40 | Global Transport Finance | September/October 2015

AIRCRAFT ENGINE FEATURE STORY

As these engines continued clockingoperational hours and cycles, airlinesstarted facing inflight shutdowns (IFSDs),air and ground turnbacks, delays,cancellations and high rates ofunscheduled engine removal due tointernal hardware distress/externalcomponent defects.The single biggest challenge that

investors and operators of these enginesface today is the effect of harshenvironments on engine hardware,resulting in high engine maintenance cost.

Impact of harsh environment onengine internal hardwareAirlines in different regions, operating

the same model of engine, began to observedistress and high rates of deterioration ondifferent internal hardware. High-cost hot section parts, such as HPT

blades, HPT NGV, combustion chamberliners and LPT NGV were mainly effected.Normal maintenance planning document

(MPD) borescope inspection intervals wereinadequate to pick up defects in time toprevent engine failures or to avoidunscheduled engine removals.

Impact of harsh environment onengine external hardwareHigher operating temperatures and dust

in the air causes malfunction of differentexternal components, resulting in delaysand cancellation of flights. Recovery of grounded aircraft from

remote stations with limited infrastructureis always a challenge, both in terms oflogistics and finance.

Entry into serviceNew aircraft and engine models have

been selected by investors and operatorswithout sufficient data on how theseengines will perform in each airline’sunique operating environment. Airlines prepare for starting operation of

these engines based on the advice fromoriginal equipment manufacturers (OEMs). Operators maintained and utilised the

aircraft and engines as per the aircraft MPDand other OEM-published operation andmaintenance documents.

Terms of operationEngine lease rates, delivery and

redelivery conditions, maintenance reserverates, minimum workscope requirementsfor maintenance reserve claims arediscussed and agreed between lessor andlessee -- usually an airline -- mainly basedon information provided by an OEM andhistorical data available from other modelsof aircraft engines operating in betteroperating environments. Engine repair and maintenance rates,

spare engine requirements, and engineremoval plans are agreed between airlinesand engine MROs based on OEM inputs.It is a crucial issue for operators as to

how much data have been collected byaircraft and engine OEMs during theproduct development stage and test runs.OEMs need to determine the adverse

effects of environmental factors on internalhardware, as well as external componentsof the engine, and factor these findings intothe warranties and guarantees that areoffered to the investors and operators.

Operational and financial impactAs an aircraft’s dispatch reliability is

adversely affected, an operator’s reputationsuffers and business is impacted.Aircraft can be grounded due to lack of

spare engine availability. Due to high rates of premature and

unscheduled removals and shop visits, costcalculations are compromised. Engine shops are likely to refuse to cover

premature and unscheduled shop visitrepairs and provide spare engine supportunless stipulated in an agreement.While revenue generation and load

factors are at optimal levels, unexpectedhigh engine repair costs will definitelyimpact income statements.Airlines without sufficient cashflow

often are forced to cease operations.All stakeholders, including investors,

lessors, vendors and airline employeessuffer in the event of a shutdown.

OEM approaches andrecommendations When an airline reports operating

problems to an OEM, it is not unusual forthe manufacturer to react negatively,asserting that the issue in question is of aspecific rather than a general nature, that is,that the problem being reported is notwidespread across a product.As further defects are reported, it is not

inconsistent for an OEM to lay blame forthe failure on a harsh operatingenvironment rather than the product.From its perspective, an OEM may not

have sufficient data from differentoperating regions to predict environmental

Growth in fleet size and operations of A320 and 737-family aircraft in the harsh Growth in fleet size and operations of A320 and 737-family aircraft in the harsh environments of the Middle East, Southeast Asia and China have presented many environments of the Middle East, Southeast Asia and China have presented many unique problems for the V2500 and CFM 56 engines that power these aircraft. unique problems for the V2500 and CFM 56 engines that power these aircraft.

By: Joe Jacob, vice president for powerplant services, Acumen AviationBy: Joe Jacob, vice president for powerplant services, Acumen Aviation

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COVER STORY»

September/October 2015 | Global Transport Finance | 41

AIRCRAFT ENGINE FEATURE STORY

failure, and may react accordingly.To prevent inflight shutdown, as well as

to reduce unscheduled grounding ofaircraft for engine replacement andmaintain high dispatch reliability, an OEMwould recommend reducing the MPDborescope inspection interval and definesoft time for internal hardware. These recommendations are generally

released through regional service bulletins.Once released, implementation of those

OEM recommendations becomes anoperator’s responsibility.

Maintenance and financial impactThe reduced inspection interval

recommendation, such as borescopeinspection, affects previously agreed leasereturn conditions, as most lease agreementsdo not allow for engines with reducedinspection intervals to those of scheduledintervals as per MPDs. Although the hardware is fully

serviceable without any findings, to meetthe redelivery conditions the enginesrequire unscheduled engine shop visits.

The reduced borescope inspectioninterval and soft time recommendation

released as containment plan results inunscheduled high cost shop visit andscraping of high cost parts at half its firstrun life.

Going forwardTwo new engine models, CFM LEAP and

P&W 1000 G, are being developed forpowering next-generation single-aisleaircraft from Airbus and Boeing.A large number of these new aircraft

engines will be operated in the emergingand developing air transport growth regionsthat also feature harsh environments.Both aircraft engine OEMs claim that

their new products are being developedbased on the lessons learned from on-wingoperations and will, therefore, featurebetter performance. As part of a new strategy, OEMs now

offer consolidated engine managementpackages that include maintenance, repairand materials management. There is apprehension in the industry,

however, that this consolidation will resultin a monopoly, no repair development andno availability of repaired parts, includingused life-limited parts, and fewer choices ofengine repair shops.

To safeguard the interests of investorsand operators, as well as to sustainprofitability, aircraft and enginemanufacturers need to share test runresults, particularly as those results relateto performance in harsh environments.Based on the test run data, manufacturers

would be in a position to offer warrantiesand guarantees to mitigate the potentialcost impact of environmental issuesRather than issuing service bulletins and

other recommendations as a reactive action,aircraft MPDs should be required to featureseparate maintenance tasks and inspectionintervals relative to operations in normaland harsh environments. Lessors and lessees need to develop

maintenance reserve availability fordifferent types of workscopes, such as highcost repair, hot section restoration,performance restoration and overhaul.It is also important for investors and

operators to engage aircraft engine expertsto monitor operations, represent investorand operator interests, address technicalissues and interact with other users in thecourse of OEM technical meetings andindustry conferences and manage on-wingand off-wing techno-commercial issues.

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