In terms of development, the Baltic States, Russia and the CIS constitute one of the most dynamic markets in the world. Currently the region’s airlines operate about 900 western type of aircraft with Boeing 737 and Airbus A320 families being the most common and in demand market-wise. Based on an extensive market analysis in the region Avia Solutions Group experts have presented a forecast for 2012-2015 covering an expected engine maintenance market overview of such Boeing 737 and Airbus A320 engine types as CFM-56 and V2500.
“Currently about 52 % of the entire Boeing 737 and Airbus A320 aircraft fleet, operated by airlines based in Russia, the CIS and Baltic countries, are equipped with the mature generation engines such as CFM56-3 and CFM56-5A. In the process of modernising their fleets, carriers will shift their preference to advanced engine types, such as CFM56-5B/7B and V2500-A5. This will certainly change the situation in the engine maintenance market. At present more than 56% of the engine overhaul is carried out for the CFM56-3 and CFM56-5A engines. However, in the next few years advanced engines will dominate the market,” - says Gediminas Ziemelis, Chairman of the Board at Avia Solutions Group.
Avia Solutions Group experts predict that in 2012-2015 airlines in Russia, the CIS and Baltic countries will spend more than USD 1.42 billion on medium range aircraft such as Boeing 737 CL, Boeing 737 NG and Airbus A320 engine maintenance and overhaul. The sum amounts to 5% of the total global expenditure in the engine repair market. Despite the fact that the number of overhauls for CFM56-5B/7B types of engines is forecasted to be lower than for their mature predecessor CFM56-3, almost half of the money will be spent on heavy maintenance of the advanced generation engines. The less popular engines in the region V2500-A1/A5 will claim approx.8 % of the total engine maintenance costs.
The total amount of the engine maintenance and repair expenditure in 2012-2015 is counted by adding up several types of costs. The first is to do with replacing Life-Limited parts (LLPs), which is expected to knock the airlines back by USD 400 million. The second includes spending on the Non-LLP segment, such as repairs and replacements of the remaining parts and components. Depending on their condition and all needed engine disassembly and assembly works can add up to USD 1.02 billion.
Despite the impressive cost of overhaul engine maintenance and repairs, appropriate planning of the repair process, may save airlines up to 15-20% of the total costs. The most important task is to review the full history of a particular engine and to consider all the specifics of the generation it belongs to.
In 2012-2015 over 55% of all LLPs replacement costs will be allocated to the advanced generation of engines CFM56-5B/7B. At the moment the market of LLPs for CFM56-5B/7B and V2500-A5 is limited. However, alongside further development airlines will gain more opportunities to reduce costs by using surplus and overhauled material. Carriers operating aircraft equipped with mature engines CFM56-3/5A will benefit even more. The market can already offer a long list of second hand parts, so airlines can choose the best option based on their quality systems and set standard requirements depending on lease return terms and conditions as well as legal requirements for flight operations.
According to Avia Solutions Group experts, in 2012-2015 the cost of repairing mature engines (CFM56-3/5A, V2500-A1), excluding LLP replacement (counting only the non-LLP portion of overhauls) will amount to USD 490 million, while the same repair works carried out on advanced engines (CFM56-5B / 7B, V2500-A5/D5) may cost up to USD 550 million. The major part, exceeding 50% of total expenditure on Non-LLP segment, is pertinent to the repairs of core major module of engines.
Implementing an accurate analysis of all options available on the market and selecting the right service provider can reduce the costs of the non-LLP works by approx. 13-15%. Airlines may save money by using the surplus parts that are refurbished and in good condition as well as non-original PMA spare parts (Parts Manufacturer Approval) approved by relevant aviation authorities. This method is especially effective for mature generation engines - using surplus material can, on average, save airlines up to 8% of the total costs. Unfortunately, the aircraft spare parts aftermarket for advanced engines is still under-developed; however, experts predict that within the next few years the situation will certainly improve, and airlines will be given a lot more opportunities to choose from considerably cheaper solutions.
Airlines, operating aircraft equipped with advanced engines, can use the DER (Designated Engineering Representative) repairs. Such repairs are carried out in accordance with technical data approved by relevant aviation authorities and are designed to increase the reparability of parts while completing engine overhaul. This way companies can save up to up to7-10% on a complete single engine overhaul cost. Moreover, airlines should pay attention to the cost of repairing particular units. Sometimes replacing a component can cost significantly less than repairing it. If a component is BER (Beyond Economical Repair) the best option is to lease or purchase a replacement unit.
In 2012-2015 most airlines operating aircraft equipped with the advanced CFM56-5B/7B and V2500-A5 engines, will face their first major engine overhauls. In order to avoid the unnecessary troubles and expenses arising from the lack of experience in organising these activities, an airline is strongly advised to conduct a market research or consult independent experts. It may help the company to save approx. 10-15% (in some cases - even up to 30%) of the total repair and overhaul costs.
“Experts working in specialised maintenance organisations possess all the right skills and experience vital in any repair process. In order to ensure the best practice, all maintenance activities must be under constant supervision. Experienced professionals are fully aware of the engine repair companies in the market, know their strengths and weaknesses as well as have a wider choice of spare parts suppliers and repair organisations. In addition, maintaining a larger number of engines allows independent organisations to provide spare parts and component repair services at significantly lower prices, thus reducing the final cost of complete repair works. They also have more freedom at switching providers if their conditions cease to satisfy customers,” - commented G.Ziemelis.