FL Technics LineThe slowly recovering market of commercial aviation is putting the airlines in a difficult position. On the one hand, it is in their best interest to make most of the rising passenger traffic by opening up new routes and increasing the frequency of their flights, especially during the summer season. On the other hand, the rising oil prices are pressuring them to look for more economically convenient solutions when it comes to maintenance of their aircraft. Thus, in the situation of constantly having to worry about costs, the outsourcing of line maintenance, although being the least popular MRO solution might in fact be the most reasonable.

Summer has always been on of the busiest seasons for the airlines. At the same time, what may seem as an opportunity to raise profitability still remains a challenge for most of the carriers. The raising passenger traffic, accompanied by high oil prices (accounting for 38% of all operating expenses) contribute to the fact that, according to IATA, 2013 will most probably be profitless at least for the European airlines. And if the forced fleet renewal has created the possibility for cutting expenses by shifting the value of the MRO market from heavy and line maintenance, the rising business of the airlines are keeping line service providers busy as ever. “On the one hand, the changes in the global fleet will have very little, if any affect on line maintenance. New technologies used to manufacture the new generation of aircraft will definitely accelerate engine and component MRO growth and the services themselves will probably become more expensive. The cost of line maintenance will not have a dramatic change as it is mainly based on manpower cost,” says Head of FL Technics Line, Asta Zirlyte. “On the other hand, considering the business models of the low-cost carriers, which are gaining popularity in the European airspace, and the overall rising workload of the airlines, the business of line maintenance providers will grow in proportion, and not only during summer, which naturally presupposes more expenses.”

It seems that, in fact, more airline managers are starting to take a closer look at all costs and options, concerning MRO services, seeing outsourcing as a reasonable solution for cutting prices. And although, according to the TeamSAI forecast, in the next 10 years line maintenance will still have the smallest MRO market share ($13.2B of $76), ICF SH&E predicts that, as airlines seek the best value alternative for supporting their fleets, the outsourcing trend will at last affect this aircraft maintenance segment as well. According to their forecast, up to 42% of line maintenance will be outsourced in 10 years time.

“Of course, signing seasonal contracts with line maintenance providers is a common practice and is economically justified. But, considering the trends of the industry, it is becoming obvious, that outsourcing of line maintenance services can be an effective way of minimizing the airline’s expenses, since it will bring savings on training, equipment, tooling, office rental and management which is especially important for new start-ups. Outsourcing the services can generally save about 15% of line maintenance cost. Providers, specializing in line maintenance can offer their clients flexibility and reaction speed as well as cutting down their expenses, since they can balance and optimize their work process on the station level providing service for several customers at a time, following the standards and procedures specifically determined by a contract. In turn, airlines become more focused on their core business; the rotations and change of their fleet becomes less complicated, since all of the accompanying maintenance work is being transferred to the line maintenance provider. Such a division of labor opens up opportunities for new companies to compete in the MRO segment, thus increasing the competition and improving the efficiency of the whole segment of line maintenance services as well as driving down costs,” shares Head of FL Technics Line Maintenance dept.

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