Crutchfield notes that Rolls exerts more control over the second-hand market for its engines than General Electric (GE), which powers the CRJs. Rolls selectively licenses its engine overhaul work and restricts an overhaul company's choice of parts suppliers. Standard Aero, for example, must buy its parts through Rolls.
Crutchfield is not critical of the practice, but says the policy can make it more difficult to sell, lease or part-out an aircraft because the dearth of choices makes the engines more expensive. This adds another challenge for marketing U.S.-operated jets, most which are not equipped for the air stairs that airports in many developing markets require; the stairs issue can be fixed, but at another cost to the buyer.
Rolls responds that its TotalCare agreements, which provide an integrated engine management and maintenance service, offer “a unique competitive advantage for our regional airline customers, providing predictability in costs and on-wing performance.” If new operators choose not to carry over TotalCare services from the original customers, it adds, Rolls has four authorized maintenance centers with repair capability for the AE 3007 engines.
The engine maker sees customer and seller advantages in the power-by-the-hour TotalCare agreements, with engines covered by the contracts holding value in the resale market. The agreements also enable smaller carriers, often with limited maintenance organizations, to pay an hourly flying rate and have Rolls manage the reliability and maintenance of their engines, the company says.
The agreements can be a plus, agrees Juliett Hewitt, marketing manager for SkyWorld, another U.K.-based regional jet marketer.
The plan provides a certain level of protection for owners and operators, boosts buyers' confidence about the engines' upkeep and is difficult to obtain post-sale if not already used for the aircraft, she says. (Aerovision President and Co-owner Jeff Barnes, for example, says the lack of a TotalCare agreement on its former Mesa ERJs makes them more difficult to place.) But Hewitt and Barnes concur that Rolls's restrictions raise an engine's price and can make marketing the aircraft more difficult.
For now, ERJ 145s still have takers, especially the longer-range models—SkyWorld found customers for three long-term leases in 2012—but “at lower pricing than we'd like to see,” Hewitt says. She expects engine prices to come down, however, either because parked aircraft will substantially increase the engine supply, or because Rolls will loosen its policy to keep the ERJ 145 flying.
The latter is what must happen, maintains Abdol Moabery, CEO and president of Fort Lauderdale, Fla.-based GA Telesis. His company is one of the world's largest parting-out specialists, but also markets aircraft.
Rolls's policy will not work for them, he says, “unless a new operator of ERJs pops out of the woodwork.