April 17, 2013
Credit: Delta Airlines
Delta TechOps, long acknowledged as a key part of parent Delta’s vast revenue diversification strategy, plays an equally important role in helping the airline keep costs down, airline CEO Richard Anderson emphasizes.
Speaking at MRO Americas in the shadow of the carrier’s Atlanta headquarters, Anderson revealed that the airline’s engine MRO prowess means the carrier’s pool of spare engines totals just 5% of its on-wing fleet — about half of what an engine OEM recommends. The spares pool includes ready-to-deploy spares plus engines being repaired.
Such efficiencies — available to TechOps engine customers as well, Anderson points out — are one major benefit of a robust internal maintenance program. Delta’s ancillary revenue ventures, including TechOps, charters, an oil refinery, and a private jet operation, totaled about $1 billion of the carrier’s $36.6 billion in 2012 revenues. TechOps contributed about 60% of that ancillary revenue, Anderson says.
While the bottom-line contribution is attractive, Anderson stresses the cost-avoidance factor as equally valuable. Take spare parts, for instance: Anderson says the OEM’s increasingly tight grip on the aftermarket means Delta’s spares costs double about every seven years. Without TechOps parting out engines to bolster spares and coming up with other alternatives to OEM-supplied support, that increase could be even steeper.
“We’re pretty good at sourcing outside the OEMs,” Anderson says, emphasizing that the airline and its TechOps subsidiary maintain very good relationships with the manufacturers. But, he adds, “Just as any business would have to do, we have to know what those alternatives are, and we’re always working to develop those alternatives.”
Another example is power-by-the-hour contracts. While some operators value the predictability they provide, Anderson bristles at the thought of losing the maintenance honeymoon that a new aircraft offers.
Not paying for work until it’s needed is one way to help ease the pain of laying out the cash required for a new aircraft, he reasons. Having a reliable, capable engine shop has helped Delta opt for cost-effective time-and-materials approaches to most of its engine types. Delta has power-by-the-hour deals on GE90s and CFM56s.
Anderson says that each of the TechOps focuses — airframe, engine and component work — is profitable as a stand-alone business line. The operation’s specialty remains engines, however. TechOps is expected to exceed 600 overhauls this year.