Turnaround Time

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  • Harmonizing Lease Transfers
    Posted by Lee Ann Tegtmeier 8:40 PM on Jan 11, 2012

    Eliminating duplicated maintenance required by different regulatory agencies could take billions of dollars out of maintenance and engineering work for leased aircraft when they transfer across borders. That’s not a typo—it’s billions.


    Given that leased aircraft comprise about 40% of the world’s total commercial fleet, and that figure continues to climb, these costs if not corrected will grow with the leased fleet.


    The industry spends $369 million per year on aircraft maintenance and modifications to satisfy the various aviation authority transfer requirements, according to a survey completed by SGI Aviation for the Aviation Working Group (AWG). That adds up to $7 billion over 20 years.


    “That’s a cost we believe neither the lessors nor the airlines should have to incur just from transferring an aircraft from one state to another,” says Rich Poutier, International Lease Finance Corp.’s (ILFC) senior vice president of technical services. Poutier is a member of the AWG’s technical subgroup.


    The Aviation Working Group, which comprises lessors, financial institutions and manufacturers, uncovered that the majority (58%) of the $7 billion is spent meeting similar safety objectives and 20% involves maintenance duplication (for example recertifying off-wing engines and revalidating modifications due to the national systems’ requirements that are not harmonized). Only 15% of the costs stem from non-safety differences, such as airspace requirements; 7% are associated with different safety objectives.


    Besides the $5 billion in redundant maintenance costs, the work takes 11.47 more days of aircraft downtime, which adds $2.284 billion over 20 years. Given the increased aircraft utilization and efficiencies airlines seek, can anybody afford this extra time and money?


    The Aviation Working Group’s longer-term mission is to promote regulatory cooperation to eliminate the majority of extra maintenance costs associated with transferring leased aircraft across borders. It is working with entities including the International Civil Aviation Organization, International Air Transport Association, European Aviation Safety Agency, FAA and member states to reduce duplications. Achieving regulatory harmonization will take time.


    However, a short-term task could be fairly easy: encourage airlines to use more digital recordkeeping and eliminate reams and reams of paperwork. “Many lessors already are talking about how to do that,” and one of the lowest hanging fruits is scanning historical maintenance records, says Poutier.


    Southwest Airlines has been following that path since 1999. During audits or before a lease return, the airline scans an aircraft’s maintenance records, secures the records storage and makes it accessible online. At the point of lease return, Southwest turns over three DVDs containing the records.


    “In the past, when we acquired an aircraft from another operator, the records were delivered on paper and were usually stored in 20 boxes or more,” says a Southwest executive. The airline had to store those boxes offsite—a far more costly and inefficient method than electronic document retention. 


    “The effort to go digital—it’s time for the industry to get with it!” says Poutier.


    It’s hard to disagree.

    Tags: AWCOL, om99, lease

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