Since we last conducted this survey (O&M, March 2003, p. 24), airlines have outsourced more work, particularly on the airframe side. Note Delta Air Line's March 28 decision to outsource its MD-88 and MD-90 heavy maintenance work to Avborne, and its Boeing 757 and 767 heavy maintenance to Air Canada Technical Services, a move that should save Delta about $240 million over five years, according to Tony Charaf, senior vice president of technical operations. MRO experts expect the airline outsourcing trend to continue around the world, particularly on the airframe side, where outsourcing now accounts for about 50% of total maintenance but is expected to reach up to 70%.

However, outsourcing should not always be viewed as a cost-cutting measure because "pure capacity issues and growth issues can begin to drive the roots of outsourcing," said Steve Casley, BACK Aviation Solutions chief marketing officer.

Low-cost carriers are springing up around the world, and some, "Tiger Airways, for example, started with a business model that assumes everything is outsourced, even line maintenance. So outsourcing isn't so much an act [to cut costs], ... it's a deliberate part of the business plan from day zero," said Bruce Strand, founder and chairman of consulting company TeamSAI.

Low-cost carriers have been one of the bright spots in the past two years, in fact, because they are growing and because they tend to outsource the majority of their maintenance. However, they are contributing to declining passenger yields, which are about 15% lower than they were before Sept 11, according to Casley. A lot of that has to do with pricing pressures from the low cost carriers and the volatility of fuel.

Two major points that are driving down airframe man-hours are efficiencies gained from internal process improvements at MROs, and thus decrease the number of man-hours needed, and the fact newer-generation aircraft in the world's fleet need less maintenance than other aircraft. The flip side of that is the world's fleet in 2002 was 14,885 aircraft and in 2004 that number grew to 16,030, according to the TeamSAI and BACK Aviation Solutions World MRO Forecast prepared for O&M (see O&M, April 2005, p. 57). This year the consultants expect the world fleet to grow to 17,203 aircraft and to 21,676 aircraft by 2010, the expansion of which should create more airframe maintenance opportunities.

This is the fourth time O&M has ranked the world largest airframe MRO providers. We asked each MRO to provide the number of third-party airframe maintenance man-hours it completed on commercial aircraft (excluding line maintenance, engine work, component maintenance etc.) in 2004. Measuring size by revenue opens up too many variables that would allow unequal comparisons, as would tabulating the lists by number of aircraft serviced due to varying job complexities and aircraft size.

Please note that in the "World Top 10" list, [see table in PDF linked at bottom of this story] we grouped all of an MRO's wholly owned airframe facilities together to provide an aggregate number to show the overall largest global MROs, whereas in the regional break-out charts, we only included a company's airframe maintenance facilities from that region. For example, ST Aero's Asia-Pacific number comes from airframe man-hours generated by ST Aviation Services Co. (SASCO) and ST Aerospace Engineering. [Shanghai Technologies Aerospace Co. (STARCO), the new joint venture between ST Aerospace and China Eastern Airlines, is not included because it is a joint venture.]

You might expect Lufthansa Technik's 2.6 million and 5.4 million man-hours numbers to be bigger, but keep in mind that LHT's numbers only include its German airframe facilities and do not include its joint-venture airframe maintenance facilities in Beijing, Budapest, Malta and the Philippines, for example. Engine and component maintenance represented 3.1 million man-hours out of the total 8.5 million maintenance man-hours LHT accumulated, so if we included those services, the numbers would be higher. By stipulating commercial aircraft airframe maintenance, the survey also excludes military maintenance, which in the case of Pemco Aviation Group, represents 66% of its airframe services man-hours, according to Kevin Casey, vice president of commercial business development. He expects Pemco's 2005 business "to be in line or slightly ahead of 2004."

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