“Aftermarket? Personally I prefer to call it MRO services, as this is a core business. It’s not after anything in my mind.”
Jim Keenan, svp and general manager of Pratt & Whitney’s commercial MRO services, is upfront about where the business is headed. He is directing a four-part strategy that aims to more than double revenues by 2009 excluding spare parts.
The plan calls for:
Increasing Pratt’s market share in overhauls and services for its own engines from an overall 17%.
Winning market share in overhauls and services on V2500 and CFM engines. It currently has 20% of the V2500s and is aiming for 30%. Boosting its CFM share from five per cent to 10% by 2008.
Bringing new solutions to the marketplace. “Some will be through acquisitions as the industry consolidates, and some through identifying integration opportunities in providing for engineering, logistics and planning for our customers,” said Keenan.
Continuous upgrading of current engines to enhance time on-wing, reduce maintenance costs and lower the total life cycle cost of ownership.
Keenan joined Pratt two-and-a-half years ago from United Airlines, where he ran the airline’s engine overhaul and engineering businesses. His move underscores Pratt’s strategy to infuse MRO services with a customer perspective, indeed to focus on each customer’s unique business problem and to build a unique solution for each.
Keenan notes that industry has taken over from airlines in developing the cutting edge of MRO service technology; it takes an OEM with deep pockets and critical mass to advance the art with such key tools as advanced diagnostics, performance monitoring and proactive troubleshooting, and to lean-out the supply chain with sophisticated ERP systems. Airlines, especially today, are increasingly unable to make the investments needed to compete with OEM-developed business solutions.
Pratt’s perspective is also influenced by the jv partners it has in eight of its 16 overhaul centers around the world, says Keenan, as well as by independent overhaul shops that are also its customers.
“Our strategy is to not drive our own solutions but to receive input from our customers and build our solutions around that.”
United Airlines had a unique problem when it came to Pratt: it didn’t know how large its fleet of V2500-powered A320s would become, and it wanted to avoid investing in its own facilities after the warranty period ended. The A320 is now the single-aisle backbone of the airline, which last year signed a record $2 billion, 10-year comprehensive fleet management program with Pratt covering more than 300 engines. Pratt has responsibility for in-flight monitoring, diagnostics, fleet management, engine overhauls, managing all the material from those shop visits, and the logistics of ensuring spare engines when and where needed.
Delta Air Lines needed a different solution. The airline has its own PW2000 and PW4000 overhaul facilities for Delta and third-party work but realized that materials management is not a core competency. So it signed a materials management contract under which Pratt supplies materials at a fixed price per hour, decides the extent of a repair and whether parts should be new, used or serviceable. “We manage it all for them,” says Keenan. “When they need a part we give it to them with a turn time that is very aggressive, allowing them to achieve world class turn times.”
The advent of the virtual airline has found Pratt taking over not only the overhaul function but also, in many cases, performing many of the actual management functions that would traditionally be embedded in an airline. Even at legacy carriers a fleet management program can involve active management within the airline and a partnership role in its day-to-day operations. This is where Keenan sees opportunities for integration services.
“Outsourcing can bring airlines high value, high quality services at a lower cost than they can deliver to themselves, but a lot of management infrastructure and coordination remains. To be able to provide more, broader solutions, and management and integration of those solutions, allows another step change in terms of cost reduction opportunity,” he believes.
“At Pratt & Whitney we are uniquely equipped to provide comprehensive integration solutions, and I do believe that will be an increasing role in future.” —John Morris
