Maintaining the edge

Following the downturn caused by the Ansett collapse and the 9/11 attacks in 2001 and later the SARS pandemic, many people left the aviation industry for good, some taking the opportunity to take a different career path, some heading overseas to search for greener pastures, while others retired early.

But now, the airline business is doing better than ever, from Qantas record profits to Virgin Blue and Jetstar expansion to new entrants like Tiger with still more on the horizon. Even regional airlines such as Rex, Skippers, MacAir, Skywest, Airnorth and Brindabella are expanding and/or moving up into larger aircraft. But new aircraft with new technologies such as composites and ultra-efficient engines will require new skill sets to maintain them, and of course, there are more people travelling due to the greater availability and affordability of seats.

In the business jet segment, Australia and the near region are experiencing a boom in sales of aircraft from VLJs to BBJs, and many of our larger airports are once again bursting at the seams for slots and parking space. Even GA is looking good in many areas, particularly in the rotary winged and sports aircraft categories, despite massive rent hikes, runway closures and development driven space limitations at many of the once booming, but now privatised and profit-driven capital city secondary airports.

But who is going to maintain all of these new aircraft as they arrive? As the large airlines expand, they draw many aircraft maintenance engineers (AMEs) up from the small to mid sized airlines (or the military), and these in turn draw people up from flying schools and clubs. But even with this natural progression in place, the increased demands from all these segments are just not being met.

“We are limited in the number of trainees we can employ due to a shortage of experienced and qualified LAMES for supervision and training. ”

“The main threat facing the aviation industry in Australia today is a lack of qualified licensed aircraft maintenance engineering staff,” Kelly Rudneski, engineering manager of WA based regional airline Skippers Aviation, told Australian Aviation. “Heavy pressure is being put on the experienced licensed aircraft maintenance engineers (LAMEs) to supervise and sign for work carried out by unlicensed and less experienced staff. ” Tracy Eiffe, the general manager of Melbourne based MRO John Holland AviationServices (JHAS) agrees. by Gerard Frawley “The skills shortage is a huge issue for our industry in Australia,” she said. “We are being challenged to create and implement strategies that accommodate rapid change. ” Workforce representatives put much of the blame for the decline in aviation engineering numbers on the proliferation of low cost airlines. “The skills shortage of qualified engineers is compounded by a reluctance of people with compatible engineering backgrounds to enter the industry due to perceived lower working conditions than other engineering industries, such as mining and heavy machinery maintenance,” explained a representative of the Australian Licensed Aircraft Engineers Association (ALAEA).

“Due to the increased competition from the ‘budget’ carriers, there is a lot of downward pressure on the wages within aviation engineering, especially within the established organisations.

The culture of cost minimisation increases an organisation’s reluctance to train engineers in technical skills and aircraft type courses to prevent wages from increasing and also reduces the retention in the industry of engineers that feel they no longer have a defined career path.

“Once people experience life away from shift work or discover other shift working industries with higher rates of pay, they are reluctant to return to aviation. There are good opportunities for people with the necessary discipline and quality that an aviation background provides to work in mining, the petrochemical industry, manufacturing, the energy sector, logistics, project planning and plant maintenance. ” But Virgin Blue said the industry itself also has to shoulder some of the blame.

“As with all highly skilled trades there is always a need for more trainees and apprentices to meet future demand,” the airline’s general manager engineering operations, Brian Sharp told AA.

“The industry failed to train apprentices 10 to 12 years ago, so consequently the industry is now in catch up mode. ” Sharp added that whilst Virgin Blue isn’t currently lacking in LAMEs and AMEs, he has found it difficult to attract a “good, experienced airline engineering planning and management capability in the local market,” adding that the situation is even worse in New Zealand than in Australia.

Whatever the reasons behind the shortage, many airlines are hurting.

“It’s affected our workforce planning in immense proportions,” said Rudneski. “Individuals with lesser qualifications are being employed rather than individuals with the desired qualifications or Australian CASA licences. We’ve put four apprentices on this year which is an increase over the previous years. However, we are limited in the number of trainees we can employ due to a shortage of experienced and qualified LAMES for supervision and training.

“We’re now advertising for people who are interested in the aircraft engineering industry but who have no initial schooling or apprenticeship training by TAFE, plus we’re advertising for overseas applicants. And applicants are in a much stronger position for negotiation of conditions of employment – much more so than has ever been seen in the aircraft engineering industry. ” Just as is happening with pilots, supply versus demand is impacting an engineering employee’s earning potential in a positive way.

Qantas said it is ramping up its training capability in order to meet its own demands.

“Qantas has taken the leadership role on the supply side of trained labour in the engineering category for 80 years – we think we probably train more people than the rest of the industry put together,” said David Cox, Qantas Engineering executive general manager.

“We’ve just appointed 111 fourth year graduates this (financial) year, plus we’re going to bring in about 100 first year trainees. We’re also looking more broadly such as at people from rural areas, and at mature-age entry into apprenticeships, and we’re trying to attract more women.

We also have a very active indigenous program, and we’re also moving towards attracting people who have been through pre-vocational training at TAFE where we’ll reimburse their TAFE costs, so that’s going to be a big incentive. So, we’re looking at sourcing people from the broadest possible base. ” “The single biggest challenge facing the industry is the shortage of skilled labour, but we’re fortunate in that we have still been able to attract good people due to our relatively small size,” said the maintenance director of business jet sales and MRO operation, ExecuJet Australia, Grant Ingall. “It is a looming problem though. Historically we have put on one apprentice every second year but this is likely to increase. For an organisation our size our training program is extensive.

We have recently added line maintenance capability in Melbourne and expect this trend to continue in other cities as our customer base grows. ” “It is extremely difficult to establish how many trainees and apprentices are actually coming through the system,” the ALAEA said.

“Traditionally, the major airlines have trained the most apprentices, but in the last few years the numbers have dropped. Ansett is no longer with us and Virgin Blue uses an engineering company that does not train apprentices. Also, Qantas uses a major labour hire firm to acquit 747 heavy maintenance that doesn’t train apprentices either. ” But Qantas management insists it’s not just a matter of putting on extra staff in order to meet its maintenance requirements. Cox said the company is building new infrastructure and a more robust IT system, and that its workforce has to work smarter and be more flexible in the future.

“Our approach to many of these threats has been to make a massive investment in our businesses in Australia,” he said. “We’ve spent more than $300 million in the past five years, and we’re working hard with our people to build more flexibility into their rosters.

Qantas is committed to building a viable business in Australia, and we’re making the investments necessary, but we need to make sure we put a totally commercially viable package together. ” One such element of the flexibility Cox talks about is the ongoing enterprise bargaining agreement (EBA) negotiation process the airline has been involved in with the ALAEA and other maintenance unions and associations. Industry sources told AA that, following a recent in-principal EBA agreement with the ALAEA, Qantas is close to making a longer term commitment to its 737 heavy maintenance facility at Melbourne’s Tullamarine Airport. Whilst this commitment is dependant on the final vote of the union’s membership, Qantas hopes to be able to get the workforces at Tullamarine and its 747 heavy maintenance operation at nearby Avalon to work more closely, possibly with the capability to move between sites during peak and trough business periods, thus providing greater flexibility and efficiency. An announcement on this process was expected as we went to press.

In the meantime, CASA said the longer term outlook for the skills shortage may be an improving one.

“LAMEs are increasing in numbers, but we are unable to discriminate the figures on the segment of industry they are working in, whether it be air transport or GA,” said CASA’s manager corporate communications, Peter Gibson. “While we have no anecdotal evidence that training institutions are failing to meet demand, the number of organisations seeking CASA approval to train has increased. Most of these are overseas organisations such as Eurocopter and Pratt & Whitney Canada, and are mainly due to the introduction of new types of aircraft into Australia. ” “Whilst we are unable to advise if this increase in LAME numbers is in line with the increase in aircraft registrations,” Gibson continued, “to be noted is that regulations have changed in who can maintain an aircraft, and now there are other categories of persons other than LAMEs who can maintain VH registered aircraft. An example in Australia is an owner/builder, while overseas there are people working for certificated organisations or who meet an Australian equivalent overseas standard, such as Qantas maintenance in Singapore. ” The 2006 closure of Qantas’s Sydney Jetbase heavy maintenance, the associated publicity surrounding offshore maintenance of Qantas aircraft, and the tenuous links drawn between the use of overseas MROs and a perceived decline in serviceability of the airline’saircraft, have all seen this issue bubble to the surface in union negotiations, political rhetoric, and the tabloid media in recent years.

“It is important to note that more and more aircraft worldwide are being maintained in various overseas specialist facilities,” said Gibson. “Airlines are responding to the intensely competitive industry by scaling back to their core business which is the provision of air transport services to passengers. With this in mind, outsourcing of maintenance has, and will continue to become the norm. Rarely do you see an airline today with integrated facilities. ” “For heavy maintenance, Qantas’s strategy is to continue to do about 90 per cent of our work here in Australia, but there will always be overflow offshore,” said Cox.

“When fleets are young, you don’t have enough scale to support a viable maintenance base, plus there are peaks and troughs in the maintenance cycle, so you don’t want to saddle your own business to be inefficient in the troughs.

It’s our responsibility to make our business as efficient as it can be, and we need to move away from this fortress mentality. Airbus and Boeing are not Australian companies – it’s a global industry now. ” The ALAEA quoted similar percentage numbers of work going offshore, but added an interesting anecdote to the equation. “There has historically been about 10 to 15 per cent of major airline work outsourced offshore, but with the increase in fleet size the actual numbers of aircraft going offshore are increasing. ” “There are MROs outside of Australia that have an Australian Certificate of Approval (COA) to perform maintenance,” CASA’s Gibson said. “CASA undertakes the same entry control and assessment process for these as it does for all applications for Australian COAs.

Certificates to organisations outside Australia are issued on a yearly basis, and CASA audits are conducted for certificate reissue. ” “There are several layers to that as well,” Cox elaborated.

“First off there’s the state regulatory authority of where the facility is located. CASA will then audit the site before awarding a CAR30 (certification); there’s an initial assessment then there are regular follow-on audits, then we do our own audit. We would then send a team up to do a broader assessment before a check was done, and we then send a team of 12 or more of our own people while the check is underway, which is about double what anyone else does. They monitor the check, they monitor quality, and they go out and watch people on the shop floor, targeting critical airworthiness tasks such as ETOPS tasks, powerplants or flight controls. ” Like Qantas, Virgin Blue conducts its own ‘line’ maintenance on its aircraft at their overnight ports. But unlike Qantas, all of its heavy maintenance is performed overseas, mostly with Air New Zealand Engineering Services in Christchurch.

“The core functions of engineering such as a system of maintenance planning, quality assurance and vendor management need to be kept in house to maintain airworthiness,” explained Virgin Blue’s Sharp. “But all other engineering and maintenance functions can be outsourced provided quality experienced suppliers are available and that there is competition in the local and global marketplace – competition breeds improvement.

“In some cases such as line maintenance the work has to be done locally as the work is mission critical, and if there isn’t more than one maintenance provider available you don’t get the competition and therefore you don’t get any upside from outsourcing,” Sharp added. “A lot of maintenance is also a scale game such as engine overhauls; an airline often cannot afford to get into this specialist game because of all of the capital investment, and you may need third party business to survive which is not necessarily a core competency of an airline like ours. Outsourcing allows you to buy in specialist skills. ” Cox agrees that the scale offered by many third party MROs is a major factor in determining whether or not to send work offshore. “We’re geographically isolated,” he explained. “In the old days, that was a technical challenge, but now it’s a commercial challenge as there just isn’t the commercial scale here as there is in Asia, Europe and US. So our continuing challenge is to improve the flexibility of our labour so as to remain competitive with those offshore organisations which have huge scales, are high quality and are very competitive. The people we compete with are two or three times bigger than us, and in many cases are able to access low cost labour. ” Lufthansa Technik is one such maintenance provider in our region with scale and cheap labour on its side. The company has 60 customers in the Asia Pacific region alone, including Qantas, and conducts everything from minor composite repairs and maintaining component pools, to major overhaulwork at six sites in China, the Philippines, Thailand, Malaysia, Singapore and India.

“It takes between 40 and 50 thousand hours to conduct a D (heavy maintenance) check on a large aircraft, and between 80 and 85 per cent of the cost involved is labour,” Lufthansa Technik’s executive board chairman, August Wilhelm Henningsen, told Australian Aviation at February’s Singapore Airshow. “For now, labour is cheaper in Asia. We have plenty of candidates for our workforce positions and they are well educated and produce a high quality product. ” Qantas’s Cox put Henningsen’s figures into perspective in detailing that aircraft D Checks can cost from $2 million to $10 million each, and typically fall in the $5 million to $7 million range. “Our heavy maintenance budget is around $300 million annually, plus engines are about the same amount again. We do a C check (per aircraft) every 18 months and a D check every five to seven years. The time taken is fundamentally driven by the age of the aircraft – a young A330 may take less than a that the cost savings, quality and safety available can help them survive and be profitable, especially when you look at the performance of heavy maintenance checks that require long periods of downtime and large investments of manpower, facilities and equipment. ” But the ALAEA sees the outsourcing issue differently.

“The biggest advantage of in-house engineering is quality, followed by flexibility to perform work outside of the usual routine requirements.

When maintenance is performed in-house there is much better access to the support services that are required to acquit aircraft maintenance and inspections and especially non-routine work properly, such as aeronautical, structural and powerplant engineers, logistics and spare parts, specialist NDT (non destructive testing), personnel and engineers, and staff that are familiar with the organisation’s routines and policy documents.

“There is also much closer supervision carried out inhouse as there is always oversight by the airline’s LAMEs at all stages of the work,” the ALAEA spokesman claimed.

“When work is carried out in an outsourced facility there is only minimal representation of the airline’s own LAMEs due to the cost associated with accommodation and the expense of sending them to an overseas facility.

There also needs to be factored in the pride that local workers put into their work – they take ownership of the company’s assets, whereas there may not be the same level of care taken on a ‘customer’ aircraft. The level of maintenance and attention to detail is determined by the profit margin. Any extra time taken outside of the basic requirements comes straight from the cream of the contract, and contracting MROs are very stringent to not work outside those basic inspection requirements.

There are also savings to be made by not having to ferry flight aircraft out of the country. ” Interestingly, Skippers’s Rudneski’s views on outsourcing maintenance echo some of those put forward by the ALAEA. “Cost saving is the biggest advantage of retaining engineering capabilities in-house,” he said. “It gives us the availability of staff to carry out the engineering requirements on an immediate basis, as opposed to having to look for available third party maintenance organisations or personnel when required. ” So, are the public’s tabloid media driven perceptions of a drop in maintenance standards or adjustments to minimum qualifications in recent years correct? “While it is inappropriate for CASA to comment on specific operators, CASA does not believe that there is a deterioration in safety standards amongst airlines and MROs,” said Gibson. “There is a broader understanding and applicaweek, whereas a 25 year old 747-300 may take 90 days or more. ” Although locally based, and as such subject to Australian labour conditions, JHAS is well placed to pick up short notice overflow work as well as ongoing longer term contract work, especially for Melbourne based aircraft such as those of Tiger Airways and Jetstar.

“Outsourcing to an MRO such as JHAS means cost savings and access to capability based on economies of scale,” explained Eiffe.

“CASA has responsibility for overseeing aviation maintenance, ensuring that regulations are followed and that the flying public is safe, and the same oversight is applied to an airline’s own maintenance facilities as those of an independent MRO. Clearly, the trend to outsourcing is growing for full service airlines and, in the main, forms part of the business model for low cost carriers, and we are developing the capability to provide total service packages and thereby gain maintenance contracts from the low-cost carriers in Australia. For the major airlines, they realisetion of risk management processes and methods across airlines and MROs.

In the past decade much promotion and education work in the fields of safety management and human performance has been done by CASA, universities and associations. Regulations are currently under development which will require all airlines and MROs to implement a formal safety management system to ensure comprehensive and integrated processes for managing all operational risks. ” But the ALAEA disagrees, citing anecdotal evidence of a need for greater levels of supervision of lower skilled workers. “There has been a deterioration in the volume and the experience levels of the people in the workforces (through) the increased use of immigrant workers to fill vacancies. It is very difficult at times to fully ascertain the qualifications or standards of previous training. There has been a push from some areas of the GA industry to narrow the scope of training for the trades to produce faster certifying. ” JHAS said it has stuck fast to its core standards. “Our selection criteria has always been based on technical competency and a particular attitude to working safely and efficiently,” said Eiffe. “We look for candidates who can demonstrate our values and provide smarter solutions for us and our customers.

Our workforce plan has two elements; the up-skilling of our current employees to be multi-licensed, giving them new opportunities and creating a much more stimulating work environment; and developing trainees and apprentices. ” Moving forward, airlines and MROs interviewed for this story commonly stressed the need for greater support from government for training, and the need for CASA to streamline its licensing and regulatory procedures to better parallel those of global bodies such as the European Aviation Safety Agency (EASA) or the US’s Federal Aviation Administration (FAA).

“As stated previously, one of the biggest challenges will be finding good staff,” ExecuJet’s Ingall said.

“Increased assistance with training is important. ” Training assistance is also top of the list for the ALAEA. “The government training departments and the regulator could assist industry by working together to get a whole of government approach to aviation engineering training, both to assist the industry in transferring other trades to the aviation sector, and vice versa,” the spokesman said.

“We are constantly in communication with state and federal bodies on industry challenges and how we can add value and be part of future industry solutions,” added JHAS’s Eiffe. “Government support of training and development is a critical part of this as we compete to attract young people to our industry. ” Qantas’s Cox cited the need for greater flexibility within CASA. “The key thing for Qantas Engineering is to make sure we’ve got the flexibility to compete,” Cox said.

“Wherever we encounter rigidity, that’s an advantage to our competitors. The sooner we move to international harmonious regulations, the better, as that will remove rigidity. ” Rudneski from Skippers agreed, albeit more forthrightly.

“The government and or the regulator needs to review and or change the CASA licensing system – it is archaic and needs to be changed to meet worldwide industry standards,” he said.

“CASA regulations (CARs) also need to be more user friendly at a ground level for basic understanding and interpretation. ” “The adoption of EASA regulations allows us to multi skill LAMES, improving our productivity and their pay,” said Virgin Blue’s Sharp, adding that, “further improvement of government’s immigration policies will facilitate quicker entry of overseas recruits where the local talent is unavailable. ” One thing that is clear is that, in this time of deregulation and globalisation, airlines and MROs must be operated as businesses first and foremost if they are to remain viable. To this end, many of these companies have been or are planning on divesting themselves of non-core business elements such as organic maintenance facilities, as well as frequent flyer schemes, catering, baggage and ground handling, and even reservations and ‘front-of-house’ check-in staff.

But there is a cost in doing this, as it can leave an airline exposed if its business interests are not sufficiently diverse to be able to ride out a period of turbulence or a series of events such as those experienced six or seven years ago.

So while calling upon the regulator to be less rigid and workforces to be more flexible is all well and good, these organisations also seem to accept that they also need to look within and see where they can find flexibility, invest in the futures of their employees, and divest themselves of rigidity in their dealings with their workforces and various business units.