Maintaining change

However, as the economy began to falter during 2008 with a subsequent impact on demand saw a major easing of that situation. Qantas, Virgin Blue and Jetstar reduced the utilisation of their fleets, and took other measures which impacted upon maintenance, repair and overhaul providers.

“When the GFC came, one of the reactions that the airlines took was to ground aircraft that were coming up for maintenance,” Andrew Henderson, John Holland Aviation Services’ (JHAS) general manager told Australian Aviation.

He adds that in his company’s case, a large amount of work JHAS conducted for Qantas was rapidly insourced as excess capacity within the airline’s own maintenance operations had opened up.

Nevertheless, the company has made some significant gains, including last year winning a 10 year contract from Virgin Blue to conduct heavy maintenance on its fleet of Embraer E-170s and E-190s in addition to a number of checks it does on the airline’s 737NG fleet. It has also gained the contract to support the Strategic Airlines A320s and A330-200.

On the positive side, Herman notes that the GFC also saw a number of international carriers review their line maintenance, seeking out additional cost savings, which greatly benefited his business. “Throughout that period our line maintenance business more than doubled, to the extent we’re doing over 170 turns per week in Melbourne alone for international clients.”

In part, this was aided by Qantas reducing its third party line maintenance services at some ports. Nevertheless, with other competitors such as Perth based IASA Global and AMSA (which is owned by Singapore Airlines Engineering), he admits that the competition for line maintenance contracts has been fierce.

And with the airlines once again ramping up capacity, heavy maintenance work is starting to increase. “We’re experiencing a bow wave. Our expectations are that it may soften in the next few months but it will continue to be busy,” said Henderson.

While it has not been as affected by the external changes, Qantas Engineering and Maintenance has seen a number of major internal changes. With the departure of David Cox last year, the organisation has moved from operating as a standalone business to be more integrated within Qantas’s airline operations.

The newly appointed head of maintenance, Chris Nassenstein, told Australian Aviation that the reintegration was a sensible decision. “My perspective is very much that it is a natural process,” he said. “So many of the benefits were achieved, and bringing it back into the airline makes sense.”

He adds that while the operation has been able to work in a more businesslike fashion, the reintegration will remove layers of duplication, ultimately helping to make it more efficient.

Another significant development has been at Jetstar, which is soon set to announce the location of its second A320 heavy maintenance facility. The need for this has been driven by the increase in its own fleet which will shortly outgrow its Newcastle facility, as well as the greater operational integration with Jetstar Asia.

While that could see the airline reduce its use of third party providers such as JHAS, Henderson doesn’t see it as a threat. “I don’t see that there’s any significant risk to the work that we do for them. They’ve got significant introductions of new aircraft over the next few years, and it’s going to be a challenge to keep up with that,” he said.

Coming onshore

With close proximity to Asia, maintenance operators in Australia have to compete against some of the lowest labour costs in the world, which can be difficult for local operators particularly for heavy maintenance.

“The challenge is that the market is very small, and to be successful you have to run heavy maintenance,” said Henderson. “Heavy maintenance is always going to be capped by the Asian competition.”

Nevertheless, there have been some major developments in regards to increasing heavy maintenance activities in Australia. One of the most significant has been Qantas’s decision to commence A330 heavy maintenance in Brisbane, whereas they had previously been sent to Manilla and elsewhere for checks. The first A330 heavy checks are scheduled to begin later this year.

“What Qantas has been doing is a natural process,” explains Nassenstein. “If you are at the beginning of your fleet cycle and if it is a large enough fleet, the first couple of years it is not an issue because you have your maintenance honeymoon and the checks are not far apart so it makes sense to outsource it because it’s simply not economical to tool up for it internally.

“Doing it now in Brisbane gives us an additional benefit because we have our 767 line right beside it, which enables us to manage the fluctuating labour demands.”

Significantly, in 2009 the Qantas Group also announced that it had cuts plans to establish a joint venture with Malaysia Airlines Engineering and Maintenance in Subang, Malaysia. The company had been planning to use the facility to cater for overflow work, as well as pursuing third party work.

Given the time lost and the cost of ferrying an aircraft overseas for checks, local firms hold an advantage when it comes to narrowbody airliners and smaller aircraft.

“Rapid turn times and flexibility are the name of the game,” said Henderson. “All the airlines are looking for capacity, so an aircraft on the ground in maintenance for an extra day is an aircraft not earning revenue. The revenue they earn is considerable, so if you can strip a day or two out of a check then that makes a big difference to the overall cost profile – significantly moreso than chasing a cheaper labour rate overseas.”

By way of example, in 2008 JHAS won contracts to conduct two heavy maintenance checks on aircraft operated by Tiger Airways Australia, which otherwise would have been carried out in Singapore.

There are signs too that the local industry is also gaining work from the wider Asia-Pacific region. JHAS has recently completed checks on Air Pacific 737s, while turboprop aircraft from as far away as South Korea have been ferrying into Cairns to receive checks with Hawker Pacific.

Jetstar has also raised the prospect that as it integrates its Asian operations more that some of the A320s operated from Singapore and Vietnam could be maintained in Australia, particularly when it opens a second maintenance base, the location of which is expected to be announced soon.

Herman says that maintaining heavy maintenance capabilities in Australia is a key to maintaining the skills base. “I think it’s a challenge that airlines really need to get their minds around is that heavy maintenance provides a significant labour pool, and if you put that work overseas you compromise your day to day operations because you just don’t have the pool to draw on.”

That growth agenda appears ready to resume during this year, driven by both aircraft coming into the fleet and those leaving.

“When you combine new aircraft with the increased maintenance amount that comes with the fleet maturing, it creates a double affect,” said Henderson.

Skills & Licensing

Although short term pressure has eased the growth expected in the domestic fleet, particularly now that capacity is again being added, is expected to put the skills issue back in the spotlight.

Many LAMEs particularly will reach retirement age over the next decade, requiring younger engineers to step up and take their place. While many LAMEs have decided to defer retirement due to the economic climate, it is expected that another squeeze on skills will hit the industry in coming years.

But recruitment from the airlines and larger MRO operators is expected to have an impact further down the chain, particularly with regional operators as the larger operators pull from their talent pool.

The changes in the fleet since the collapse of Ansett has meant that demand for courses is now weighted heavily towards narrowbodies, explains Henderson. “The narrowobody fleets are growing like crazy, hence there are a lot of widebody LAMEs that are starting to show interest into moving into narrowbody type courses,” he said.

The industry has long recognised that it needs to lead the way in providing opportunities for the next generation of AMEs and LAMEs, with a number of operators at all levels increasing their intakes of apprentices. Qantas, which has the largest AME apprentice program in the country, added another 100 apprentice positions this year to bolster its stocks.

Even still, it will take some time for these new bodies to gain the skills and experience to come through. “It takes about 4-5 years to create a good mechanic who is fresh without any experience. So you start looking at before you have a good experienced LAME at least 12 years,” said Nassenstein.

Henderson says that JHAS is also taking action on this front. “We’ve had one intake of apprentices. We’re in the process of putting together a program to continuously bring in apprentices.”

With changes to the licensing system from the end of the year to bring Australia into line with EASA regulations with new licensing systems, the skills those new apprentices will be different to those of previous generations.

For JHAS, which already has EASA approval, the changes present a great opportunity. “We see it as strengthening the system by becoming more international. We’d like to see it move further. The more we can align it with best practice, the better,” said Henderson.

Nassenstein says that the changes are part of a greater trend. “I think what we see happening is a global tendency. What is happening here is no different to elsewhere. As the industry becomes more globally aligned, it makes a hell of a lot more sense to have a globally oriented certification system.

“We have actually started several pilot programs on the A380, for example. We have adopted a B1/B2 system which is working quite well. We are learning, as much as CASA is learning. This will be a process which is going to take several years before we are there.”

He backs the system totally, noting that it will provide benefits to employees, as well as the company. “This is a good thing, and we need to make sure that everybody sees it as a good thing. It is going towards a more modern system that makes a lot more sense for everyone, and is advantageous to the employees themselves as well as the company.”

Maintaining for the future

Having been through recent trials, maintenance providers appear set to grow strongly over the next few years as the commercial aircraft fleet matures and a number of new aircraft are introduced to the local fleet.

“We’ve now got a situation where the fleet is starting to mature a little, and therefore that creates a combined effect of volume increase due to more aircraft introductions, and the ageing aircraft which generates a higher maintenance requirement,” said Henderson.

Qantas’s, Nassenstein notes that with a large number of its 747-400s and 767-300s due to leave the fleet that it will be focused on a lot of end of service type maintenance. “We have ageing aircraft that eventually will have to be returned to lessors which have become more and more critical because of their debt challenges. The same applies to airplanes that are still valuable assets which you have to market, and the marketing is a lot more critical.”

Similarly, JHAS has been conducting end of lease maintenance on a number of Virgin Blue 737NGs, which looks only set to increase with the carrier set to retire at least 30 aircraft over the coming years.

While the industry continues to undergo some major changes, the large number of opportunities in the market appears to show that there is a bright future ahead for Australia’s maintenance organisations.