20 Years of outsourcing aircraft maintenance does little for Australian economy.

If the nation is looking to maximise job opportunities post COVID it might be time to reset the Maintenance Repair & Overhaul (MRO) sector and focus on the establishment of an onshore narrow body heavy maintenance capability. It will cost, but the investment will be worth it.

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We saw a major announcement last week by Alliance Airlines (19.9% owned by Qantas) to develop on onshore heavy maintenance capability. Catering for its own Fokker and Embraer maintenance needs there is still a pressing need for a narrow body heavy maintenance capability for other carriers particularly that of Virgin and Jetstar.

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Victoria, Queensland, and NSW were awash with engineering expertise with overhaul capability for all airframe and engine types operated in Australia, engine overhaul, test facilities, and support shops that could overhaul and repair anything on an aircraft from a radome to a rudder and everything in between.

Fast forward 20 years since the collapse of Ansett Australia this weekend, Qantas does retain a heavy maintenance capability in Brisbane that does some heavy maintenance however more could be done.

Disappointingly, Virgin Australia, Tiger (when in existence) and Qantas-owned Jetstar have exported their heavy maintenance since their inception, doing little for supporting local engineering jobs.

Victoria once held the mantle as the aviation state, however, is now the state that has lost the most in recent years, losing 1,250 engineering jobs at Avalon (at its peak), 400 jobs at the Qantas Melbourne 737 base, 150 jobs from John Holland Aviation Services and 210 jobs at the Lufthansa Technic Qantas engine joint venture. This represents over 2,000 highly skilled jobs lost due to cost cutting, fleet transformation and drive to reduce maintenance costs.

In 2015 an internal Victorian state government report put a conservative estimate of more than 1.2 million man-hours of airframe/engine/component maintenance was exported annually by Qantas, Virgin, Jetstar, and Tiger. In the last 20 years, far too many jobs have been lost to New Zealand, Philippines, Singapore, Hong Kong, Portugal and even Nashville, Tennessee for the then Virgin Embraer airframes.?

Having been in the unique position to have met with key industry stakeholders from Airline CEO’s, heads of engineering, Original Equipment Manufacturers, local and international MRO’s, and training schools from Estonia to Essendon over an eight-year period, I concluded long ago, the single biggest risk to the development of this important sector is the fact it is misunderstood, and sadly we don’t have the right people in the right positions with the necessary vision or ability to repatriate this capability.

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We consistently hear about the value of aviation for tourism, the ecosystems that are airports, pilots, flight attendants, baggage handlers, caterers, refuellers, airfreight, and the thousands of people they employ yet how often do we hear about the value of what a comprehensive engineering ecosystem generates?

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The opportunity

Commonality of airframe is key to an efficient engineering operation and with the Australian fleet predominately narrow body mainly made up of 737 (Virgin, Qantas, REX) and A320 (Jetstar) airframes, Australia has the benefit of commonality.

Given what Australia has experienced in the last 18 months in relation to our reliance on foreign supply coupled with the geopolitical state of play, there are transformational changes that can and should be made in relation to supporting a sovereign capability for such maintenance. There are current business models that are far more supportive of Australian jobs than existing schools of thought of offshoring maintenance.

Performing heavy maintenance onshore provides an opportunity for our own engineers to gain the experience required to attain a licence, and without the capacity to gain experience, we remove the training ground that has been the foundation of the Australian maintenance sector – In the case of Qantas for over the last 100 years.

I remain more optimistic than most, that Australia can be home to a successful independent narrow body MRO not only because it makes sense, but because it is the right thing to do, importantly, we need to develop our own economy and skills, not skills of other nations, we don’t want to be the only advanced economy in the region that is devoid of this strategic capability and become beholden to developing economies for heavy maintenance.

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Regardless of what some believe, independent MRO’s are interested in establishing a heavy maintenance capability in Australia. It would be a great investment in Australian jobs for the current generation and the generation after that. Failure to devise a national strategy for the establishment of an independent narrow body MRO will be overlooking an opportunity to tap into the existing knowledge capital of our ageing engineers across both the commercial and general aviation sectors.

COVID-19 turned the global aviation sector on its head, as did the arrival of deregulation (in Australia) and the Low-Cost Carrier model. Let us hope that Australian carriers, state and federal governments, unions, education providers and regulators can one day work together to establish an MRO to ensure this important capability prospers as opposed to further development and advancement of skills of foreign economies.?

Australia has the commonality of airframes, skills, capability, reputation, training environment and talent to establish a globally recognised MRO, yet collectively there is a fundamental disconnect and lack of awareness of the opportunities that currently present.

If government is committed to creating and / or preserving as many jobs as possible, we need to see a commitment that will support this sector like we have never seen before. It is totally unacceptable that Australia’s global reputation for safety and training in aviation, specifically engineering can disappear as it has done, and will remain a missed opportunity for generations to come if we don’t act now.

What can be done

· Australia requires a national strategy to support the aviation ecosystem.

· Consideration of this capability as “Sovereign Capability” to support and compliment the Australian Defence sovereign industrial capability of “Aerospace platform deeper maintenance and structural integrity” priority and realising the improved public value that can be attained as a result. ????????

· Attract the right personnel to drive the opportunity from a federal level.

· Encourage airline CEO’s to support the vision. ??

?·Establish policy to support onshore maintenance and policy around procurement for those airlines that continue to outsource to developing economies. ???

?·Initiate an education process at the appropriate ministerial level (federal), outlining the opportunity and understanding of the need to act now.