Understanding Airplane Maintenance Costs

Today I would like to focus on one aspect that technical staff sometimes tend to relegate to the backgrounds. Maintenance Costs!! In this article I would like to discuss the factors that impact maintenance cost.

About 15 percent of Direct Operating Cost of an airline originates from maintenance. Of course, this may be as high as 20% depending upon the fleet age, utilization, configuration etc.

Maintenance Cost to begin with very simply is Event Cost , either scheduled or un-scheduled.

Event cost in its elementary stage is just (Labor cost + Material cost) X Frequency of that event (Dependent on Operators Maintenance Program/Reliability).

Primary Determinants of maintenance costs ?

The primary determinants of maintenance cost are Labour, Material, Maintenance Program & Reliability. The variables that impact these elements are Design of Aircraft, Operating Environment, Nature of Operations and Regulations.?

Direct & Indirect Maintenance Costs

Direct Maintenance Costs:?All costs that can be directly attributed to an Aircraft or Fleet Type e.g., Line and Hangar checks, Defect rectification, Engine/APU/Landing Gear maintenance, modifications etc. DMCs are a direct result of Labour, material and any subcontracted repairs.

Indirect Maintenance Costs: Costs that cannot be attributed to any specific Aircraft or Fleet e.g., Maintenance Management such as Planning, Engineering, Records, Reliability; Facilities maintenance, Tooling Equipment, Warehousing and Stock Maintenance. Indirect costs are overheads but are necessary for maintenance to be accomplished. Indirect Maintenance costs should not be underestimated and according to industry estimates they match almost the Direct Maintenance Costs with a major chunk coming from spares and inventory. On an average airlines hold a approximately a $ worth of inventory for $ worth of DMC. Another noteworthy mentioning is that a large number of operators lease their fleet and thus Maintenance Reserves pay another major role towards maintenance costs.?

Principal drivers of Maintenance Cost

1.??????Fleet Type & Mix, this determines certain factors as Maintainability, Design Quality, Reliability, MRB intervals etc.

2.??????Airline operations e.g., Operating environment, Engine Thrust setting, Braking policy, All Weather Operations, Aircraft Utilisation etc.

3.??????Operator Policy e.g., Labour cost and productivity, Maintenance Contract Vs In-House, Stock Levels, Service Bulletins and modifications etc.?

Fleet type related factors that impact maintenance Cost

·??????Narrow Body Vs Wide Body

·??????MRBR Task Frames, As an example of how critical the MRBR can be in driving maintenance costs, a 787 almost 50% less C checks compared to 767.?

·??????Airframe weight and Structure e.g., Composite aircraft and more durable and have reduced corrosion and fatigue issues.

·??????Cabin Configuration: e.g. Complex Business and First Class seats involve higher maintenance costs, other items such as IFE, Internet, mood lighting and other such items add to maintenance costs.

·??????Number and Type of Engines

·??????Avionics Capabilities: Aircraft with self-diagnostics are easier to maintain, Fly by wire has higher reliability and associated lower maintenance requirements (almost 50% lower scheduled maintenance tasks as compared to previous generation aircraft)

·??????Landing Gear Configuration

Some of the Secondary Fleet Type Factors are Reliability, Fault tolerance/redundancy, Corrosion and Fatigue aspects, Maintainability. Health monitoring, BITE Capability, Accessibility of LRUs, Scheduled maintenance program and Utilization.?

In-house Vs Outsourced Maintenance

Then There are factors internal to the organization that have a profound impact on maintenance costs.

One critical consideration to look at is if the maintenance is handled internally or is outsourced. Within in-house maintenance all though the initial capital expenditure is higher there is also greater control of the variables for the operator.

Within the in-house maintenance the maturity factor of the labour has to be taken into consideration. As the labour gains more experience on a particular aircraft/equipment the Labour man-hours is expected to decrease per task and eventually reaching mature levels.

On the other hand outsourced maintenance has slightly higher costs however the enormous capital expenditure is avoided. Carefully negotiated maintenance contracts go a long way towards managing costs. As far a maintenance contracts are concerned there are numerous complexities involved and hence I will attempt to discuss them in separate ?future articles.

Calculation of Maintenance Costs

Calculation factors for Line Maintenance Costs

Costs from MPD related tasks or scheduled maintenance: Usually Calculated per FH/FC/Calendar Time. It is Combination of Labor and material costs.

For unscheduled maintenance Labour cost is estimated using (No of Pireps + No. of MaReps ) * Avg defect rectification time

Material Costs is Material Usage X Material Costs

Aircraft Utilization has a direct impact on scheduled maintenance costs. The more an aircraft is utilized the more will be direct costs as Flight Hours and Flight Cycles are used up Faster.

Calculation factors Base Maintenance Costs

Costs from MPD related tasks:

Calculated per FH/FC/Calendar Time. Combination of Labour and material Costs.

Material costs of consumables/expendables/rotables.

Estimate of unscheduled maintenance man-hours/checks

Calculation Factor for component maintenance costs

Component reliability, Average repair cost (Hours/Materials and Testing costs).

Costs per Flight Hour/Flight Cycle

Typical method of estimating maintenance costs is calculating maintenance cost per Flight Hour or Cycle.?

The interesting thing to note is that with increase in flight duration the overall cost per FH decreases. Why do you think that is ? Let me know in the comments.?

Component Maintenance Costs

On-wing performance addresses the performance of the different components used on a certain aircraft. The longer the on-wing life of a component, the lower the impact on related costs, since repair and replacement costs are lower. Therefore, reliability of the components belongs to the on-wing performance category.?

However, maximization of life-usage of a part number on the aircraft doesn’t always lead to optimal costs for the airline, as a failure of a part during operation can lead to opportunity costs related to out-of-service times or Aircraft On Ground (AOG) costs. It is based on the assumption that the total repair cost of such a scheduled removal is usually much lower than the cost of a severe unscheduled breakdown. Each individual operator has to find its own optimum, considering which part number should be treated on condition or with a soft time limit.

Once the component is removed from the aircraft and routed to the shop for repair, overhaul or modification, the focus shifts to the repair shop cycle and costs associated with this process.

Operators that have well defined supply chain and inventory management procedures in place to manage processes relative to logistics, turn-around time (TAT), repair costs, shop reporting and receipt/inspection are best placed to retain controls over component-related costs.?