Outsourcing
The issue of outsourcing is not going away. The trend of airlines outsourcing maintenance work to third-party repair facilities is growing.
I talk about outsourcing in my upcoming May editorial column in AMT (arriving in your mailbox next month). I discuss this trend, and more specifically the trend of sending more work to foreign repair stations (and the FAA oversight challenges that go along with them).
Obviously the key driver to outsourcing is money. But can it be stopped? Is there a way that airlines can keep their maintenance in house and still remain competitive?
Here’s another thought. In the past I have heard many mechanics say that if the traveling public was willing to pay higher (reasonable) rates for airline tickets, this wouldn’t be an issue. Airlines have kept ticket prices at un-realistic low levels to avoid losing customers to their competitors. But if money is the issue, and airlines are saving money by outsourcing maintenance, if ticket prices do happen to go up, do you honestly think the airlines will bring the work back in-house? I don’t think so! I believe the outsourcing that has happened is irreversible. If ticket prices do rise, the airlines will take their profits and run.
We welcome your comments!
Joe Escobar
Joe,
Yes, money is the driver. If the airlines are flying new aircraft, then the amount of maintenance is far less than an “aged” aircraft. They can get away with under-skilled aircraft maintainers in a foreign land. Until the FAA requires all maintenance performed on an aircraft to be accomplished by an A&P’s and remove the “under the supervision” rule we may never see the work return to the USA. It’s our own rules that hinder the A&P profession.
The flying public is getting exactly what they think they want.
Your outsourcing rhetoric is hypocritical. If none of the repair stations in the U.S. were repairing foriegn registered aircraft, I could see your point. There are plenty of qualified FAA repair stations overseas that can do the work. I have worked at a lot of them. The money is better overseas too. I wouldn’t want to work in the U.S. with the current rates being offered. Americans work too cheap and the dollar isn’t what it used to be since we have had our cocaine addicted “president” in office.
As you said: “Obviously the key driver to outsourcing is money.”
From the latest issue of AM:
Despite some “unexpected costs” associated with outsourcing airframe heavy maintenance, TechOps officials claim, “The overall savings remains substantial, and we are seeing solid overall program economics.”
from Commercial: Delta TechOps Rejuvenated
http://www.aviationtoday.com/am/issue/cover/9982.html
You asked: “But can it be stopped? Is there a way that airlines can keep their maintenance in house and still remain competitive?”
“Big boost for American Airlines Maintenance Services
AMR Corporation is planning to invest up to $100 million in its American Airlines Maintenance Services group as part of an ongoing effort to grow its third-party aircraft maintenance business”
from http://www.mronewsfocus.com/
Some of the other legacy carriers should ask American Airlines how they turned aircraft maintenance into a profit center while they turned their hangers into warehouses.
Will the work/good jobs come back? Perhaps, but likely not in our lifetime. The airlines have had cheaper maintenance options available for many years, even within the U.S. I was suprised that it took as long as it did for them to catch on. Currently your A&P career in the US is safe as long as your happy earning $12/hr. If things become more competitive then Im sure Mexico can do it for less that. Times change industries change, aviation has become a classic example.
Take a look around; this “crisis” has been going on for 45 years starting with the steel mills, textile industry, and more recently Detroit. I’m suprised that as mobile as the airline industry is, it didn’t happen a long time ago.
With NAFTA behind us, look on the horizon at the open skies policies coming up and you will see MRO’s with a WALMart sign on them. I’m not complaining but, we are going to have to look at the big picture and see if our face is in it. If not, how can we keep it there?
My own thinking on this subject is that our A&P certification is going to (have to)change.
As difficult as it is to get new recruits for A&P training and the “decades behind” FAR’s for Parts 43, 65, and 147, it will be easier for the governments to scrap the process than to fix it. (They are not Maintenance oriented.)
The trend is leaning toward Part 145 repair stations outside the U.S. so it will become essential to get into the business side of maintenance out there and become the employer of the foreign workforce and put your expertise to work in that environment. The only control we will have in it is in ownership.
It may be all about money, but it CAN be stopped. All it will require is that our representative organizations, PAMA, AMT Society and ARSA, as well as we as individuals, petition (read lobby) our representatives in Congress to direct the DOT to eliminate the loophole in CFR 14, Part 121, Appendix I for foreign repair stations. This is the random drug testing program requirement, from which everyone outside the USA is exempt. This loophole discriminates against US workers!Once that is eliminated, all the major maintenance comes back inside the USA, by regulation. This won’t eliminate outsourcing to US repair facilities, but it will level the maintenance playing field. If it causes a slight increase in air fares, it will affect all US airlines equally, so no one will have an economic incentive to send work overseas. A few dollars more on ALL airfares won’t keep anyone from flying.
Hi Joe,
I’ve been bumpin around in this business for 33 years and the landscape is certainly changing. As far as bringing airline work back in house goes. Mesaba Airlines which just became a wholly owned subsidiary of Northwest Airlines is bringing their heavy maintenance back in house. From what I know this was an AMFA negotiated deal involving the all too familiar pay cuts that A&P’s have endured since, well since as far back as I can remember. It seems like its one step forward and two steps back time after time. Anyway, I digress, which is easy to do when it comes to the subject of how this industry has become what it is.
There seems to be contradictions that I don’t understand. Like Embraer building MRO’s in the US to work on their aircraft. Even Singapore is building in the US. If everything is moving out of the US then why do these BIG foreign MRO players feel they have to compete in the US? I realize the total cost of maintenance is important but I also believe that getting an aircraft turned out of maintenance on time and on budget are drivers that out way total cost. I’m talking about what an A&P gets paid an hour. If owners of MROs and airline operators want to be competitive then they have to invest in doing business differently.
In a nut shell I’m referring to “Lean practices” and “Continuous improvement” I know some people are sick of hearing the warm and fuzzy crap but if it’s implemented and management sticks with it and doesn’t quit when it gets hard it will work. There are some great ideas out there on how to run a maintenance organization efficiently. The vast majority of those ideas come from people who are actually doing the work.
I don’t know that we need legislation so much as we need people who have come up through the ranks. People who have seen what doesn’t work and who realize that “if you keep doing what you’ve always done, you’ll keep getting what you’ve always gotten”.
I’ve got an airplane to get out of the barn in a couple of hours so I will stop my rant for now.
What is outsourcing? When I hear Americans talk of it, they always mean work being done outside the U.S. of A. But, I have always understood, it means any work placed to outside contract, whether it is within the same country or not. European and other countries’ airlines have been contracting out their maintenance for years with no more adverse effects than those who have done everything in house. All parties have had their share of licensed engineers, and mechanics/technicians.
Some time ago I read a report by one of the larger U.S. banks, heavily in to aircraft financing, which had made a study and concluded it was not economic sense for an airline to do its own maintenance with a fleet of less than sixty aircraft. Therefore, it is good business practice to outsource one’s maintenance, as a small operator.
Before the money question comes into play, the labour source must be available. In my years in aircraft maintenance I have seen a dwindling interest in youngsters wanting a career in aviation, including pilots.
As for Mr. Giovingo’s comment that all work must be carried out by A & P mechanics, that will kill off the U.S. home market, as I know there are a lot of uncertificated mechanics working under supervision in the U.S. So, Mr G. if you want to speed the closure of the domestic product, just keep on your soapbox.
Also, Mr Fuller seems to think that drug testing is the preserve of the FAA alone. I will put him straight now, alcohol and drug testing has been the law in Europe for some time, Very often it is in employment contracts, stating a minimum time prior to commencement of work for the consumption of alcohol. Within Europe’s very protective employment laws, failure of a random test are grounds for instant dismissal. (Not good, bearing in mind how small the aviation community is worldwide). I worked for a company where the restriction on maintenance personnel was stricter than flight crew, as an example. (Try drugs in some of the Asian aviation areas, you might just get more than you bargained for).
You have a very poor opinion of the FAA if you think they dish out Repair Station Aprovals to anybody who asks for one especially already approved companies. So I think you have hit a non-starter there.
So, to pick up on Mr. Giovingo’s comment regarding money. I agree give all the coal face workers more cash, fares do not have to go up - just take away the ‘productivity bonuses’ from the executives and give it to those who make the profit. It will even make the tax man happier as the country will benefit from the extra tax collected.
Unfortunately, I do not have any solution how to encourage more school leavers to enter aviation, so, that leaves the manpower situation in decline. Hence, the need to go where the labour pool is, whatever the cost. Some contract labour comes to the carrier and works the peaks at his base, outsourcing under another face. An employer is nor burdened with manpower at low times.
I think ‘outsourcing is here to stay. As the aircraft become more complicated, the investment in a maintenance facility will increase, even if fewer personnel are required to maintain the product, equipment costs will take their place. To recoup this money the facility will need to run 24/365. Therefor, the small airline can never hope to carry out its own maintenance, the large carrier will be looking to keep the shareholders happy. And, don’t overlook the unexpected arising, where an AOG occurs and the aircraft is needed on the line immediately if not sooner, cost, who, where no longer matters. No matter how the situation is approached, contract maintenance is a fact of life and will always be needed.
Now for the real test - can I get some highly qualified personnel who will pay me to let them maintain my aircraft?????????????????????????????