Airlines maintenance is a crucial element in ensuring the sustainability and performance of aircraft. Aircraft must be maintained to ensure continued airworthiness, and the maintenance process includes inspection, overhaul, defect rectification, modifications, and replacement of faulty parts (McFadden & Worrells, 2012). The essence of airline maintenance is to ensure compliance with the requirements for the airworthiness of aircraft. Aircraft maintenance is traditionally organized through scheduled checks whereby national regulations in the US are aligned with international standards under the international civil aviation organization. Period checks are conducted after a period of usage and time.
The need for regular inspection and continued conformity to international aviation standards force many airlines across the globe to implement specific maintenance criteria. Some companies conduct their maintenance in the US using an in-house mechanism, while others use the outsourcing mechanism. Airlines choose between these two maintenance practices depending on their budgets (McFadden & Worrells, 2012). Many American airlines have shifted their maintenance to outsourcing in recent years, choosing companies in global markets like China, El-Salvador, and Mexico.
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Outsourcing is a business term that defines an agreement between two companies, whereby a parent company hires another company for activities that could be done internally. An outside party is hired to create goods or perform services that are traditionally designated for in-house personnel. The practice is upheld as a cost-reduction mechanism and was established as a business strategy in 1989 (Olaganathan, Miller, & Mrusek, 2020). Through outsourcing, businesses can cut labor costs, salaries, technological costs, and overhead costs. Through outsourcing, businesses can focus on critical aspects within their business by shunning off less critical operations.
In the airline sector, one of the most outsourced maintenance works is that involving the airframe. An airframe defines an airplanes' basic structure, which covers the mechanical elements. The airframe includes several parts like undercarriage, fuselage, wings, and empennage. The propulsion system within an aircraft is excluded from an airplane's airframe system. Airframes' history dates back to 1903 with modifications and other innovations, making way for the modern-day airframes (McFadden & Worrells, 2012). In outsourcing, US airlines use Power-Plan, which enables them to conduct critical evaluations on costs before choosing outsourcing or in-house airline maintenance.
Choosing between outsourcing and in-house maintenance is a critical decision that must be evaluated by companies. Outsourcing presents cost-effective maintenance practices for organizations, making it easier for airlines to consider. Traditionally, the airline sector was characterized by maintenance organizations installed in huge hangars of small cities (Arnold, 2019). The cities comprised specialists and technicians who would perform all the maintenance tasks, both the external and internal overhauls. With such expertise firms presenting quality and cost-effective services, airlines found it easier to outsource their maintenance operations.
Outsourcing also presents other benefits to an organization when compared to in-house maintenance. If airlines are to maintain their fleet, the outsourcing requirements could go beyond their baseline capabilities. Air carriers that own hangar resources for large-scale checks experience numerous challenges when maintaining their check lines (Olaganathan et al. 2020). Consequently, valleys and peaks within the aircraft utilization criteria fail to drive similar valleys and peaks in their resource needs. Another reason for outsourcing is that new aircraft demand outsources maintenance whereby the outsourcing requirements are specific for various brands. Outsourcing also provides American airlines with an opportunity to get maintenance services from experts in the maintenance sector. For instance, most outsourcing operations aim at system component repairs, engine repairs, or overhaul of the whole system. The outsourced companies have more experience and knowledge in the specific maintenance parts, making it easier for the quality maintenance to be achieved.
Outsourcing in maintenance also presents airlines with access to better machinery and processes. Safety is a critical issue in the airline sector; hence through outsourcing, organizations high-quality machinery and processes (Arnold, 2019). Outsourcing also enables companies to benefit from bulk purchase discounts. By using outsourcing, dealers can give huge discounts, thus cutting the maintenance costs.
However, despite presenting all these benefits, outsourcing could be detrimental to a company's reputation. For instance, outsourcing in a foreign country may result in safety issues. The workforce in the outsourced company could be less-skilled, thus compromising the safety of airlines. Before choosing contractors for outsourcing practices, it is critical to consider several factors (Bazargan, 2016). An outsourced company must have adequate personnel, whereby both the qualitative and quantitative elements must be considered. In the qualitative element, companies must have adequate skills. A company should also have an adequate facility for the operations whereby all the sizes and types of aircraft must fit within the facility.
In-house maintenance is also an effective practice that some airlines in the US choose over the outsourcing practice. Through in-house maintenance, companies can develop their workforce to gain more expertise. In-house maintenance is also essential for small-scale maintenance requirements (Bazargan, 2016). The maintenance practice also makes it convenient for companies to be accountable for their customers' safety. In this practice, organizations ensure top-level maintenance, thus increasing the safety of their customers.
The US hosts numerous airlines that have shifted their maintenance activities from in-house to outsourcing. The most dominant examples are United, American West, JetBlue, Southwest, and Northwest airlines. Delta Airlines is also a good example of companies that use outsourcing maintenance. The company moved into using this approach in 2005 to cut expenditure costs in its renewed bid (McFadden & Worrells, 2012). Joining the dominant industry trend of outsourcing maintenance, the company's move was first faced with labor objections from its workers. Through this move from in-house to outsourcing maintenance, the company cut its number of employees by 2000 (McFadden & Worrells, 2012). The move also saved Delta airlines over $240 million every year. The company's maintenance costs were also cut by 34% within the next five years.
Delta airlines outsourced its 136 Boeing MD-88/90s for overhauls to Avborne, a Miami-based maintenance firm in this outsourcing experience. Air Canada Technical Services also benefited from Delta's outsourcing by getting a contract to repair 208 Boeing 757/767s. In this deal, Delta airlines benefitted from a contract worth more than $300 million (Reed, 2018). More than 51% of the current US fleet is maintained through outsourcing.
An important airline that values outsourcing practices is JetBlue airlines. Being a new member of the outsourcing maintenance sector, JetBlue emphasizes culturally compatible maintenance practices. According to the company, numerous factors must be considered when awarding a contract to vendors in the maintenance sector. Being a company with a strong corporate culture, maintenance operations are closely monitored for safety and ethical reasons. In its awarding of contracts, JetBlue looks for people-conscious maintenance organizations (Olaganathan et al. 2020). One of the company's top maintenance firms, Aeroman, upholds such practices, leading to the formation of good relations with the partner.
In 2019, MTU maintenance firm announced a 13-year contract that would see it maintain JetBlue's maintenance activities. In this contract, MTU would maintain V2500 pre-select aircraft. The outsourcing covers overhaul, maintenance, and repair of engines, running from 2020 to 2033. Within the first nine months, MTU was expected to gain $4.5 billion (Olaganathan et al., 2020). The contract will also ensure that JetBlue benefits massively from MTU's expertise in engine overhauls. Apart from the benefits gained from the dealer's expertise, JetBlue will also benefit from decreased expenditure costs.
Over the last two decades, most American airlines have left the airline maintenance business for third-party service providers. The firms ensure the stability of maintenance costs and provide adequate services to accommodate the aviation sector's needs. In the last few years, the maintenance, repair, and overhaul (MRO) sector have pressure airlines to reestablish themselves as maintenance firms (Federal Aviation Administration, 2010). Several airlines have already made announcements on reinvesting in in-house maintenance. However, the firms aim at establishing larger maintenance systems to offer services to other airlines. Through this provision, companies will be able to make more income.
Outsourcing is a critical maintenance plan for US airlines. However, the outsourcing sector is faced with various challenges that threaten its effectiveness. Infrastructure and capacity is the main problem facing the sector, whereby some firms lack crucial equipment to handle airlines made using technological advancements. Space is also a huge problem whereby most firms lack adequate space for hosting aircraft being repaired. Personnel and technician shortages are also huge problems facing the industry. The acquisition and training of personnel working in the maintenance firms pose a huge threat to airlines that use the outsourcing maintenance technique (Reed, 2018). The competency of maintenance providers and supervisors makes it difficult for airlines to trust some outsourced firms. With most engineers and technicians being employed in airlines to conduct minor repairs and maintenances, most firms find it difficult to find qualified and regulations-compliant technicians.
Outsourcing is undoubtedly on the rise, and airlines will continue this process for a long time. With the main focus of airlines being time delivery, quality of aircraft, and cost, it is evident that outsourcing is the best practice that promises the three factors (Arnold, 2019). The outsourced companies have massive responsibility and adequate tolls to effectively achieve the airlines; hence outsourcing will last even longer.
References
Arnold, K. (2019). American Airlines wants to outsource another, 5000 maintenances workers, union says. The Dallas Morning News. https://www.dallasnews.com/business/2019/06/26/american-airlines-wants-to-outsource-another-5000-maintenance-workers-union-says/
Bazargan, M. (2016). Airline Manitenance Strategies-in-house vs. outsourced-an optimization approach. https://www.emerald.com/insight/content/doi/10.1108/JQME-08-2015-0038/full/html
Federal Aviation Administration, (2010). Practices and Perspective in outsourcing Aircraft Maintenance. https://www.faa.gov/about/initiatives/maintenance_hf/library/documents/media/human_factors_maintenance/ar02-122.pdf
McFadden, M. & Worrells, D. S. (2012). Global Outsourcing of Aircraft Maintenance. Journal of Aviation Technology and Engineering. https://docs.lib.purdue.edu/cgi/viewcontent.cgi?article=1039&context=jate
Olaganathan, R. Miller, M. & Mrusek, B. M. (2020). Managing Safety risks in Airlines Maintenance Outsourcing. International Journal of Aviation, Aeronautics, and Aerospace. https://commons.erau.edu/cgi/viewcontent.cgi?article=1435&context=ijaaa
Reed, T. (2018). Amount of outsourced offshore Airline Maintenance work has risen, report says. Forbes. https://www.forbes.com/sites/tedreed/2018/04/06/amount-of-outsourced-offshore-airline-maintenance-work-has-risen-report-says/#640a91c326e2
