Starting a new airline is a challenging prospect in many ways, but particularly in the world of maintenance, repair and overhaul, which ICAO suggests can make up slightly more of an airline’s flight operating costs as crew or fuel [PDF, p10] — often between 10-15%, though the reduced maintenance cost of newer aircraft may tilt this balance. To start an airline during COVID-19, many of those challenges are amplified.
[Intro links: ICAO: Airline Operating Costs and Productivity | Emerald.com: An outsourcing decision model for airlines’ MRO activities | Cirium: Startup airlines in North America]
Instead of hiring and operationalising a full set of experienced MRO team members directly at every step of the process, many new airlines are looking to service providers to fill the gaps — or, in some cases, even provide the entire MRO function.
The goal for a startup airline, says Thomas Böttger, head of sales in Asia-Pacific for Lufthansa Technik, is that “you can significantly reduce the number of interfaces, individual contracts and individual suppliers you have to align.”
Base and line maintenance, together with engineering services, can either be integrated or outsourced to varying degrees [PDF, p27]. “But to get the core product working fine, you have to get all the bits and pieces of setting up the surrounding processes, logistics, customs, export control, shipping containers, and transparency in IT systems,” Böttger explains.
A common package for a new startup airline might include a maintenance and engineering package including software, a flight operations suite, as well as either a stock or a service contract for components, consumables and expendables. It is also likely to include personnel as part of a project team, even including relatively senior specialist management staff like those qualified to serve as a Form 4 post holder [PDF].
“Looking at the startup airline’s timeline, it’s typically an aggressive timeline: I need an AOC, I need revenue flights at this point in time, I have to sell tickets at this point in time. So typically, they’re always under time pressure,” Böttger explains.
This time pressure often competes with cost pressures: while a larger MRO services provider or one that is part of a larger group may be able to bring in additional resources more swiftly and easily, this usually comes at a price — both in terms of overall cost and the cost of the ad hoc requirements. Balancing this cost versus the potential time lost if a smaller provider cannot furnish staff, software or hardware can be a complicated line to walk.
Fundamentally, though, there are key technology opportunities for startups that aren’t there for established airlines, particularly around new technologies.
“The beauty of a startup is that you do have no legacy issues, no hesitancy to change to a new IT system, or to change to a new supplier or to develop and change process,” Böttger explains, highlighting the benefits of “the startup spirit of building something that’s typically intensive for these teams, but very rewarding. It’s very typically experienced people as part of the consulting team, so they bring in all the experience and best practice. They are more open-minded, listening to what’s available, what is the latest standard, what you recommend — much more freedom to go for different solutions.”
This means that new airlines don’t have the adoption curve hurdle or not-invented-here-syndrome barriers around technologies — whether that’s new pieces of kit like robotics and cobotics, new ways of working, or combinations of both like remote verification, drone inspections and virtual/augmented reality.
But in some cases, and particularly with the impact of COVID-19 on aviation, there’s no technology that can replace the on-the-ground handshake with customers.
During the pandemic, Lufthansa Technik’s geographically distributed team — Böttger cites roughly 25 staff across nine countries in his sales unit alone — proved an on-site benefit, particularly given some of the especially stringent requirements on travel within the Asia-Pacific region. “It was very helpful to still be capable of having face to face meetings for whatever issues, so logistics clarifications, or invoice clarification.”
Author: John Walton
Published: 17th February 2022
Photo Credit: Lufthansa Technik
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