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Coronavirus: View from the industry on how airlines will return their aircraft to service

A panel of Cirium and industry experts assess how airlines will return aircraft to service as part of a planned and predictable recovery from COVID-19

A panel of industry experts weigh in on the technical and operational challenges airlines face when getting their fleets back in the air.

When analyzing the unprecedented situation the aviation and travel sector are dealing with currently, it’s easy to feel paralyzed at first by the significant decline seen in air travel.

This was most certainly the initial response of Cirium’s Director of Market Development, Andrew Doyle, who has spent a full career in aviation. But, both Andrew and the industry realize now is the time to get ahead of the curve with a planned and predictable recovery from COVID-19.

On a recent webinar, Coronavirus: the route to a planned and predictable recovery, hosted by Cirium and Yocova, a platform where the aviation community comes together to exchange ideas, Doyle moderated a panel discussion that talked to the challenges that lie ahead for airlines,  MROs and the wider supply chain.

Johan Bank, Senior Consultant at VZM Management Services, Chris Markou, Head of Operational Cost Management at IATA and Rob Morris, Global Head of Consultancy at Ascend by Cirium, all joined Doyle to explore: what are the challenges presented by the volumes of aircraft in storage?; what do airlines need to consider to return to service?; what impact will there be on MROs?; and will passenger aircraft be converted to cargo aircraft?

What challenges does mass aircraft storage present?

Airlines are facing numerous challenges when maintaining an in-storage fleet. As Johan Bank explained, the biggest challenge is uncertainty:

“Nobody knows what is going to happen and you are faced with the consequences of the choices you have made before. You have different storage programmes; long term, short term, 30 days, 60 days, a year, longer than a year – each with different requirements.”

The longer aircraft are in storage, the more likely they are to require heavier maintenance work before they can return to service, from software and technical updates to airworthiness directives and service bulletins.

Are OEMs and regulators prepared to help airlines with these MRO challenges?

IATA’s Chris Markou acknowledged that carriers are operating in conditions outside of their control, on a scale never seen before. Explaining that a coordinated network response will be instrumental to a planned and predictable recovery for the aviation industry, he said:

“There are licenses expiring and certifications that are going to be outdated. Inspectors and mechanics cannot access aircraft due to quarantine measures, travel bans and other restrictions.

“There is strong collaboration in trying to find commonality and harmonization between all the parties involved; the airlines, the regulators and the manufacturers. They all need to work together in addressing these significant challenges for the industry.”

How can airlines plan for a return to service and what measures are already in place?

Turning to what airlines can do to plan for a return to service, the panel stressed the importance of a flexible approach. Markou observed that most airlines will have aircraft in different storage tiers, which will return to service at different intervals once the industry moves into the recovery phase:

“Before they started parking aircraft, they [airlines] went through a process that identified aircraft that they have to retire from their fleet. Then they have programs for aircraft to go on short-term or prolonged parking, depending on what the outcome is.  

“A number of airlines have decided to pursue short-term parking and then extend and extend, because they expect some aircraft will go into service a bit faster and these are probably the narrowbodies.

“Some of the widebodies are used with lower utilization, because there are passengers that need to be repatriated or to transport medical supplies or other cargo around the globe. So, there are different stages of these programs and the uncertainty is what makes it very difficult.”

On top of this, is the maintenance work that has to be considered. Markou added that airlines will likely try to defer some of the heavier checks and expensive engine overhauls to aid recovery where possible.

Will airlines with an in-house MRO capability benefit over carriers that outsource maintenance?

Bank addressed the tradeoff between in-house and outsourced maintenance in the airline industry, asserting that carriers with their own MRO teams will benefit from this expertise when trying to get aircraft back into service:

“Definitely the MROs that have the internal capabilities have an advantage in all of this, they have the know-how internally and quicker access to aircraft.

“Larger airlines also tend to work more closely with the OEMs. Because of the high demand, they know the regulators and that gives them some advantage. However, these carriers have also had to park their aircraft at different locations around the world because they have larger fleets, which will cause some inefficiencies when returning aircraft to service.”

What opportunities for the industry could emerge from this crisis?

When Markou was asked about whether the aviation industry will change as a result of the crisis and in what areas he commented:

“There is a need for wider adoption of technology, to leverage the capabilities at a faster pace but there  are many considerations surrounding that adoption that have to be factored in. For example , many people are looking at how predictive maintenance can be accelerated and with this you need to prepare the ground for it. Blockchain is also something everyone is talking about but if there are two or three systems in blockchain, they’d have to talk to each other, you would need to consider the repeatability and there needs to be significant work on the development of standards.

“Let’s not forget that the industry has made some significant progress with implementing some technologies, such as adopting paperless technologies, i.e. inspections via the internet and rise of tele-maintenance.”

The COVID-19 crisis might see the industry rush to embrace digital transformation to not only power the recovery effort but protect against future challenges.

Which aircraft should airlines take out of service first?

Looking ahead to which passenger jets airlines will attempt to return to service first sparked some debate among the panel. Bank kicked off the discussion asserting that:

“What you see with most airlines is that they take out the oldest ones [aircraft] and continue flying with the smallest, the cheapest and the most modern aircraft.”

Joining for the audience Q&A session, Cirium’s Rob Morris added that the maintenance status of an aircraft will become the most important factor:

“Aircraft that are close to a major check or an engine shop visit are clearly going to be less attractive to bring out of store because the cost of returning them to service will be significant.”

He also explored the trade-off between low fuel prices and the airline industry’s continuing commitment to sustainability:

“Fuel will be a very important consideration. But as we recover from this crisis airlines need to think about the environment.

“We need to demonstrate our environmental credentials are still sound, that we are committed to the long-term reduction in emissions and thus bringing older aircraft out, because they’re cheaper and because fuel price is low, might be high risk in the context of the future.”

Will there be capacity constraints at MROs once aircraft return to service?

With maintenance work required on large portions of the stored global passenger fleet, there’s some concern that MROs could be overwhelmed once airlines begin to restart their operations. But Markou explained much would depend of the shape of the recovery:

“It’s clear  that the domestic markets are opening first, then the expectation is regional will be next,  followed by international and long-haul. Let’s say a breakthrough happens to tackle the virus. What we  saw with SARS was that when the virus was stopped quickly, the MROs struggled with the expected quick turnaround.

“In the case of COVID-19 there’s no indication that this will happen. Given that it’s likely to be a slower recovery, that will provide a cushion which is better for the MROs. However, it could be a challenge for specific MROs and it needs to be dealt with on a case-by-case basis.”

Bank agreed that “Not all the aircraft will return at the same time, which provides an opportunity for a controlled recovery.”

Passenger aircraft being converted to cargo, is it strategic in long term?

Closing the session, Morris shed some light on what could become of aircraft that are retired from the passenger fleet when airlines embark on the road to recovery:

“What we might see is a number of aircraft that are surplus in their current airlines moving into other airlines or leasing companies, converting them from passenger to freight usage.

“Particular types that might be attractive would include the 737-800 and the A321 for emerging e-commerce networks. We’ve increasingly learned to shop online and there’s going to be a further boom there.”

Morris also predicted that 767s and A330s could also become desirable aircraft types for conversion, as a burgeoning passenger to freight market emerges from a planned and predictable recovery.

As part of the Coronavirus: the route to a planned and predictable recovery webinar, Rob Morris also presented some latest Cirium data and insights which can be viewed here.

And in an effort to bring together the industry more closely and break down some of the silos faced, Cirium and Yocova launched a joint survey to gather key points from the industry, surrounding the challenges associated with airline recovery. You can participate in this survey here and an analysis of the results will be sent out afterwards.

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