By HANK HOGAN, Engine Air Magazine
This is a reprint of an article that appeared in the Spring/Summer 2011 issue of Engine Air Magazine.
Before last year, independent aircraft engine maintenance, repair, and overhaul (MRO) service providers already had to compete with a network of facilities run by GE and Snecma (SAFRAN Group), the 50/50 corporate parents of West Chester, Ohio-based CFM International. At the end of 2010, CFM International announced a new joint venture with Air China to service the national airline’s fleet of planes flying with CFM56 engines.
EFFECT OF EXPANSION
At first glance, this news appeared to indicate the beginning of another corporate MRO service network, which could add to the dozens of shops around the world already servicing the popular CFM56 line of engines. According to Bill Millhaem, General Manager of Materials and CFM Services for GE, MRO providers competing in the international marketplace have no need to worry. “We’re not looking to create a footprint for CFM,” he says.
That being said, the joint venture does represent a new area for CFM International and heralds a new direction, one that may grow over time. Along with other projects, such as the opening up of a training center in Hyderabad, India, and the company’s TRUEngine certification program, it is a sign of CFM International’s continued expansion. Any of these efforts could mean changes ahead for independent MRO providers. However, in the near future, with an installed base of 16,000-plus CFM56 engines, there likely is enough work to go around. “There are a lot of engines out there, so it will take time for the supply chain model to change,” says David Stewart, a partner in the aerospace and aviation consultancy AeroStrategy.
CFM International’s Millhaem is right in a way about the shop in China not creating a new footprint for the company, even though sixty to eighty CFM56 engine overhauls will go through the facility this year. The joint venture, a 60/40 split between Air China and CFM International, is known as Sichuan Services Aero Engine Maintenance Company, and it is based at the Chengdu Shuangliu International Airport, the busiest airport in Western China. As the shop is a former Snecma MRO service facility, the new venture really represents more of a transfer in ownership than standing up a new shop.
INVESTING IN THE FUTURE
While both GE and Snecma operate MRO networks, and between them they probably service a majority of CFM engines, MRO service on CFM International’s new LEAP-X engine is to be performed by the company’s network of service providers. This will happen after the engine’s expected 2016 entry into commercial service. Two airframes, the C919 from the Commercial Aircraft Corporation of China (COMAC) and the Airbus A320neo, currently are committed to the new engine.
CFM International will provide overall maintenance support for the new engine, a service it does not currently supply. “In the future, we will have an integrated offering of a CFM service with a new engine or after the engine is sold,” says Millhaem. Having a shop in China that handles the CFM56 today could prove useful for this undertaking in a number of ways. The first is that the C919 could be a major market for the new engine, and having a local facility to handle what could be a largely Asian workload makes sense. Being a junior partner in that facility also could be a benefit, as Air China can handle the needed support.
LEAP-X MRO services probably will not be needed for several years after the engine actually enters service, which puts the anticipated date for support for it somewhere toward the end of this decade or perhaps beyond. However, CFM International is being proactive in starting now with the CFM56 service, instead of waiting for that date. “Having it start out principally as a CFM56 facility and having it transition to a LEAP-X engine, that makes sense,” says Wayne Plucker, Industry Manager for Aerospace at the consulting company Frost & Sullivan North America. Plucker suspects that the facility may be pushed to the maximum before any other shops are opened up.
Thus, CFM International has a long lead time to consider its next move, which very well may entail contracting with GE, Snecma, or a third party for some or all of the LEAP-X engine MRO services. In such an arrangement, CFM International would be the company that customers deal with, while another firm would do the actual wrench turning. Other signs of CFM International’s expansion can be found in a new training center that opened in Hyderabad in March 2010. The center has the capacity to train 500 engineers a year, and it is similar to existing training centers in China, France, and the United States. Again, this investment indicates an expectation of an increase in the engine fleet in India and southern Asia.
That anticipated growth may play a role in future MRO service plans, although it may not entail the opening up of additional shops by CFM International or anyone else. Snecma, for instance, announced in July 2010 that it had won an MRO contract with Royal Jet of Abu Dhabi in the United Arab Emirates. But that award was based, according to reports, on the previous relationship between the two companies, not on any announced facility expansion plans.
Still, market growth certainly could impact independent shops. For example, CFM International is touting its TRUEngine certification, something the company’s Millhaem says was developed because of requests from customers in the leasing or secondary markets. “As they were going out looking to acquire aircraft, the questions we would get were, ‘How do I know what the condition of my engine is?’ and ‘Did the previous owner maintain it in accordance with the OEM’s (original equipment manufacturer’s) recommendations?’ So based on that, we created the concept of TRUEngine,” he says.
TRUEngine certification can be done as a CFM56-5B or a -7B engine comes off the manufacturing line or at any time during its lifecycle. It also can be done for the CFM56-3 engine, last produced in 1999. Since the TRUEngine certification program was launched two years ago, some 6,000 engines, over 37 percent of the installed base, have been enrolled. Millhaem expects that total will continue to grow. The upper limit of engines that are certified will be set by a number of factors, one of which is the fact that some engines will not be able to enter the program, because they have undergone too many overhauls or major shop visits. Millhaem did not provide an exact number for this, but he did say that those engines that had undergone five to ten such shop visits probably could not be enrolled. If an engine is in the program, the certification is good until the next shop visit, after which it has to be renewed.
Certification involves a check of the paperwork and the documented history of an engine, something that clearly is easier to do with a new engine than it is for one that has been in service. It also is easier to do when work has been done in a shop that uses the documentation, parts, and procedures specified by the OEM. Achieving this degree of transparency is simpler in some cases than in others, such as when an engine is serviced by GE or Snecma. “When one of GE’s or Snecma’s facilities overhauls an engine, we’re able to fairly easily substantiate what was done,” Millhaem says. “We also work with a number of [independent] MRO [service providers], and we understand what their maintenance strategy is. So those are pretty easily done.”
Certified engines have a higher market value, he adds. Since the program is free to owners, there is an incentive for them to get engines enrolled. In turn, the availability of certification-quality work makes it worthwhile for independent MRO service providers to ensure that their processes, materials, and documentation are up to the OEM’s standards. Millhaem expects the program to pass the 10,000-engine plateau sometime this year. He also says that an announcement later this year will expand the program to include additional models, tapping into an even larger engine pool and potentially increasing the impact on independent MRO providers. He declined, at this time, to specify what the program expansion will cover.
Thus, despite the growth of CFM International and other corporate service networks, all is not bad news for independent MRO shops servicing these aircraft engines. In 2010, Austrian Airlines logged its 1 million flight hour milestone on CFM engines over a 15-year span. CFM International’s own figures show that CFM56 engines have logged more than 500 million flight hours in more than 8,900 aircraft as of late 2010. Such statistics prove not only that these engines are plentiful, but also indicate that they will be around for a long time, offering MRO service providers ample business opportunities now and in the future. Successful technology plays a large part in this opportunity.
In the CFM56, the company delivered the right product, says Frost & Sullivan’s Plucker. “It’s something you practically can’t kill. It has variant after variant after variant. It’s a super engine.” AeroStrategy’s Stewart notes that this success involves more than engine technology. It also is a result of the company’s setup, which features an equal split between the two partners and an independent management team. What could have been an unworkable arrangement has turned out a winner. As he says, “If you consider the number of engines sold and the reliability they now achieve, the 50/50 joint venture has been successful.” And that success extends down the line to everyone involved in the manufacturing, use, and MRO service of these popular aircraft engines.
Images Courtesy of CFM International. Copyright 2013.