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Are You Registered for the MARPA Conference? Brainstorm with Air Carriers and Suppliers!

I am very excited to see all of you at the 2013 MARPA Conference on October 23-25 in Las Vegas. 

This year the Conference will feature a lobbying meeting workshop conducted by new Air Carrier Committee Chairman Ed Pozzi of United Airlines.  This will be a brainstorming session attended by both suppliers and carriers, with a goal to explore a lobbying effort aimed at producing an air carrier PMA approval checklist that can be presented to the FAA for potential publication as an FAA Advisory Circular.  For Air Carriers, it will be a great opportunity to work with a diverse group who are involved with the efforts of preparing a PMA technical package for the different variations of submittals.  For manufacturers, it is an opportunity to gain understanding in the needs of your customers.

From the number of registrations we have received, this year is assured to be a great chance to network with the best of the industry.  And as always, we have A LOT of customers registered for the conference so there are tremendous sales opportunities waiting for PMA company attendees as well!

We’re continuing to add more information about speakers and Conference events, so be sure to check out the online Conference Agenda.

Not yet registered?  The Conference Registration form is available online. Just fill it out and email or fax it. Questions? Call Katt Brigham at (202) 628-6777 for answers!

Make sure your registration reaches MARPA before the next deadline to get the current registration discount!  The next deadline is Sept 21, 2013 and meeting that deadline will save MARPA members $200 (for the first-registrant from a  company) to $300 (for each additional registrant from a company) over the cost of on-site registration.

You don’t have to be a member to come – non-members are also welcome to attend the Conference for the non-member rate.

MARPA Winter Meeting Scheduled for February 12, 2013 in Washington, DC

Don’t forget that the 2013 MARPA Winter Meeting will be held in Washington, DC on February 12, 2013.

Expected speakers include:

  • Joe White, Managing Director, Engineering and Maintenance, Airlines For America
  • John Milewski, PMA Program Manager, Federal Aviation Association
  • Kevin Cox, Partner, CliftonLarsonAllen LLP

Our topics for discussion will likely include PMA developments, streamlined PMA for non-safety-sensitive (NSS) parts, Instructions for continued airworthiness, air carrier needs, and tax laws and regulations with a particular affect on PMA parts manufacturers.  In addition to our speakers, we will be discussing our government affairs program and strategic planning for the Association.

The Winter meeting is an intimate opportunity to work closely with the Association and the Board on topics of special interest to MARPA members.

If you would like to attend the meeting, please RSVP to MARPA at (202) 628-6777. There is no charge for registering for this meeting; and the meeting is open to all MARPA members.

MARPA 2012 is the Place to Do Business: Air Carrier Update

Need to meet with air carriers about your PMA parts?  They will be at the 2012 MARPA Conference, and they will be looking for PMA solutions.

MARPA has 40 pre-registered air carrier representatives from 17 different air carriers attending the 2012 Annual Conference in Las Vegas:

  • Air Canada
  • ANA
  • Allegiant Air
  • American Airlines
  • American Eagle Airlines
  • Bismillah Airlines
  • Copa Airlines
  • Delta Air Lines
  • Horizon Air
  • Japan Airlines – JALUX
  • Kenya Airways
  • SkyWest Airlines
  • Southwest Airlines
  • United Airlines
  • UPS
  • US Airways
  • Westjet

For a complete look at the pre-registered attendees for the Conference, please be sure to check out our pre-registration list, which was published on September 22.  This list is not complete, as we always have had a significant numbers of attendees who register in the lat week or at the door; but it does provide a reasonable look at the businesses that have already made a commitment to attend.

Where Do I Find the Air Carriers? At the MARPA Conference!

Wouldn’t it be great if someone were to put all of your customers together in one room, so you could shake their hands, thank them for their business and then describe the new products that you plan to bring to market in the coming year?  Wouldn’t you love to have an easy way to meet those air carriers with whom you aren’t yet doing business in a relaxed environment that would allow you to get to know them without the “first date” stress of a formal introductory sales call?  How much would it be worth to be able to sit down over lunch with a major customer and ask them what PMAs they would like to see developed for purchase over the next year?

MARPA is pleased to announce that we have 47 air carrier representatives pre-registered for the 2011 MARPA conference.  They represent both US and non-US air carriers.  This number does not include non-air carrier operators and MROs.

These are the buyers!  This is a tremendous opportunity for PMA companies to meet with the people responsible for purchasing PMA parts among the major customers.

Air carrier representatives will meet during the Air Carrier Committee meeting to discuss the PMA industry, and they will discuss their purchasing patterns during the airline panel in the general session on October 14th (the panel will also include at least one repair station).

The 2011 MARPA Conference is scheduled for October 12-14 at the Renaissance Hotel in Las Vegas.  We are expecting between 250 and 300 total participants in the Conference.  With 47 air carrier registrants in the pre-registration group, this is roughly a 4-1 ratio of PMA companies to air carriers (the ratio is even better when you consider the number of other varieties of customers, like operators and repair stations).  This Conference will be a great opportunity for PMA companies to renew and forge new business relationships.

MARPA Early Registration is 43% Higher Than Last Year

With one month left before the conference, MARPA has 208 registered attendees for the 2011 MARPA Conference.  Last year’s early registration list boasted only 145 attendees, so that is a 43% increase over last year.  This means that the 2011 conference is likely to be the largest MARPA Conference ever.

For comparison purposes, last year’s conference had about 210 pre-registered attendees when we left the office for Nevada, and on-site registration brought us to 257 attendees.

We’d like to thank everyone in the MARPA Community for making this year’s conference a success, already.  If you have not yet registered for the Conference, though, please be sure to check out our 2011 Conference Agenda!  You should also examine the early registration list to see how many of your business partners (and how many of your competitors) will be at the Conference.

The downside to this sort of popularity is that the hotel has reported to us that they are sold out for October 10th and 11th (days on which we’d only reserved a small room block).  Space is still available for check-in on October 12th or later (remember, the Conference is October 12-14).  However, today (the 12th) is the last day on which our room block will be reserved for MARPA registrants – after today the room block opens up so get your rooms reserved quickly!

Many members want to invite business partners and customers to dinner (either after the opening night reception or on the night of the 13th, which is a free night).  In order to be fair to all MARPA members and attendees, we make the list available online for all to see on a pre-announced day.  We had previously announced that the early registration list would be available today – and it is now up on the internet.  You can find the Early Registration List online.

Economic Outlook for the PMA Marketplace

At the 2011 Gorham Conference, Michael Howard of Aerostrategy explained that oil prices are likely to continue to increase.  This means that airlines are going to need to find ways to cut costs in order to remain profitable.  This helps to drive air carriers to investigate use of PMA parts as a means of saving costs without jeopardizing safety,

At the same time, this could affect some of the markets for older types.  High fuel prices exacerbate aircraft operating costs – less fuel-efficient aircraft become even more expensive to operate – and thus high fuel prices put pressure on air carriers to retire older aircraft in favor of newer, more fuel-efficient, aircraft.  Howard explained that aircraft retirements are surging – they seem to be at a 400 aircraft per year level, which means that air carriers are already replacing large quantities of older aircraft.  The older aircraft are often the ones with the most PMA-saturation, so this means that fuel prices are influencing the market that is available to PMA parts.

Rising MRO Spend

Aerostrategy analyzes PMA use as a component of the whole (air transport) MRO market.  Howard explained that the air transport MRO market was valued at about $43.6 billion in 2010.  This was down from a high of $45 billion in 2007, but up from the 2009 level of $42.7 billion.  Aerostrategy sees the air transport MRO market continuing to grow at an average annual rate of 3.5% for the next decade – rising to $58.4 billion by 2019.

Howard explained that airlines are simplifying their MRO supply chain in order to preserve cash.  This can mean that PMA companies must shift their marketing resources to reach MROs.  In some cases, though, air carriers are helping to make sure that they retain their PMA savings by working with their MROs to ensure the use of PMA parts on their aircraft.  United Airlines’ Michele Bassi-Degenkolb explained that this is part of her airline’s cost-saving strategy.

Excess Inventory Trends

In 2009, Aerostrategy estimated that the industry held $47 billion in excess inventory, which could be utilized without replacement in order to cut costs.  In response to the poor economy, air carriers were able to reduce MRO spending by 15-20% in 2009.  One factor in this reduction was the ability to draw down excess inventory.  But air carriers cannot rely on this strategy forever, and Aerostrategy sees a bottoming-out to this trend, with an attendant increase in purchase of new parts (including PMA parts).

While excess inventories may be running out, there are other sources of parts being tapped.  Disassembly (parting out) of aircraft for their parts is gaining momentum – this puts more surplus parts in the system and these surplus parts compete with the sale of new parts in the market.  Howard explained that there is significant parting-out occurring among 737s and A320s.

Aerostategy estimates that the total surplus parts consumption in 2009 in the transport aircraft industry was about $2.3 billion.

Fuel Prices and Growth

Howard explained that if fuel stays in the $80-$110 per barrel range, then Aerostrategy predicts that we should see modest growth (2-3%) in both U.S. Gross Domestic Product (GDP) and airline profitability.  In such a scenario he sees a 5 year CAGR of 12% and strong growth in the air transport market in 2011 and 2012.

In support of this trend, he explained that 2010 PMA was up 4% over 2009 levels from $353 Million to $367 Million.  Part of what is driving this faster-than-MRO-growth-rate is increased penetration within air carriers.

Howard explained that the retirement of PMA-friendly platforms, and OEM and leasing impediments will eventually cause PMA growth to slow down, but we do not yet seem to be approaching that “tipping point” because PMA is still seen as a safe and reliable way to reduce costs.  Thus, while the growth of PMA cannot go on forever, it will continue to grow for quite awhile and the slow-down point is far enough in the future that Aerostrategy is not willing to even begin to estimate where or when that “tipping point” may be found.

PMA Impediments

Throughout this year’s Gorham Conference, there was a general agreement that leasing contracts are a major impediment to the growth of PMA, but that some of these hurdles are slowly being surmounted.  As with other industry segments, the key to surmounting the perceived hurdles is treating the leasing industry as potential partners and opening lines of communication with them.

An Aerostrategy study shows that airlines believe that leasing companies are the biggest barriers to use of PMAs, but Howard sees situations where leasing companies are starting to get more comfortable with the use of PMAs, particularly for older types.

The Aerostrategy study shows that leasing companies are the biggest obstacle but they are not the only obstacle to PMA penetration.  OEM total care and power by the hour contracts often exclude PMAs and they can reflect significant impediments to the use of PMAs – particularly among engines.  David Doll added his belief that one of the reasons that OEMs purchased MRO facilities was to protect their aftermarket parts sales markets; he concluded that OEM MRO facilities may reflect another impediment to PMA penetration.

Aerostrategy sees the PMA industry continuing to grow at a rate faster than the rate of MRO growth, and is currently predicting that the PMA market will grow from in $367 Million 2010 to $665 Million by 2015 (assuming fuel prices remain within a moderate $80-$110 per barrel range).  If this prediction proves correct, it will mean that the PMA market will have grown at a rate of over 12% over that period

At the Gorham Conference, Michele Bassi-Degenkolb asked if Aerostrategy has looked at air carrier inventories to assess PMA penetration?  Howard said that they have not done this for the whole market.  Michele Bassi-Degenkolb pointed out that United is pushing PMA at their MRO service suppliers, and is looking carefully at their contracts to make sure that there are no impediments to PMA.  She explained that airlines are getting smarter as they understand better how to overcome PMA impediments, in order to take advantage of the savings and reliability improvements associated with PMA.

FAA Delays SMS Deadline

The FAA has delayed the deadline for submitting comments on the Safety Management Systems (SMS) proposed rule.  This delay was in response to a MARPA request for additional time for commenters.

The proposed SMS rule was published on November 5, 2010.  It proposes a new set of regulations that would require air carriers to develop and implement a comprehensive quality management system known as a “Safety Management System.”  This Notice of Proposed Rule Making (NPRM) proposes a new Part Five of the FAA regulations that would establish the SMS parameters for regulated businesses.

The rule is likely to have an affect that reaches beyond air carriers.  The proposed rule announced a future intent to impose the new SMS requirements on repair stations and FAA-regulated manufacturers.  It is possible that even before the standards would be imposed on PMA manufacturers, that many of the requirements could be “flowed-down” to PMA manufacturers by their SMS-regulated customers.  For these reasons, the outcome of the proposed rule is very important to the PMA community.

MARPA has been working with its Technical Committee to develop comprehensive comments on the proposed rule.  One of the Committee’s concerns is that if the rule is not well crafted, then it could  misdirect resources and actually impede safety.  MARPA members with ideas or comments are invited to share them with the Association.

The new deadline for comments on the FAA’s SMS proposal is March 7, 2011.   With this delay in the comment deadline, MARPA is hoping to use the additional time to strengthen its comments and to solicit more comments from members.

Chinese Air Carriers Discuss their Positive Experiences with PMA

Wow!  I was shocked at the positive support for PMA from the Chinese carriers in a recent air carrier PMA/DER conference in China.

MARPA attended a Conference in China on November 11-12 that focused on PMA parts and DER repairs.  We participated in a leasing panel on day one and also provided a day two speech discussing the PMA marketplace and MARPA’s efforts to promote Parts Manufacturer Approval (PMA) parts.  The Conference hosted about 80 participants, representing all of the major air carriers from China.

Feng Xiabao of Hainan Airlines pointed out the dual benefit of increased reliability and cost savings from PMA.  Jason Wang of China Southern explained that the pricing, reliability and safety of PMA parts need no further analysis.  He took that as a given and focused instead on positive advice concerning product support mechanisms for PMA companies.

A representative from a Northeast China MRO serving the Chinese carrier community provided statistics from his experience about reliability increases associated with use of PMA parts that resolved issues identified in OEM parts.  He explained that between 2001 and 2010, increased use of PMA parts in CFM-56-5C has correlated to increased mean time between service for that engine– increasing the mean time between service from about 13,000 hours in 2001 to almost 21,000 hours in 2010.  A similar increase has also been seen to correlate with the increased use of PMA parts in the CF6-80 engine.

The attendees and the speakers made it clear that the value of PMA is clear to Chinese carriers.  MARPA received questions about topics like how to identify existing PMA parts that could be used by Chinese air carriers; now the next step is for PMA companies to bring their products to the customers!

CCMA: Latin American Carriers Interested in PMA!

MARPA presented this week at the annual meeting of the Latin American and Caribbean air carriers, known as CCMA. The presentation addressed the advantages provided by PMA parts and strategies for overcoming the legal and technical issues facing a Latin American air carrier seeking to use PMA parts for the first time. The response from from the air carriers was overwhelmingly positive!

The event was hosted by Avianca, the Colombian carrier.  Avianca’s Vice President of Maintenance, Miguel Montoya, announced that one of his top goals was to identify and begin using more PMA parts and DER repairs to provide cost-effective solutions that will support Avianca’s comitment to safety.

During the Conference, MARPA President Jason Dickstein spoke with several  other air carriers who all expressed interest in PMA parts.

Who Can Support This Configuration?

A number of people have shared with us different incorrect statements made by large manufacturers to the disadvantage of the PMA community. These anecdotes ultimately lead MARPA to the complaint letter we filed with CFM last year.

I witnessed another inaccurate statement at the AIC Aero-Engine meeting on March 4th.  But this time, industry was able to ask the right questions and expose the rhetoric for what it was!

The speaker presented a slide featuring a cut-away view of an engine, and positing that OEM parts, two different sets of PMAs parts, and a change to type design pursuant to an STC could all be found in the one engine. The caption at the bottom professed that “No one has the data to support this configuration.”  The speaker explained that the point of the slide is that no one is able to support this configuration because no one has the data to support the configuration.

But when I asked about the practice of configuration control exercised generally by air carriers, the speaker admitted that his statement was inaccurate.  What he really meant, he explained, was that no manufacturer had the data for this particular configuration; but he admitted that the air carriers  that flew the configuration woul dhave the data to support it.

An air carrier in the audience confirmed that they review all PMAs and STCs before implementation for configuration control purposes, and that their engineering departments have the data to support any configuration chosen by the air carrier before that configuration is implemented.

The same air carrier representative also noted that he had approached PMA companies for engineering support and found the PMA companies to be highly responsive and supportive.

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