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CFM Agrees to permit the use of PMA Parts and DER Repairs

In a major win for the aviation industry, CFM has agreed that they will begin permitting MROs to use PMA parts and DER repairs!!

CFM has been known for their anti-PMA tactics.  Past CFM antics have included unflattering advertising and disparaging presentations.  MARPA had to write CFM in 2008 in order to put a stop to some of the tactics (to only some of the most egregious tactics – they developed other anti-competitive tactics).  IATA brought an unfair competition complaint in the European Union, which led to a significant investigation by the EU Competition Commission.  MARPA and MARPA members filed comments and presented evidence to the Commission.

In advance of a final ruling by the EU, CFM has agreed to a settlement agreement, and IATA has agreed to withdraw its complaint from the EU commission.

The settlement agreement includes a set of CFM Conduct Policies and a set of Implementing Measures for those Conduct Policies.  The IATA Press release summarizes the benefits like this:

Among the many elements of the agreement, CFM has agreed to:

  • License its Engine Shop Manual to an MRO facility even if it uses non-CFM parts
  • Permit the use of non-CFM parts or repairs by any licensee of the CFM Engine Shop Manual
  • Honor warranty coverage of the CFM components and repairs on a CFM engine even when the engine contains non-CFM parts or repairs
  • Grant airlines and third-party overhaul facilities the right to use the CFM Engine Shop Manual without a fee
  • Sell CFM parts and perform all parts repairs even when non-CFM parts or repairs are present in the engine

Some key sentences in the documents that are most useful to the aftermarket, and to operators seeking to rely on the aftermarket, include:

  • “The mere installation of non-OEM parts and/or repairs in the engine does not in itself render the warranty void.”  Conduct Policies Para. 9.
  • “CFM does not refuse to service engines because they contain non-OEM parts or repairs.”  Implementing Measures Para 12(a).
  • “Parts approved by the FAA under 14 CFR Part 21 and 14 CFR Part 43 and/or approved by the EASA under Part 21.A.109 and Part 21.A.451 are eligible for installation in CFM engines.”  Implementing Measures Para 21(a).
  • “CFM agrees to waive fees (both upfront fee and royalty) for Overhaul Shops for the use of its ESM (i.e. overhaul instructions and Fully Disclosed Repairs) charged under CFM’s PLA and will not require any other form of financial compensation for such use by shops overhauling CFM engines.”  Implementing Measures Para 1.
  • “Parts that have been repaired with a repair approved by an FAA DER under 14 CFR Part 183 and/or an EASA DOA holder in accordance with Part 21, Subpart J and related Acceptable Means of Compliance and Guidance Material, are eligible for installation in CFM engines.”  Implementing Measures Para 21(b).
  • CFM will include in relevant policies and procedures for [Departure Request] requests an explicit statement expressing that the presence of non-OEM parts and repairs is only relevant to a [Departure Request] request to the extent it affects CFM’s ability to perform the relevant engineering analysis, and that the mere presence or use of non-OEM parts or repairs unrelated to the [Departure Request] request does not preclude a [Departure Request] consideration.”  Implementing Measures Para 18.
  • “CFM will regularly train its customer support organization, and other departments that make official statements on behalf of CFM related to non-OEM parts or repairs to ensure that communications related to non-OEM parts or repairs are based on data that validates the proposed communication.”  Implementing Measures Para 24.

This is just a sampling of the text, showing how potentially beneficial the Settlement terms are, for the rest of the industry.

The Conduct Policies and Implementing Procedures explicitly recognize PMA manufacturers as intended beneficiaries of the settlement agreement.  Implementing Measures Para 33.  It is worth noting that any beneficiary who tries to assert the Conduct Policies or Implementing Procedures as a binding standard may be bound by the dispute resolution provisions (the policies state this explicitly, but since a third party is not in privity to the agreement, the actual application and interpretation may depend on the facts).  Conduct Policies Para. 6; Implementing Measures Para 34.   The dispute resolution provisions require disputes to be brought first to the CFM’s Liaison Officer for good faith discussion and resolution.  Implementing Measures Paras 39, 49.  If this does not resolve the issue, then subsequently the issue may be submitted for arbitration; arbitration will take place in New York, London, Paris or Geneva. Implementing Measures Para 40.  They will be subject to the Swiss legal system and French law.  Implementing Measures Paras 40, 64.  There are also limits on CFM liability.

When asked whether it plans to pursue similar inquiries against other manufacturers, IATA predicted that other manufacturers will follow similar guidelines, making future investigations unnecessary.  GE has announced that it will “voluntarily” follow the same guidelines as CFM.

Resources:

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About Jason Dickstein

Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Air Carrier Purchasing Conference, and the Modification and Replacement Parts Association. He also represents private clients drawn from the spectrum of the aviation industry.

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