Everyone in the PMA industry knows about the challenges that arises when selling PMA parts to customers operating leased aircraft. These challenges very often arise from restrictive clauses in lease agreements that prevent the use of PMA on the asset. This can cause particular headaches when the customer is a low cost carrier (LCC) whose business model should make them the ideal PMA customer, but whose largely (or exclusively) leased fleet means that restrictive clauses (either perceived or actual) restrict use of PMA.
The good news is that lessors’ position with respect to use of PMA appears to be loosening as lessees demand the right to use PMA, lessors become more familiar with PMA, and the industry continues its shift toward ever greater PMA acceptance.
The first, and most important, step in greater PMA acceptance on leased aircraft is demand by the operators. We have already heard at least two air carriers–Delta Air Lines and Copa Airlines–state unequivocally that they will not sign leases with “no PMA” clauses in them. But at MRO Asia Pacific last week, we heard multiple parties–both LCCs and lessors–state that the use of PMA on leased aircraft was a common occurrence; the lessee (the air carrier) just has to ASK.
Lessors typically enter a lease negotiation with a set of boilerplate terms. Those terms, however, are subject to change to suit the lessee’s business model and to satisfy the needs of both parties. Ananta Widjaja from Sriwijaya Air pointed out that a lessor will never give a lessee anything outside of the boilerplate unless the carrier asks for it. This point was echoed by a number of lessors over the course of the conference, who recognize that use of PMA is a reality in virtually every air carrier’s operation.
This is an important point for PMA manufacturers to take to their customers. Remind air carriers that most lessors will permit PMA to be used on leased aircraft (with a few exceptions); the carrier just has to demand the right. As lessors continue to grow more familiar with PMA, and recognize that use of PMA does not in any way devalue their asset, they grow more willing to waive the “no PMA” clauses in their lease agreements. This is beneficial for the lessee and lessor, as the lessee can continue to realize the savings and reliability improvements provided by PMA, and the lessor opens up more potential customers by allowing the use of PMA.
A number of the LCCs at MRO Asia Pacific pointed out that they especially use PMA during the middle of the lease. The lessor community explained that the most important part of any lease is the return conditions, because these are the terms that dictate the condition of the aircraft for the next lessee. Lessees take advantage of this fact by using PMA throughout the term of the lease (as allowed by the lease terms) but if necessary return the aircraft to an “OEM-only” condition (such as exists, which we in the PMA community know is a fiction) during C-check prior to the return of the aircraft.
Lessors are becoming more accepting of PMA for a couple reasons. The first, which we’ve touched on, is demand by their customers. Lessors need to have their aircraft leased in order to realize a return on investment, so it makes sense to permit the customer to use PMA if that is what it takes to get the lease signed.
Second, lessors have begun to realize that it is simply not possible for many carriers to operate without any PMA. PMAs, especially on interiors and air frames, are a reality for a significant number of carriers. Some carriers simply cannot operate without the use of PMA to control costs and reliability. Air carriers, LCCs in particular, want to control costs and improve reliability to the greatest extent possible, and this drives use of PMA. (As an aside, if anyone manufactures a PMA lavatory mirror for the lav setup on the A320 family, Tigerair out of Singapore would love to hear from you.)
Lessors recognize this. Lessors have even started to realize that this is the case with respect to engines. And though most lessors remain squeamish about PMA in the gas path or life-limited PMA, the simple fact is there are very very few PMA that meet this description.
Finally, lessors are becoming more flexible in allowing PMA because it is impractical not to. When leasing older aircraft, lessors recognize that it is simply not possible to get “OEM” spares. They also recognize the significant lead times for OEM parts, when PMA parts are available off the shelf. This makes a big difference in turn time when delivering a leased aircraft to the next customer. Finally, lessors are beginning to understand that many new aircraft are, in fact, built new using PMA parts! It simply makes no logical (or legal) sense to demand no PMA be used when the aircraft are delivered new with PMA throughout.
There are still many hurdles for PMA in leased aircraft. Lessors remain nervous about PMAs in engine gas paths, LLP and rotable PMAs, and PMA in high-value components. The fear is that PMA could devalue these articles and reduce the resale or part-out value. This means that we as a community must continue to educate the leasing community and the valuation community to allay those concerns, by explaining that PMA meets the exact same standards as TC/PC parts, and must meet or exceed the performance of the OEM part.
Lessors are also concerned about the practices of many OEM repair shops to threaten to void the warrant of an engine if it includes PMA, or pull off PMA parts during maintenance and replace them with OEM parts (and bill for it), thus depleting maintenance reserves required under the lease. These protectionist tactics are something we will continue to fight.
Ultimately, lessors are becoming more and more accepting of PMA in leased aircraft. Air carriers must remember that everything is negotiable, and that if PMA plays and important part of their maintenance and cost saving strategy, they need to demand use of PMA be allowed by the aircraft lease. PMA manufacturers should make it a point to remind their customers that lessors will allow (or at least negotiate) the use of PMA. But they won’t allow anything if the carrier doesn’t ask.
MARPA and the Korean Trade Promotion Agency (KOTRA) delivered a PMA workshop in Seoul this week. Hosted at KOTRA Headquarters in Seoul, the workshop provided an opportunity to begin educating the Korean aerospace community about the value of FAA-PMA parts. It also afforded the PMA community an opportunity to begin strengthening business relationships with the Korean aerospace industry.
MARPA’s President, Jason Dickstein, spent the first day of the workshop laying the goudnwork for understaing the PMA process.
The room was packed with about 60 participants from all sectors of the Korean aeroaspace community. MARPA discussed issues like the parts approval process, the safety, reliability and economic advantages afforded by FAA-PMA, and strategies for partnering with US PMA companies in order to increase trade and increase the profis of both companies.
Three of our members attended the workshop. Representatives from Heico, Jet Parts Engineering, and the Wencor Group joined us at the workshop and had an opportunity to network with potential suppliers from Korea’s manufacturing community as well as potential customers from MROs and airlines.
We were honored to be joined by Ha Girl Chung, the Deputy Director of Aircraft Certification for Korea’s Ministry of Land, Infastructure and Transportation. Mr. Chung was a key negotiator in the recently updated technical implementation procedures for the US-Korean bilateral aviation safety agreement. He reviewed the elements of Korean law that permit the acceptance of US PMA parts in Korea, and he also explained Korea’s own ability to issue PMA for parts made in Korea.
Privately, Mr. Chung told MARPA that Korea would like to begin issuing domestic PMA. This was foreshadowed by last years update to the US-Korean technical implementation procedures, which left a specific reservation (a place holder) for US acceptance of Korean PMA parts.
Asiana and Korean Air Lines were both well-represented at the event. Hoon Yong Kim, from Korean Air, delivered a presentation about his air carrier’s PMA policy. He explained that his carrier does not currently use critical PMA parts, but that they would like to expand their current use of non-critical PMA (critical PMAs are less than 1% of all PMAs). Mr.Kim said that they are particularly targeting interiors parts, right now, but they would like to increase both the quantity and the scope of the PMAs that they use.
What specific qualities does Korean Air seek? Mr. Kim explained that parts partners need to hold FAA PMA (other nations’ systems are currently not on his radar) and they should be prepared to support Korean Air in cooperative analysis. He described one situation where a supplier helped Korean Air perform a root cause analysis. Despite the fact that the root cause was unrelated to the supplier, the supplier provided continued engineering support. During subsequent conversations, Mr. Kim confirmed that he is looking for companies that have established systems like MARPA’s Continued Operational Support (COS) program.
All three of the MARPA members who were on hand had an opportunity to meet and speak with the attendees. Steve Johnson from Jet Parts Engineering added some insightful questions to the workshop. Joe DePaoli of Heico explained that his company and his peers from other PMA companies were interested in opportunities to work with Korean manufacturing companies with specialized technologies, and also with Korean manufacturing companies that are already making certain types of parts and who could use those skills to manufacture parts that could be approved under FAA-PMA.
Mark Powell of the Wencor Group delivered the anchor presentation at the end of the workshop, and he summarized the process that helped to ensure that PMA parts met the highest standards.
KOTRA and MARPA have begun a partnership to promote US-Korean aerospace trade with a focus around PMA parts. MARPA members should expect – and should look forward to – future oppotunities to increase their trade with Korean businesses.
UPDATE: Due to an unforeseen conflict the dates of the AEA/MARPA PMA Aircraft Parts Conference have CHANGED! The new dates are May 25-26, 2015 in Istanbul, Turkey. Please visit the conference website for latest hotel and registration information.
Over the past several months MARPA has been in discussions with the Association of European Airlines (AEA) to work together to put on a PMA conference specifically designed to further education about PMA in Europe and the Middle East, and open new export opportunities for our members. MARPA is pleased to officially announce its partnership with the Association of European Airlines and formally announce the dates and location of our first ever European MARPA conference.
The AEA/MARPA PMA Aircraft Parts Conference conference will be held May 18-19, 2015, in Istanbul, Turkey at the Hilton Istanbul Bosphorus.
AEA and its members have expressed considerable enthusiasm for this event. AEA has pledged to work with its members to ensure their attendance at the conference, and will be holding its own meeting the afternoon of May 18 to provide additional incentive for its members to attend. AEA and MARPA expect a significant number of the European air carriers to be in attendance at the conference. MARPA is also reaching out to contacts in the Middle East to encourage air carriers from that region to attend as well.
This will be an excellent opportunity for MARPA members to meet and network with European and Middle Eastern air carriers, or to continue to develop preexisting relationships. Of course, we will also present a slate of educational and informational speakers to give attendees the very latest information about PMA, export regulations, and developments in air carrier and leasing issues.
The AEA/MARPA PMA Aircraft Parts Conference is one element of MARPA’s partnership with the International Trade Administration under its Market Development Cooperator Program, intended to increase the export of U.S.-made PMA parts.
MARPA is very excited to work with AEA to present an excellent conference program and provide substantial opportunities for our members to meet and network with air carriers. Be sure to mark your calendar for May 18-19, 2015 in Istanbul! For more information, visit the conference website at http://www.pmaparts.org/EMEAconference/about.shtml.
MARPA looks forward to seeing you in Istanbul!
PMA manufacturers who are exporting their parts from the U.S. need to ensure that they remain in compliance with the U.S. export regulations. In addition to the BIS and DDTC regulations that apply to aircraft parts, exporters also need to remain in compliance with Treasury Department regulations.
Some of those Treasury Department regulations include lists of people and entities that you ought not to do business with. Every agency has multiple lists that you need to examine, but Treasury is doing something to consolidate its lists and make it easier to review them. This consolidation should make it easier to search to ensure compliance, whether you are searching on line or using a computer program to automatically research your business partners.
The Treasury Department office with jurisdiction over export programs is the Office of Foreign Asset Control (OFAC). OFAC has a list of Specially Designated Nationals (SDNs) as well as other (non-SDN) sanctions lists. OFAC is now offering all of its non-SDN sanctions lists in a consolidated set of data files called the Consolidated Sanctions List. This consolidated list will include the following:
OFAC announced that it plans to discontinue some of these lists as separate lists, so they will only be available as part of the consolidated list.
Persons seeking to check whether there are OFAC sanctions that might apply to their transaction should be sure to check their export business partners (by personal name and company name) against the Specially Designated Nationals List and the Consolidated Sanctions List.
One can also use the Sanctions List Search which consolidates both lists into a single searchable database. This tool is useful because it can automatically search for names that are close (bot not exact matches) and can be set to find matches with different levels of confidence (which will then be reviewed by a human to assess whether they actually match).
Exporters should also check the details of their transaction (including destination country) against the Sanctions Programs and Country Information page, which list sanctions programs based on country and on certain other criteria.
MARPA is proud to announce that it is the recipient of a $300,000 matching grant from the Department of Commerce International Trade Administration Market Development Cooperator Program! MARPA was one of eight recipients of funding under the Market Development Cooperator Program (MDCP), which is intended to help organizations boost exports and create U.S. jobs. With the receipt of this assistance, MARPA plans to implement a number of initiatives to help grow the international PMA market and most importantly help our members grow their businesses by exporting more PMA parts!
The first of these initiatives will be to establish a European MARPA Conference, similar to the MARPA Annual Conference held in Las Vegas. Our current target is for the inaugural MARPA Europe conference to occur in May 2015, in Istanbul, Turkey. The primary goal of MARPA Europe will be to bring together PMA manufacturers (our members) and customers from both Europe and the Middle East. Air carriers reliably account for 25% of our Las Vegas attendees, and we expect to meet or exceed that rate at MARPA Europe.
Another initiative will be to lead educational missions to regions that present an opportunity for expanded PMA penetration. These include Japan, China, Southeast Asia, and the Middle East. MARPA will lead technical and regulatory seminars explaining the benefits of PMA and the way PMAs fit within the regulatory framework of the various countries we visit. MARPA also plans to attend regional MRO shows and other trade shows to educate the global aviation industry about the benefits of PMA.
Finally, MARPA will work with our partners and air carrier contacts to continue to bring more air carriers to both the MARPA Annual Conference in Las Vegas as well as MARPA Europe. The significant and growing attendance by air carriers at MARPA’s conferences make them the premiere events for PMA manufacturers to meet and network with air carriers in an intimate setting.
Of course nothing in life is free! One very important element of MARPA’s participation is the MDCP program will be measuring the effects our efforts have on growing the export PMA market. In a previous post we explained that MARPA would begin collecting export data from our members to get a better idea of the global PMA market share and identify to what market PMAs were being sold and where opportunities lay. As a part of our commitment to the Commerce Department, MARPA will track and measure the increases in exports reported by our members. This will be an important part of the next three years, as MARPA works closely with the Commerce Department to grow exports of PMA. MARPA will also need the help of its members to collect and report accurate data to measure the effects of our initiatives. We will be working with our members to help them increase their exposure to foreign markets and increase their exports in order to optimize the return on the Commerce Department’s investment as well as to develop accurate PMA export data.
Fred Elliot from the Department of Commerce and Ryan Aggergaard from MARPA will be on hand at the MARPA 2014 Annual Conference in Las Vegas to discuss some of MARPA’s planned initiatives and the requirements related to the award of the MDCP grant, as well as to answer member questions on how they can benefit from MARPA’s new programs. We look forward to seeing you there!
As the sole trade association representing the PMA industry, MARPA receives many inquiries from both industry and regulators regarding the economic effect of the PMA industry. Among the most frequent question is to the extent PMA parts are exported to other countries. Because the aerospace industry is such a large exporter, information regarding economic effect is useful in helping to shape policy and build support for the industry.
Unfortunately, MARPA does not have a significant pool of data from which to report or draw conclusions when approached with questions about economic effects and export statistics. Although we have data from a handful of members and plenty of anecdotal evidence to support the PMA industry’s positive economic effect, we lack significant hard data from which to draw any statistical conclusions. We would like to change this.
MARPA is therefore beginning an initiative to collect export data from our members to begin developing statistical data specific to the PMA industry. Rather than relying on information from aerospace trade publications or industry forecasting groups, which tend to focus on the aerospace industry as a whole without distinguishing PMA, MARPA seeks to develop a PMA-specific industry analysis.
But to develop and perform such economic export analyses, we need the help of our members. We will therefore be requesting that our members provide to us economic export data about their businesses. Such data would include, for example, to which countries you export, revenue derived from export, and percentage of total revenue derived from exports.
Of course, there is nothing more important to MARPA than a robust and competitive PMA industry. With that in mind, all information submitted to MARPA will be kept strictly confidential, and used only for overall statistical analysis. No company names, data, or strategies will ever be disclosed, either to other members, regulators, or the public in general. We understand and appreciate how important confidentiality is, and how much value is placed in keeping data about your business private.
The more data we obtain the better we will be able to promote the benefits of PMA, open new markets and expand existing markets, continue to build the trust of industry, and gain the support of regulators. We cannot do any of this without the support of our members.
We will be discussing this initiative further at the MARPA Annual Conference in Las Vegas, just a little more than a month away. But in the meantime, if you have data readily available, or have any questions about this initiative, you can email them to Ryan Aggergaard at MARPA at email@example.com. We look forward to hearing from you, and continuing to build the future of PMA.
For years, PMA parts were a uniquely American product. But recent European events may suggest that others will be following our lead. BAE has been focused on obtaining design approval and production approval to create approved independent replacement parts under the European system.
On January 22, Graham Smith and Phil Beard explained how BAE has been obtaining replacement parts approval user EASA standards. They explained that BAE has been able to get European approvals that are very similar to US PMA approvals.
As with FAA PMA, they start with a significant review of a part in order to determine whether it is feasible to reverse engineer and produce the part. They perform a full reverse engineering operation. They develop their own engineering drawings. Like most modern PMA companies, they take special pains to avoid using OEM data to support their analysis in order to make sure tat they are avoiding misuse of someone else’s intellectual property.
Beard feels that the substantiation of these engineering documents is a little different from the U.S. process. He explained that EASA does not allow BAE to use identicality. Instead they must use positive substantiation of compliance with the airworthiness standards. He said that this generally comes from analysis, understanding of the part’s function, and testing.
As with test and computation PMAs in the US, the substantiation process that BAE uses permits them to fully understand the part, which in turn permits them to remedy reliability problems with the original design or make other improvements desired by the customer. Beard offered an example during his discussion; he commented that if service history has shown evidence of unexpected corrosion, then BAE might change the coating in order to better protect against corrosion.
BAE has made good use of its Design Organisation Approval (DOA) system, which allows BAE to operate under a government-controlled system in order to make findings of compliance up which the government can rely (similar to the ODA system in the United States). Smith and Beard affirmed that this system has been invaluable to their parts approval efforts.
BAE’s initial efforts appear to be largely focused on parts for Regional Jet Aircraft; but they are approved and willing to undertake work on all fixed-wing aircraft types. This an exciting development for international trade in civil aircraft parts.
We previously wrote in this space that MARPA will be attending the 2013 Aerospace Industry Exhibition Tokyo (ASET). As a benefit to our members, MARPA plans to feature member-company literature in our booth to allow you to make connections with the Japanese aerospace manufacturing market. This is just one of the benefits of MARPA membership. ASET offers an excellent opportunity get in front of a substantial segment of the Japanese aerospace manufacturing community; at the last conference over 23,000 people attended!
In order to help us feature member companies in the MARPA booth, members must ship their literature to us in Tokyo. To ensure we are able to showcase your literature, you must follow these steps:
1. Act quickly! ASET runs October 2-4. You should plan to have your literature arrive absolutely no later than Monday, September 23. This will allow adequate time to ensure your package clears customs.
2. Ship your package to:MARPA (Booth No. G-01) c/o AEROSPACE INDUSTRY EXHIBITION TOKYO 2013 2013 Management office Tokyo Big Site 3-11-1 Ariake, Koto-ku, Tokyo 135-0063, Japan
3. Email Katt Brigham at MARPA with your package tracking information. This should include the date the package was shipped and the estimated date of arrival. You should also include the contents of your package so we know what to look for.
4. Confirm your package arrives in Tokyo. When you have confirmed arrival email Katt to let us know as well.
Remember it will take about a week for your shipment to clear customs upon arrival in Japan. It is therefore vital that you ship your literature in time to ensure arrival by September 23.
MARPA is excited to be able to offer this opportunity to its members. If you have any questions about shipping, please contact Katt at (202) 628-6777 or by email at firstname.lastname@example.org.
MARPA is pleased to announce that we will be at the 2013 Aerospace Industry Exhibition Tokyo, and you can be there too!
While this is a fantastic opportunity for making connections in the Japanese aerospace manufacturing market, we recognize that not ever member can afford to add this to their trade show agenda, so MARPA will be featuring literature from members at their booth. That’s right – you can have your company literature included in the MARPA literature rack at ASET 2013 in Tokyo!
COST: Free to MARPA members (it is a membership benefit).
HOW BIG IS THIS CONFERENCE: The last conference was in 2011 (it is held every two years) and there were 23,373 visitors for the aerospace trade floor.
YOUR REQUIREMENTS: YOU are responsible for producing your company materials. YOU are responsible for shipping the materials to the convention center and for alerting us to look for it.
WHAT WE WILL DO: We will keep your literature in our literature rack or on our display table (depending on factors like size and volume of member response) and hand it out to interested conference-attendees.
HOW DO I GET STARTED: Contact Katt Brigham by calling or emailing the Association
OTHER CONFERENCE DETAILS:
The Aerospace Industry Exhibition Tokyo (ASET) is the only exhibition held in Tokyo dedicated to specialized aerospace technologies. In addition to the unique business opportunity, ASET also features programs and lectures from key industry figures, as well as business and social networking events.
MARPA will have an exhibit booth for the three day event, October 2-4, 2013, and MARPA President Jason Dickstein will give a keynote address discussing PMA and the advantages that it represents. This is an excellent opportunity to further raise industry awareness about the value and benefits of PMA and about MARPA itself.
DO YOU PLAN TO ATTEND?
ASET has asked for our help in getting the word out about this opportunity, as ASET is seeking PMA companies to join their PMA session. The PMA companies would be asked to introduce their business to the attendees and participate in a PMA panel. As inducement for participation, ASET is offering to provide exhibition booth space (three-day exhibition required) and potentially other inducements to PMA companies who are willing to present at the exhibition.
The city of Tokyo’s event planning subsidiary specifically requested the presence of PMA manufacturers at ASET 2013. This is a great opportunity for our members to exhibit their products in front of a large audience in one of Asia’s key business hubs. It is also a chance to further educate the aerospace community on the advantages of PMA.
If your company is interested in taking advantage of this opportunity, please contact ASET advisor Jay Kato via email at email@example.com. ASET 2013 runs October 2-4, so it is important to act quickly. MARPA hopes to see you there!
Today, EASA issued an updated agenda for the 2013 EASA / FAA International Aviation Safety Conference. The Conference is the annual meeting among EASA, FAA, TCCA and other regulators to discuss new paradigms in regulatory oversight. This meeting directly impacts the aviation industry, which is the subject of this regulatory oversight!
The updated agenda provides better guidance on what to expect from the 2013 meeting.
Sessions that will be interesting to member of the PMA manufacturing community will include:
MARPA will be there and will be reporting on the new directions proposed by the regulators.