How Do MRO Costs Breakdown For Different Engine Types

How do MRO costs break down for different engine types?
Paolo Lironi, Executive Director Head of Engine Advisory
Confidential not for third party distribution SGI Aviation 2009
Oct 2009
Topics
How do engine MRO costs break down for different engine types?
The effects of ageing and maturity on engines costs The costs of second and subsequent shop visits as compared with the first shop visit The effects of operating in severe environments, in operating short/long stage lengths and in operating abnormal missions The effects of short-term leasing and engine part-out in the sunset years of operation Comparative costs for different engine types and variations in where the costs are found
Agenda
Cost breakdown for engine model First shop visit Factors affecting shop visit costs Second & subsequent shop visits End of life Conclusions
First shop visit
Cost breakdown
Shop visit cost breakdown for engine model

SGIs Analysis
Major Factors Age of the model General market status Number of engines in the market Availability of DER Availability of PMA Assumptions Only new models Only OEM material used No DER No PMA
Workscope
Factors driving the engine removal off wing
Operations
Reliability
Contracts
Engine Removal
Fleet Needs
First shop visit cost analysis

Factors to be considered
Major Factors Deterioration Contract Modification status of the engine Time on wing of the engine Spare level Thrust rating (Re rate) & De rate EGT Stagger Reliability issues Budget Utilization LLP profile Assumptions Only core performance restoration Average contract terms Average engine deterioration Average time on wing for the engine Average flight length
First shop visit cost analysis

Cost per hour curve
Considerations Parts do no need to be replaced Parts have to be repaired Parts have to be replaced
Engine operating cost / time on wing
Cost per hour
Time on wing
Methodology
The shop visit cost is divided into:
Accessories and fees Material cost of new material Repair cost of repairing parts Labor cost
All mark up and fees are included in the cost The following engines have been considered based on
SGI experience Mix of modern concept engines and mature engines
Shop visit cost breakdown for engine model

Breakdown per engine model
100%
Considerations Accessories and fees are similar On new engines, material cost is most relevant the cost of repairs is significant on older models
90% 80% 70% 60% 50% 40% 30% 20%
Acc/fees Material Repair Labor
10% 0%
Improvements
How to reduce shop visit costs
Proper workscope
Only necessary modifications to be implemented Cost effective analysis of necessary repair level per each module and of repairs
Use of Properly repaired parts to be maximized Proper management of the engine through the shop
Number of workscope revisions to be minimized Unexpected findings to be evaluated and corrective actions to be managed
Plan in advance
LLP & normal replaced parts to be acquired in advance
Tailored contract
10
Factors affecting shop visit cost
Analysis
Major factors affecting engine operating cost
Thrust reduction
Thrust rating change
Environment
Operating cost
Flight lengths
12
Environment effects on modern design engines

Design requirements
Considerations Low fuel consumption:

High operating temperature Cooling systems
More prone to have environment effects Certain engine areas are more critical Results Deterioration rate is higher (more rapid) On wing life is reduced Scrap rate is higher Workscope is more extensive
13
Environment effects on CFM56-7B engines

CFM56-7B DIFFERENCE IN COST PER MODULE
60%
50%
40%
30%
20%
10%
0% LPC HPC CC HPT First shop visit LPT AGB Non Mod TOTAL
Second shop visit

14
Environment effects on V2500-A5 engines

V2500 DIFFERENCE IN COST PER MODULE
80% 70% 60% 50% 40% 30% 20% 10% 0% FAN LPC INT CASE HPC DIFF COMB NGV HPT LPT GBX ENG TOTAL
15
Thrust reductions
Considerations Take off thrust reduction has a major effect on deterioration De-rate has a bigger impact on full power take offs Effects It is more beneficial to use flex take offs at higher thrust settings Flex take offs benefits are higher at maximum take off power Severity curves usually used to consider this effect On wing life can be increased up to 25% by maximizing flex take off policy
Effect of de rate /deterioration

45 40 35 30 25 20 15 10 5 0 0 1 2 3 4 5
Deterioration
Derate
16
Thrust changes
Considerations Thrust ratings can be changed easily Wide range of Thrust ratings across same engine model Parameters Rotor speed Temperature Pressure Operating curves are changing significantly Results Engines are operated at multiple thrust settings during one engine run Higher time on wing can be achieved Higher reliability Lower maintenance cost per hour
17
Stage length effects

Considerations Flight length proportional to aircraft weight Deterioration is higher during take off Leasing contracts refers to cost per hour Effects Short flights Long flights less weight more weight more derate less derate
Additional cost is divided in more flying hours There is no significant changes in cost per hour based on the sector length
18
Second & subsequent shop visits
Analysis
Second & subsequent shop visits

Driving factors Previous shop visit Material used: new or overhauled Modification status of the engine LLP profile of the engine Operating thrust Changes in on wing life FH/FC ratio De-rating Average TO temperature Severe environment Short length Engine model fleet problems
20
Major factors affecting shop visit cost over time

Factors Majority of the parts are checked/repaired/replaced during a shop visit, however there are some parts affected by ageing stators Each engine model is affected by a common issue across the fleet Effects Shop visit cost increasing BUT More used parts are available in the market
21
Shop visit cost over time

16
Highly depending on the market and Not generic for all engine models
Shop visit cost
14
New technology introduced Fatigue problems Minor number of repairs available
12
10
Availability of repairs Availability of replacement parts
0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5
Time
22
Cost breakdown for CFM56-5B/7B

Difference between first shop visit and subsequent
70%
60%
50%
40%
30%
20%
10%
0% Labor Repair SV 1 WS SV 2 WS
Material
Acc/fees
23
Cost breakdown for V2500

60%
50%
40%
30%
20%
10%
Material
Acc/fees
24
Cost breakdown for CF6-80E1

60%
50%
40%
30%
20%
10%
Material
Acc/fees
25
End of life
SGI experience
Product life cycle curve

Considerations Market driven Aircraft application
14 12
Product request vs time
Product request
10 8 6 4 2 0 0 1 2 3 4 5 6
Time
27
End of life for fleets with small number of engines

Market The number of engines in operation are decreasing Request for aircraft with this engine model is less and less Availability of repairs is limited End of Life The cost of repairing an engine is higher than buying a replacement The availability of spare engines is limited Engine exchange is common
28
End of life for numerous engine fleet

Market The number of flying engines is extensive Request for aircraft with this engine is stable The availability of repairs is extensive End of Life The repair cost is stable Engines available in short term lease High availability of spare engines
29
Conclusions
Life Cycle
Conclusion
SGI experience
Environment and engine operations are the most critical factors for engine deterioration The cost of operations can be predicted using a model for each engine The cost for repairing an engine is depending on the product phase of the engine model End of life strategies are depending on the engine model
31
Contact details
I would be glad to answer any questions that you might have!
Paolo Lironi Executive Director SGI Engine Advisory B.V. World Trade Center Amsterdam F-03 Strawinskylaan 381, 1077XX Amsterdam, The Netherlands (T) +31 20 880 4261 plironi@sgiaviation.com
32
Contact details
I would be glad to answer any questions that you might have!
Paolo Lironi Executive Director SGI Engine Advisory B.V. World Trade Center Amsterdam F-03 Strawinskylaan 381, 1077XX Amsterdam, The Netherlands (T) +31 20 880 4261 plironi@sgiaviation.com
33

How Do MRO Costs Breakdown For Different Engine Types

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How do MRO costs break down for different engine types?

Paolo Lironi, Executive Director Head of Engine Advisory

Confidential not for third party distribution SGI Aviation 2009

Confidential not for third party distribution SGI Aviation 2009

Confidential not for third party distribution SGI Aviation 2009

First shop visit

Confidential not for third party distribution SGI Aviation 2009

Shop visit cost breakdown for engine model

Confidential not for third party distribution SGI Aviation 2009

Confidential not for third party distribution SGI Aviation 2009

First shop visit cost analysis

Confidential not for third party distribution SGI Aviation 2009

First shop visit cost analysis

Engine operating cost / time on wing

Cost per hour

Confidential not for third party distribution SGI Aviation 2009

Shop visit cost breakdown for engine model

90% 80% 70% 60% 50% 40% 30% 20%

Acc/fees Material Repair Labor

Confidential not for third party distribution SGI Aviation 2009

Confidential not for third party distribution SGI Aviation 2009

Factors affecting shop visit cost

Confidential not for third party distribution SGI Aviation 2009

Major factors affecting engine operating cost

Thrust rating change

Confidential not for third party distribution SGI Aviation 2009

Environment effects on modern design engines

High operating temperature Cooling systems

Environment effects on CFM56-7B engines

Second shop visit

Environment effects on V2500-A5 engines

Confidential not for third party distribution SGI Aviation 2009

Effect of de rate /deterioration

Confidential not for third party distribution SGI Aviation 2009

Stage length effects

Confidential not for third party distribution SGI Aviation 2009

Second & subsequent shop visits

Confidential not for third party distribution SGI Aviation 2009

Second & subsequent shop visits

Confidential not for third party distribution SGI Aviation 2009

Major factors affecting shop visit cost over time

Confidential not for third party distribution SGI Aviation 2009

Shop visit cost over time

New technology introduced Fatigue problems Minor number of repairs available

Availability of repairs Availability of replacement parts

0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

Cost breakdown for CFM56-5B/7B

Cost breakdown for V2500

Cost breakdown for CF6-80E1

Confidential not for third party distribution SGI Aviation 2009

Product life cycle curve

Product request vs time

End of life for fleets with small number of engines

End of life for numerous engine fleet

Confidential not for third party distribution SGI Aviation 2009

Confidential not for third party distribution SGI Aviation 2009

Confidential not for third party distribution SGI Aviation 2009

Confidential not for third party distribution SGI Aviation 2009

Confidential not for third party distribution SGI Aviation 2009

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