engine maintenance — Airlines are grappling with a substantial $5.7 billion spike in engine maintenance costs as the International Air Transport Association (IATA) renews its agreement with CFM International through February 2033. This renewal is set against a backdrop of acute cost and capacity pressures in the aviation industry, driven by ongoing supply chain issues and a constrained maintenance environment.
Engine maintenance: Strengthening Competition in MRO Services
CFM International, a joint venture between GE Aerospace and Safran Aircraft Engines, produces the widely utilised CFM56 and LEAP engine families, which power many single-aisle aircraft worldwide. By renewing this agreement, IATA aims to enhance competition in the maintenance, repair, and overhaul (MRO) services for CFM engines, which is crucial as airlines face escalating operational costs.
Long-standing Challenges in the Aftermarket
IATA Director General Willie Walsh highlighted the persistent structural issues in the aftermarket, noting that airlines have historically struggled with the business practices of manufacturers. He stated that these practices have limited competition and driven costs higher, intensifying the pressures faced by airlines due to constrained maintenance capacity and broader supply chain problems.
Financial Impact on Airlines
A recent IATA study revealed that these ongoing challenges are projected to add $5.7 billion to engine leasing and maintenance costs for airlines by 2025. Walsh described the renewal of the agreement as timely, emphasising that although it is “not a panacea,” it incorporates pro-competitive practices that are essential for the long-term health of the industry.
Short-term Relief Amidst Industry Pressures
Walsh expressed optimism that the renewed framework could provide much-needed short-term cost and capacity relief as airlines strive to meet rising demand amidst persistent aerospace supply chain failures. He commended CFM for leading this important reform and urged other manufacturers to take notice and improve their practices.
CFM’s Commitment to a Competitive Marketplace
From CFM’s perspective, President and Chief Executive Gael Meheust stated that the extension of the agreement reaffirms the company’s commitment to fostering a competitive aftermarket for CFM products. He pointed out the emergence of a robust MRO ecosystem, which includes numerous third-party providers capable of overhauling, repairing, and maintaining CFM engines. This ecosystem is expected to lower ownership costs and expand choices for airline customers.
Focus on Customer Satisfaction
Despite the significant challenges presented over the past few years, particularly due to supply chain issues, Meheust affirmed that CFM remains dedicated to prioritising customer satisfaction. He mentioned that the company is committed to enhancing its efforts to ensure complete satisfaction with its products and support by 2026.
Framework for an Open MRO Model
The agreement, originally signed in 2019, is built on Conduct Policies adopted by CFM that aim to create more opportunities for third-party providers in the engine parts and MRO services sector. These commitments apply across CFM’s commercial engine portfolio, including the CFM56 engines, which continue to power a significant portion of today’s single-aisle fleet, as well as the newer LEAP engines.
Maintaining Options for Airlines
In practice, the framework is designed to keep maintenance options open. It allows airlines and MRO providers to utilise CFM technical manuals and repair instructions, even when engines contain non-CFM parts or have undergone non-CFM repairs. This flexibility is vital for airlines seeking to manage costs while ensuring the reliability of their fleets.
Warranty Protections and Competition
The agreement also seeks to protect warranties based on factual assessments rather than penalising airlines for opting for alternative parts or repairs. By enabling independent MRO providers to compete for engine work, the agreement is intended to expand effective maintenance capacity, helping to alleviate backlogs and minimise aircraft downtime.
Addressing Supply Chain Constraints
In conjunction with this, the agreement confirms access to alternatives where original equipment manufacturer supply chains are constrained. This facilitates third-party parts and repair solutions, easing the pressure on engine and parts availability for airlines.
Ongoing Support and Market Engagement
The continuation of the CFM liaison officer and the independent Trustee provides a significant interface for the market to raise questions and resolve issues. Meheust explained that CFM pioneered an open MRO model with the CFM56 programme, where nearly 40 shops compete for overhaul work, with CFM itself accounting for only about a third of that work.
Future Directions for LEAP Engines
He concluded by stating that the same competitive approach is now being applied to LEAP engines, with six Premier MRO providers and over a dozen licensed shops competing for work. The beneficiaries of the renewed agreement include CFM’s airline customers, aircraft lessors, third-party MRO facilities, and parts manufacturers, all of whom stand to gain from a more competitive and flexible MRO landscape.
