International Bureau of Aviation, IBA, Aviation Maintenance Cost Benchmarking for airlines

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IBA's Maintenance Cost Benchmarking Presentation, given at the ERA General Assembly 2011 in Rome, on 29th Sep 2011.

It covers, what is Maintenance Cost Benchmarking, the benefits a good MCB exercise brings, the report options and the expected timeline.

For more information, please contact ben.jacques@ibagroup.com

Published in: Investor Relations, Business

International Bureau of Aviation, IBA, Aviation Maintenance Cost Benchmarking for airlines

  1. 1. Maintenance Cost Benchmarking <br />& Warranty Management<br />Presented by Ben Jacques, IBA Commercial Manager, September 2011<br />“the first choice aviation consultancy;<br />Whenever and wherever a client wants to minimise risk or maximise opportunity. Providing cost effective, considered and prompt advice.”<br />
  2. 2. 23rd Year of Service<br /><ul><li> Originally formed in 1988 as a technical consultancy
  3. 3. Independent of any financial institution, operator, lessor, manufacturer or supplier
  4. 4. Encompasses both corporate & commercial aviation activities
  5. 5. Main office situated in Leatherhead, U.K.
  6. 6. Affiliates in North America, South America & Australia
  7. 7. Representatives in various global locations</li></li></ul><li>Advice through Experience…<br />Our teams have developed comprehensive aerospace backgrounds before joining IBA:<br /><ul><li> Engineering & Maintenance
  8. 8. Aircraft Finance and Consulting
  9. 9. Airline Operations & Fleet Planning
  10. 10. Market Analysis & Trend Monitoring
  11. 11. Aircraft Marketing & Sales
  12. 12. Manufacturing
  13. 13. Academia</li></ul>As IBA Group, we have accumulated significant project experience:<br /><ul><li> 25,000+ aircraft & engine valuations
  14. 14. 10,000+ aircraft & engine inspections
  15. 15. 700+ aircraft deliveries & redeliveries
  16. 16. 500+ market studies & research projects</li></li></ul><li>IBA Group Overview<br />Expert<br />Witness<br />Asset<br />Management<br />Manufacturer<br />Support<br />Feasibility<br />Study<br />Repossessions<br />Maintenance<br />Cost Tracking<br />Engine Tech Support<br />Data Analysis<br />& Modeling<br />Due<br />Diligence<br />Technical<br />Services<br />Commercial<br />Services<br />Ad-hoc<br />Research<br />Inspections<br />Transaction<br />Analysis<br />Regulatory Work<br />Asset<br />Valuations<br />Conferences<br />Continued<br />Airworthiness<br />Technical Records<br />Market<br />Opinion<br />Remarketing & Sourcing<br />Publications<br />
  17. 17. Recent Projects<br />Manufacturers<br />Boeing - benchmark data for their systems<br />Airbus – A320 avionics upgrades assessment<br />Mitsubishi - MRJ Cost Benchmarking / Competitor Analysis<br />GE / Rolls Royce - Engine upgrade impacts on operating costs<br />Airlines<br />Aircraft and Engine Maintenance Contract reviews<br />Detailed benchmarking, both technical and commercial<br />Detailed Investigative Cost Analysis Reporting, Forecasting and Optimisation recommendations<br />Banks, Lessors<br />Maintenance Reserve Adequacy Assessment Forecast <br />Impact of Total Support Contracts<br />
  18. 18. Maintenance Cost Benchmarking?<br />Airlines wishing to review of their own technical performance in order to compare and<br />lower costs. <br />Typically airlines will find a suitable independent consulting partner to evaluate both<br />maintenance and engineering costs borne by the airline and report how the airline<br />performs when compared to similar and/or competing carriers.<br />The results are used to quantify opportunities for both structural and economic <br />improvements within the technical operating environment.<br />
  19. 19. Maintenance Cost Benchmarking Benefits<br />The results of the benchmarking exercise and the analysis of these results will;<br />Identify Maintenance costs and drivers – particularly those performing badly.<br />Identify measurable cost metrics for maintenance spend.<br />A comparable benchmark against competitors, both local and worldwide.<br />Present a range of solutions to bring improvements to poor performing costs.<br />Assist in the prioritising of maintenance cost solutions.<br />Create solid foundations for the implementations of improvements.<br />Benefit from overall fleet maintenance optimisation.<br />Allows better understanding of maintenance costs from all aspects of the operation.<br />Create internal trend monitoring to quantify and control spend going forward.<br />Give opportunity for better contracting and cost control with MROs.<br />
  20. 20. The Report and Model<br />Typically the report is delivered in two coordinated, bespoke formats.<br />1/ A model based in Microsoft Excel<br />This report is a model which is a long term tool for the client, which delivers immediate cost saving identifiers and the ability to use the model to forecast cost and also check costs against expectations going forward.<br />2/ A written report <br />This report elaborates on the detail in the Excel report and is delivered with both an executive summary and fine detail contained within.<br />
  21. 21. The Written Report<br />The Report is written and presented to highlight<br /><ul><li> An outline of the investigation and the analysis performed.
  22. 22. Investigation of underperforming tasks / project areas
  23. 23. Including analysis of these tasks / project areas and recommendations for improvements.
  24. 24. Timeline for improvements and betterment for all project items.
  25. 25. This will encompass implementation goals and indicator understanding and monitoring capabilities.
  26. 26. This will also include IBA on going support and continuous measurement support and implementation assistance.</li></li></ul><li>The Model<br />
  27. 27. Bespoke To Clients’ needs<br />What are the best performers?<br />IBA reports and models are built bespoke to our client needs and workscope specifications.<br />IBA models work in a way that your team understands and will fit into their daily business tasks and activities.<br />The written report and the model address items which are relevant to the client and work to achieve cost savings outlined within.<br />Discussions will be held with the client during the project, these discussions and interim meetings will help to shape a model and report which exceeds the client’s expectations in the short, medium and longer term.<br />
  28. 28. Typical Timelines<br /><ul><li>Stage 1 – Visit, review and data collection 2 weeks
  29. 29. Stage 2 – Determine Industry Standard 3 weeks
  30. 30. Stage 3 – Model Construction 3 weeks
  31. 31. Stage 4 – Report Construction 3 weeks
  32. 32. Stage 5 – Review of output & amendments 1 weeks
  33. 33. Stage 6 – Final Delivery 12 weeks</li></li></ul><li>It Doesn’t Have to End There<br />Forecasting and updating as you require and in line with your changing business needs.<br />
  34. 34. Questions <br />Ben Jacques<br />Commercial Manager<br />IBA Group Ltd<br />Ben.jacques@ibagroup.com<br />+44 (0) 1372 22 44 88<br />

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