The document discusses airline strategy regarding operating older aircraft from 14-25 years versus replacing aircraft. It notes that while maintenance costs increase with aircraft age, leasing costs decrease, resulting in a relatively flat total cost curve. Operating older aircraft requires more training for mechanics, additional maintenance resources, and focus on passenger cabin experience to prevent the perception of an aging fleet. Overall, the document argues that for airlines used to new aircraft, operating in the 14-25 year range could produce cost savings and suit financial, operations, and customer needs.

1. Airline Strategy
Rewarding Maintenance Costs?
A consideration when deciding whether or not to extend or renew the
lease of an aircraft is the ongoing maintenance costs of the aircraft in
question. Typically maintenance requirements increase as an aircraft’s
age increases, but does it increase so dramatically that it makes an
aircraft uneconomical to lease? Perhaps the commensurate reduction
in lease rentals potentially offsets these maintenance increases and IBA Group Limited
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offers a modern, passenger friendly, but not new, aircraft as a viable
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revenue machine for many years to come?
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It is a relatively simple hypothesis to argue that as an aircraft gets older it requires more KT22 8DY
maintenance. The maintenance required may become more complex and downtimes can United Kingdom
increase compared to that of a new aircraft. T: +44 (0) 1372 224488
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However, the effect of the global financial crisis has been such that airlines have had to rethink E: marketing@ibagroup.com
their aircraft fleet replacement policies. A few years ago it would have been relatively easy for
airlines to acquire new aircraft to replace their older aircraft through finance or operating leases.
About IBA
IBA has performed detailed studies of the maintenance costs of the aircraft covering the complete The International Bureau of
maintenance spectrum of airframe, systems, engines, landing gears and general support costs Aviation (IBA) was established
for an aircraft from new to 30 years old and through the various stages of line maintenance, in 1988 to provide independent
base maintenance, interior costs and engine shop visits. expert business analysis to the
aviation industry. IBA advises
commercial and business
The manufacturers typically use a maintenance maturity curve that shows significantly increasing aviation clients, aircraft engine
costs as the aircraft gets to its “mid teens”, that is, around the 14 to 16 year timescale. manufacturers and operators.
Services include asset
For the airlines the decision to operate the older aircraft will create challenges. The Chief valuations, technical and
engine management, consulting
Technical Officer (CTO) will need to focus on the increased costs and require decisions as to
and commercial services,
whether to perform the increased workload in-house or outsourced to other MRO’s. Similarly the industry and sector research
Chief Financial Officer (CFO) will want to see some form of predictability in the future costs of and analysis.
operating the aircraft beyond the mid teens.
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At the higher level there is some benefit in holding onto older aircraft since the leasing or www.ibagroup.com
financing costs are likely to reduce as the aircraft gets older.
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2. Airline Strategy
The graph below compares the increased maintenance costs of a B737-800 to the lower leasing
costs. The resultant product is a relatively flat cost curve between 14 and 25 years.
For an airline, the total costs will in fact decline after 14-15 years of service due to the drop in
lease rate. However the costs will start to rise again after 25 years of service.
For Line maintenance there are some specific considerations if the policy of operating older
aircraft is being seriously considered:
Line Mechanics may require more detailed training on troubleshooting defects and their system
knowledge may need to be more detailed in order to keep downtime to a minimum. For airlines
operating an equalised maintenance programme where the line teams are expected to perform
slightly heavier checks to reduce the heavy check downtime – these checks may increase as
the aircraft ages. Therefore more detailed training to identify the access areas and inspection
criteria will be required and this may need line mechanics becoming acquainted with the heavy
maintenance checks to gain practical experience of the more detailed inspection requirements.
Access equipment and tooling on the line will need to be reviewed - perhaps requiring more
equipment for access and testing of the aircraft systems both for troubleshooting and increased
routine maintenance.
Similarly, the spares holding will require review to ensure adequate supplies of rotable and
consumable spares are at hand for the increased maintenance requirements. Therefore the
interaction between the planning and line maintenance teams will be an important aspect.
Clearly there will be no point with embarking on the exercise until it is clear that the right
equipment and parts can be procured at reasonable prices and that the increased demands
upon the workforce can be suitably managed. For example, if the expectation is that more line
maintenance work will be required there may be labour matters to deal with, such as changes to
working hours and shift patterns.
Maintenance of older aircraft does have other benefits. The aftermarket for spare parts is more
mature and options such as exchange, pooling, used parts purchases or discounted new pricing
will be more likely than when an aircraft is new into service. The MRO options are also likely
to be greater as facilities expand their capabilities as more aircraft. Many airlines will also
look more closely at PMA parts usage. There will be some checking of any leasing or financing
contract to see if they are allowed under the maintenance covenants.
~~CONTINUES~~

3. Airline Strategy
At IBA we are finding that lessors are seemingly more relaxed and allow the use of some PMA
parts, apart from those used in the core engine/gas path areas.
An area that will require some further thought and training is “culture”. Aircraft maintenance
engineers tend to be very focussed on the airworthiness aspects (as we would expect) but in my
experience there can be an aversion to the cabin interior issues. However, these areas are what
the passengers see and feel so attention to detail is vital to prevent the passengers perceiving
that they are flying in older aircraft. Seat arm caps, carpets, window blinds and washroom
facilities may not be a significant airworthiness or reliability item - but it is what the passengers
are sat looking at often for many hours. Therefore line maintenance may need to have a
dedicated interiors crew, especially where complex, interactive IFE systems are involved. These
issues may already be addressed for the operation of new aircraft but for the more mature fleets
there is more often a greater need for rapidly fixing the cabin defects.
In summary - if you are an operator used to flying “new” aircraft do not be afraid of operating
aircraft that are in the 14 to 25 year range. The issues are complex but we suspect that the
balance between financing and maintenance/operational cost will produce a result that may
suit the CFO, the CTO, shareholders and passengers alike. If this idea sounds daunting, IBA is
on hand to outline the likely issues for your operation and we would be pleased to hear your
feedback on how you might consider implementing this into your fleet planning.
Phil Seymour
President and COO
Phil.seymour@ibagroup.com
Ben Jacques
Commercial Manager
Ben.jacques@ibagroup.com
~~ENDS~~