40 | Global Transport Finance | September/October 2015 AIRCRAFT ENGINE FEATURE STORY As these engines continued clocking operational hours and cycles, airlines started facing inflight shutdowns (IFSDs), air and ground turnbacks, delays, cancellations and high rates of unscheduled engine removal due to internal hardware distress/external component defects. The single biggest challenge that investors and operators of these engines face today is the effect of harsh environments on engine hardware, resulting in high engine maintenance cost. Impact of harsh environment on engine internal hardware Airlines in different regions, operating the same model of engine, began to observe distress and high rates of deterioration on different internal hardware. High-cost hot section parts, such as HPT blades, HPT NGV, combustion chamber liners and LPT NGV were mainly effected. Normal maintenance planning document (MPD) borescope inspection intervals were inadequate to pick up defects in time to prevent engine failures or to avoid unscheduled engine removals. Impact of harsh environment on engine external hardware Higher operating temperatures and dust in the air causes malfunction of different external components, resulting in delays and cancellation of flights. Recovery of grounded aircraft from remote stations with limited infrastructure is always a challenge, both in terms of logistics and finance. Entry into service New aircraft and engine models have been selected by investors and operators without sufficient data on how these engines will perform in each airline’s unique operating environment. Airlines prepare for starting operation of these engines based on the advice from original equipment manufacturers (OEMs). Operators maintained and utilised the aircraft and engines as per the aircraft MPD and other OEM-published operation and maintenance documents. Terms of operation Engine lease rates, delivery and redelivery conditions, maintenance reserve rates, minimum workscope requirements for maintenance reserve claims are discussed and agreed between lessor and lessee -- usually an airline -- mainly based on information provided by an OEM and historical data available from other models of aircraft engines operating in better operating environments. Engine repair and maintenance rates, spare engine requirements, and engine removal plans are agreed between airlines and engine MROs based on OEM inputs. It is a crucial issue for operators as to how much data have been collected by aircraft and engine OEMs during the product development stage and test runs. OEMs need to determine the adverse effects of environmental factors on internal hardware, as well as external components of the engine, and factor these findings into the warranties and guarantees that are offered to the investors and operators. Operational and financial impact As an aircraft’s dispatch reliability is adversely affected, an operator’s reputation suffers and business is impacted. Aircraft can be grounded due to lack of spare engine availability. Due to high rates of premature and unscheduled removals and shop visits, cost calculations are compromised. Engine shops are likely to refuse to cover premature and unscheduled shop visit repairs and provide spare engine support unless stipulated in an agreement. While revenue generation and load factors are at optimal levels, unexpected high engine repair costs will definitely impact income statements. Airlines without sufficient cashflow often are forced to cease operations. All stakeholders, including investors, lessors, vendors and airline employees suffer in the event of a shutdown. OEM approaches and recommendations When an airline reports operating problems to an OEM, it is not unusual for the manufacturer to react negatively, asserting that the issue in question is of a specific rather than a general nature, that is, that the problem being reported is not widespread across a product. As further defects are reported, it is not inconsistent for an OEM to lay blame for the failure on a harsh operating environment rather than the product. From its perspective, an OEM may not have sufficient data from different operating regions to predict environmental Growth in fleet size and operations of A320 and 737-family aircraft in the harsh Growth in fleet size and operations of A320 and 737-family aircraft in the harsh environments of the Middle East, Southeast Asia and China have presented many environments of the Middle East, Southeast Asia and China have presented many unique problems for the V2500 and CFM 56 engines that power these aircraft. unique problems for the V2500 and CFM 56 engines that power these aircraft. By: Joe Jacob, vice president for powerplant services, Acumen Aviation By: Joe Jacob, vice president for powerplant services, Acumen Aviation acumen_Layout 1 06/11/2015 15:20 Page 1