The MRO landscape is changing as next-generation engines continue to enter into service, tightening the pressure on an already exhausted supply chain. How do engine manufacturers ready the MRO network and the supply chain, as a whole, going forward? Join four top engine OEMs, as they discuss current and future challenges and opportunities for this sector.
The new generation of aircraft engines have already caused quite a stir on the market, among them, Rolls-Royce's Trent 1000 engine, which powers Boeing’s 787 Dreamliner aircraft. In short, the engine manufacturer is experiencing problems with the compressor durability causing parts to wear out faster than expected.
And Rolls-Royce certainly isn’t the only manufacturer facing initial technical challenges with next-gen engines. CFM’s Leap and Pratt & Whitney’s geared turbofan engine, the GTF engine, too, have experienced a series of teething problems that have slowed down aircraft deliveries and increased maintenance costs as well as supply chain strain.
Engine ramp-up
All of the OEMs are already working toward solving the issues in the short term, hopefully switching the focus from the problems of the engines to the benefits in fuel savings that the new technology is offering. Meanwhile, though, the supply chain is struggling to keep up with the added demand and a red-hot market that hadn’t anticipated problems with the new engines.
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As a group of experts discuss how to prepare the supply chain for the challenges of tomorrow.
On top of that, there’s a huge ramp-up going on in the market. The global commercial aircraft fleet is expected to grow by 50 percent within a decade, according to Oliver Wyman’s Cavok Group, increasing the global fleet from 26.307 aircraft in 2018 to 37.978 in 2028.
»I can’t remember a time where capacity was as constrained in the engine market, as it is right now. For the past 20 years, engine shops have largely been 50 percent full, but today, that’s not true,« says Jonathan Berger, Managing Director at Alton Aviation who was the moderator at the Engine Update Session at MRO Europe 2018.
He continues:
»The reason why it’s so difficult to get slots right now is because of the fact that multiple forces are pressuring the supply chain. On one hand, we have all the legacy engines that stayed on wings until their LOP visits, but they’re all coming into the repair shops now. On the other hand, we have all the new technology engines coming into the market and, as with all new products, we are seeing some teething issues that are driving these engines into the shop. For the supply chain, this means that it’s being constrained with producing parts for legacy motors as well as producing and optimising all the new engines.«
What’s the current state of the engine market?
All four major engine OEMs were represented in the discussion at MRO Europe 2018, allowing attendees to gain insight into the current struggles and the outlook for the future.
Paul Finklestein, Director of Marketing with Pratt & Whitney, gets the first word:
»We’ve had various issues lately but we’re handling them quite well. Starting in January 2018, all corrective actions are inherent in the new engines we produce, so the MRO challenge this year is taking those 300 engines in the field and bringing them up to the latest standard. From a fuel perspective, the new GTF engine hit the target from day one, saving about 16 percent in fuel,« he says and continues:
»GTF sales have been really strong, with over 9000 orders and commitments within two years of entry into service, so this is great news for our MRO partners. In comparison, the V25 motor sold 7000 engines in 30 years. «
Rolls-Royce is also keeping itself busy with the introduction of three new parallel programs.
»With regard to new engine programs, we’ve been in a relatively unprecedented phase of new product introduction over the last couple of years. We basically have three new parallel programs: the latest version of the Trent 1000, the Trent XWB 97 and the Trent 7000. All three are coming into service now, two of them are in service already and the A350-NEO is about to enter service,« explains Scott Holland, Marketing Executive – Europe at Rolls-Royce.
Holland also touched on the issues with the Trent 1000, apologizing for the inconvenience to customers.
»I have to mention the issues we’re having with the Trent 1000. We’re putting Trent 1000 customers under a lot of pressure and stress and we know it’s an unacceptable level of burden for them, so we’re working very hard on fixing the issues with the compressors. The Trent XWB, though, continues to perform near flawlessly. The first engines are reaching about four years in service, and we’re virtually getting these engines to run a full refurbishment life, without any issues at all,« he says.
Jacopo Lucioli, Marketing Services Manager at Safran, is representing CFM in the debate and recognises the huge increase in demand, which has led to major capacity investments.
»The LEAP engine entered into service around two years ago and it’s been a great success. Right now, we have a backlog with more than 50.000 engines on the NEO-models, but it has been an incredibly steep learning curve. Just to give you an idea, the LEAP engine logged 1 million flight hours two times faster than the CFM56, we delivered 1.000 engines three times faster than CFM56, and in two years we have had two times the number of customers. We’re making huge investments to modernise our facilities as well as increase the capacity in order to be ready for 2019 and 2020, when we raise the rate again with a record number of more than 2000 LEAP engines delivered in one year,« Lucioli explains.
Representing the last major engine OEM, GE Aviation, is Brian Ovington, Director of Marketing – Services. Recently, GE tested the biggest jet engine ever for the Boeing 777X, the GE9x engine.
»We’re very happy with the performance of the GEnx in the 787s. We recently introduced an additional upgrade to address some issues in severe environments, so we’re working on implementing this to increase overall durability. We’re also seeing great progress with the new GE9X engine. We had the first test in 2016, and we’re about halfway through all the certifications now and have around 700 engine orders in the backlog at the moment,« Ovington explains.
Will the OEMs’ aftermarket strategies change?
For the legacy engine models, each of the OEMs has had slightly different strategies. Going forward with the geared turbofan, the question is if and how the OEMs are approaching the next 20 years differently than they’ve done with the previous models.
»Our focus right now is making sure we can bring the current engines up to speed. We still focus on our current network, consisting of four shops in the NEO-network, but we’re also expanding our horizon and bringing in some top service providers,« Paul Finklestein says about Pratt & Whitney’s future aftermarket strategy and adds:
»Our strategy isn't to build a lot more shops for ourselves. The strategy is to continue to use growth either through independents, third parties or large legacy operators that happen to purchase the geared turbofan and who want to stay in the overhaul market. In the long term, there’ll be a huge demand for MRO capability, so I’m sure there’ll be a lot of interest from third parties to get into this market.«
Scott Holland from Rolls-Royce, too, identifies future opportunities for independent MROs, especially with regard to the OEM’s Trent 700 engine.
»The Trent-network is difficult to view as a whole, as we satisfy very different fleet sizes within that network. But the Trent XWB is probably the most visible demonstration of the way we’re going to do things going forward. Also, the network we have set up already for the Trent 700 is a mixture of joint venture shops and customer-owned shops. This balance of independents and joint ventures is something we want to maintain, going forward, as a template,« he says, adding that that there’s going to be more opportunities for >MROs interested in collaborating with Rolls-Royce on maintaining their Trent 700 engines, which are moving into a mature phase of their life cycle.
Jacopo Lucioli, Marketing Services Manager at Safran, says that CFM won't change their strategy going forward.
»We’ll continue to offer the same value. We want to provide different services throughout the life cycles and, at the same time, offer the value of an open network and a competitive aftermarket. Customers can choose their own MRO-infrastructure to perform maintenance or go to a third-party that has a different value proposition than us,« Lucioli says.
GE Aviation’s approach to the aftermarket continues to be very similar to that of CFM. Brian Ovington, Director of Marketing – Services, explains:
»We have an open competitive MRO model, as it’s helpful for both us and partners. For the GEnx, 50 percent is available for other people to service and this is very valuable to us. It’s helpful to have experienced airline MROs who can help solve our problems and teething pains.«
Challenges going forward
Throughout the discussion between the engine OEMs, it’s becoming apparent that the main short-term challenges ahead lie in the increased demand from multiple forces. The global fleet isn’t behaving as forecasts anticipated and thus, legacy fleets are staying longer on the market than expected, causing strain on the supply chain.
At the same time, a record number of new engines are entering into service these years – and with a considerable amount of teething issues – this is adding further pressure on the supply chain.
»New engine programs consume resources, especially if there are service issues too. Those resources should have been allocated to do a heavy overhaul on the legacy fleets. To solve this, we need to do a better job in forecasting the demand, so we can prepare for these scenarios,« says Paul Finklestein, Director of Marketing at Pratt & Whitney.
Rolls-Royce’s Scott Holland agrees.
»We all draw on certain materials, technologies and people who can help us with the activities that support our business. Right now, we’re experiencing a ramp-up in growth in both the production and the aftermarket,« he adds and points to a potential solution looking further ahead:
»We’ve got to look at how we can approach that new material production through what we can do in the longer term aftermarket. For our mature fleet, we are looking into using more serviceable, used materials and working with people who can do that well. That will relieve the burden of new part supply in the aftermarket and make sure it’s available for the OE.«
Asked about when airline operators, who are negatively influenced by the heavy strain on the supply chain, can expect a resolution of the ramp-up, GE’s Brian Ovington had relatively good news.
»We’re not talking years. I think it’s going to be resolved over the course of the next year. The thing is that once you get behind, you can kind of recover, but not fully. You’re always going to be behind until you manage to get ahead of demand and we’re working hard on getting to that point,« he says.
Long-term outlook for the engine sector
In the longer term, there are several milestones and new technologies on the horizon. Engine OEMs, too, are focusing on driving their business models forward with innovation. For now, that innovation is taking the form of various digitisation technologies and demonstrator programs and, to some extent, electric engines.
»Of course, digitisation is a hot topic for us as well. I think all the engine OEMs apply analytics that help support the fleet and help manage field issues and this is only set to continue in the coming years. We can already predict and prevent certain failures, so the main goal, at the moment, is to prevent unscheduled activity. Naturally, we can’t get rid of all events altogether, but if we can plan and schedule current unforeseen events, that would be of tremendous value to us,« explains Brian Ovington.
Across the panel, better connectivity, supply chain transparency and big data seem to be key areas of focus. Additive manufacturing, which is spreading fast to all corners of the industry, has already shown promising results.
»AM is a big opportunity. You can make some parts with it already and get significant cost reductions, but it doesn’t really work for the big complex parts – yet. The technology and the use cases are developing all the time, so it’ll be interesting to follow in the years to come. In terms of electric engines, we’re probably talking 20-30 years before we’ll see significant adaption,« Ovington says.
Part of Rolls-Royce’s investment for the future is a series of full engine demonstrator programs that promise to power the aircraft of the future.
»The key, for me, is maturity. The technology must be matured, and part of that drive for maturity comes through our commitment in the aftermarket and our service contracts because we need to live within this aftermarket. As for the future of engines, we are investing, as much as we can, into full engine demonstrator programs and testing those, as much as possible, to move forward,« says Scott Holland, Marketing Executive – Europe, Rolls-Royce.