airline maintenance cost executive commentary · 2021. 4. 30. · summary graphs and p&o...

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1 Airline Maintenance Cost Executive Commentary CONFIDENTIAL

JANUARY 2021

Airline Maintenance Cost Executive

Commentary

FY2019 Data

FY2019 Data Highlight

Airlines 32

Aircraft 3,628

Leased Aircraft 1,655

Cost per FH $1,095

Cost per FC $2,548

Cost per Aircraft $3.33M

Cost per Airline $378M


Foreword

Dear Member Airlines,

2020 has been a very challenging year for the airline industry. Most of the international traffic came to a halt and in

many cases service became sporadic. Commercial airlines tried to adapt to new conditions and parameters and

tried to preserve as much cash as possible to remain a viable concern. Increased cargo services (utilizing even the

passenger cabin to transport essential cargo), repatriation flights, quarantines and travel restrictions and bans

became a new norm for the industry. The development of a new vaccine for COVID-19 and the wide vaccination of

the general public is a major hope for the survival of the whole airline industry.

MCTG has not been immune to such a huge impact to the airlines worldwide. Airline employees that the IATA

MCTG team has been working with, have been significantly affected by layoffs, furloughs, salary and work schedule

reductions, bankruptcies, and airline closures. Recognizing such challenges, we decided to keep the MCTG data

collection active in 2020 and collect as much as possible for the 2019 maintenance cost data. We had a drop in the

number of participating airlines as many were simply not available to provide data. We expect that 2021 will be

another challenging year for the industry as industry forecasts remain gloomy. However, we would like to maintain

such links and continue to track the costs in the industry that will take an unprecedented change. Data collections

for these years will provide us with the baseline to monitor costs in the past COVID -19 era. Therefore, we would

like to thank all the airlines and their personnel that worked with us this year to make such a report available and we

would like to encourage you to provide us with your 2020 maintenance cost data as soon as they become

available.

Best regards,

Chris Markou

Head, Operational Cost Management, IATA

[email protected]

Geraldine Cros

Manager, Operational Cost Management, IATA

[email protected]

mailto:[email protected]



Contents

Foreword .................................................................................................................................................................................................. 3

Preliminary Remarks ............................................................................................................................................................................ 6

The importance of data quality .............................................................................................................................................................. 6

The importance of reporting operational data ................................................................................................................................. 6

The importance of data treatment ....................................................................................................................................................... 6

The acceptance of data ........................................................................................................................................................................... 7

Data and Analysis Methodology ....................................................................................................................................................... 8

Definitions & Acronyms ....................................................................................................................................................................... 9

1. Global Picture ................................................................................................................................................................................... 11

1.1. Airline Industry Landscape in 2019 ........................................................................................................................................... 11

1.2. World Fleet ......................................................................................................................................................................................... 11

1.3. Maintenance, Repair & Overhaul (MRO) Market ..................................................................................................................... 14

2. FY2019 Snapshot ............................................................................................................................................................................ 16

2.1. Fleet Overview .................................................................................................................................................................................. 16

2.2. Maintenance Cost Analysis .......................................................................................................................................................... 19

2.2.1 Direct Maintenance Spend .................................................................................................................................................. 19

2.2.2 Direct Maintenance Spend by Aircraft Category ..................................................Error! Bookmark not defined.

2.2.3 Personnel & Overhead ...................................................................................................Error! Bookmark not defined.

2.3. Spare Parts & Inventory ..........................................................................................................Error! Bookmark not defined.

2.4. Aircraft Leasing & Maintenance Reserves .......................................................................Error! Bookmark not defined.

Aircraft Ownership Costs - Finance/Leasing & Maintenance ............................................. Error! Bookmark not defined.

3. Analysis by Airline Group ........................................................................................................... Error! Bookmark not defined.

3.1. Fleet Overview ...........................................................................................................................Error! Bookmark not defined.

3.2. Maintenance Cost Analysis by Airline Group ..................................................................Error! Bookmark not defined.

3.3. Aircraft Leasing & Maintenance Reserves by Airline Group ......................................Error! Bookmark not defined.

4. Trend Analysis ................................................................................................................................ Error! Bookmark not defined.

4.1. Fleet Overview ...........................................................................................................................Error! Bookmark not defined.

4.2. Maintenance Cost Overview .................................................................................................Error! Bookmark not defined.

4.3. General Trends ..........................................................................................................................Error! Bookmark not defined.

4.4. Trend Analysis by Airline Group ...........................................................................................Error! Bookmark not defined.

5. Trend Analysis by Aircraft Category ...................................................................................... Error! Bookmark not defined.

5.1. Overview by Aircraft Category .............................................................................................Error! Bookmark not defined.

5.2. Narrowbody Aircraft .................................................................................................................Error! Bookmark not defined.

5.3. Widebody Aircraft .....................................................................................................................Error! Bookmark not defined.

5.4. Regional Jets ..............................................................................................................................Error! Bookmark not defined.

5.5. Turboprops .................................................................................................................................Error! Bookmark not defined.


Annex I: MCTG Fleet vs World Fleet ............................................................................................ Error! Bookmark not defined.

Annex II: Base and Component Maintenance Costs by Airline ........................................... Error! Bookmark not defined.

Annex III: Staff ..................................................................................................................................... Error! Bookmark not defined.

Annex IV: Mechanics and Overhead Staff Breakdown .......................................................... Error! Bookmark not defined.

Annex V: Time Breakdown .............................................................................................................. Error! Bookmark not defined.

Annex VI: Fleet Distribution by Aircraft Family and by Group ............................................ Error! Bookmark not defined.

Annex VII: Operational Data by Aircraft Category ................................................................. Error! Bookmark not defined.

Disclaimer

This study provides high level benchmarks. This study does not provide direct cost comparisons. Every Airline operates in a unique

environment, e.g., in terms of geographic location, network schedule, fleet type, aircraft age, fleet size, proximity to major OEMs, currency

exchange rates, etc. Cost Benchmark is not a science and no existing normalization is available that allows any form of direct comparisons. In

addition, our sample includes Airlines of different size, aircraft size, and operational profile.

Every effort has been made to ensure this Report, including the collection of data and publication of the results, complies strictly with all

relevant competition laws. This Report is only available to the Airlines which participated in the data collection. Any use by third parties must first

be cleared with IATA.

Although every effort has been made to ensure accuracy, IATA shall not be held responsible for any loss or damage caused by errors,

omissions, misprints or misinterpretations of the contents herein. Furthermore, IATA disclaims all warranties of any kind, either expressed or

implied, including, but not limited to, implied warranties of satisfactory quality, fitness for a particular purpose, or non-infringement. IATA shall

not be liable for any loss which may arise from the use of the information contained in this report.


Preliminary Remarks

The Maintenance Cost Technical Group (MCTG) – formerly known as Maintenance Cost Task Force (MCTF) –

collects maintenance cost data from airlines worldwide on an annual basis. The goals of MCTG are to provide the

tools, methodology and definitions to be able to determine how much it costs an airline to maintain its fleet and be

able to use the data in cases of new fleet introduction or expansion, “make vs. buy” decisions, year-over-year

trends, etc.

This report is exclusively distributed to airlines that provided data for 2019. We are doing our maximum to present

meaningful analysis and we encourage you to provide feedback on this report so we can enrich it again next year.

We regularly send out a survey to airlines in order to gather their advice on how to improve this report and its

content. MCTG data collection is open to all commercial airlines worldwide that would like to benchmark their cost

to maintain their fleet. MCTG does not discriminate between IATA and non-IATA member airlines. MCTG does not

discriminate between major, domestic, international, low-cost, regional airlines, etc.

The importance of data quality It takes a fair amount of time for MCTG airlines to gather and submit data, and it takes a lot of effort to validate this

data in order to deliver the most relevant benchmark analysis. We often need to contact airlines and ask for

clarifications when numbers do not meet the quality checks set. For this initiative to remain viable and reliable, it is

critical to focus on the best possible data quality.

That’s why we would like to remind you of the importance of making sure your data are accurate before submitting

it. For that purpose, built-in checks are included in the data collection form (on three tabs: Summary Tables,

Summary Graphs and P&O Graphs) in order to help you get an idea of the main metrics (e.g. maintenance cost per

flight hour, per flight cycle or per aircraft). Unscheduled events can cause dramatic impact on maintenance spend,

that is why we need also as many comments to explain unusually high or low costs.

The importance of reporting operational data The focus of MCTG is clearly on maintenance costs, however operational data (e.g. flight hours, cycles, ASK, fleet

size and fleet age) and personnel & overhead data (e.g. number of mechanics and overhead staff, time breakdown,

overhead costs, etc.) are very important to calculate unit costs and KPIs. We would like to draw your attention on

the importance of reporting accurate cost data and operational data in order to get the best benchmark data and

analysis possible for the benefit of the airline industry and your own airline.

The importance of data treatment All the MCTG analyses presented in this report use maintenance cost data as they were provided by the airlines

through the standardized IATA toolset. No attempt was used to normalize the data based on any parameters such


as operational severity (hours to cycle ratio, utilization, harsh environment, etc.), aircraft ageing, fleet size and

commonality, labor rate, etc.

Additionally, it should be noted that the analysis is done in USD as most of the aircraft parts are marketed in USD;

therefore, currency exchange rates may play a significant role in benchmarking maintenance costs, especially

when substantial foreign exchange fluctuations and/or currency devaluation take place.

Finally, the aircraft delivery schedule and the periodicity of the maintenance program can strongly influence costs,

especially when many aircraft were delivered within a short period of time.

The acceptance of data This report analyzes and comments data from 32 airlines. Due to some late submissions, the publication of this

report has been delayed compared to previous years.


Data and Analysis Methodology

IATA’s Maintenance Cost Technical Group (MCTG) collects maintenance cost data from airlines worldwide on an

annual basis. MCTG Airlines are the carriers which participate in the annual data collection. Thirty two (32) airlines

reported data for FY2019.

The data are then coded (operators are deidentified) and used as reported (i.e. without any normalization) to create

this benchmark report.

All airline data are consolidated and then analyzed considering aircraft type, fleet and engine size and models, fleet

age, maintenance market segments (line, components, engines, heavy checks and MOD) and elements (labor,

material, subcontracted work), flight hours, cycles and geography.

All data presented in this report are de-identified. The two-digit airline codes shown in this report are unique codes

given to the participating airlines for de-identification purposes. Although some of these codes may match real

IATA airline codes, this is merely a coincidence. If you do not know your airline’s code, please contact us at

[email protected].

Typical metrics include cost per flight hour, cost per departure, cost per aircraft. The cost data unit is US dollar, and

the length unit is kilometer.

The goals of MCTG are to provide the tools, methodology and definitions to be able to determine how much it

costs an airline to maintain its fleet and be able to use the data in cases of new fleet introduction or expansion,

“make vs. buy” decisions, year-over-year trends, etc.



Definitions & Acronyms

Term or Acronym Definition

AC Aircraft

AFI Africa

AFTK Available Freight Tonne Kilometers

Aircraft Category NB, WB, RJ, TP (defined below)

Aircraft Family Aircraft communalities (e.g. A320 Family includes A318, A319, A320, A321; 737 NG includes 737-

600/700/800/900)

Aircraft Sub-Category NB, WB2, WB3+, RJ, TP (defined below)

AL Airline

APU Auxiliary Power Unit

ASK Available-Seat Kilometers

ASPAC Asia Pacific

Cost Elements Material, labor, engine life limited parts and outside repairs (or outsourced, used interchangeably)

Cost Segments Line, base, component and engine maintenance

Currency All amounts in this report are in US$, unless specified otherwise.

DMC Direct Maintenance Costs

ESV Engine Shop Visit

EUR Europe

FC Flight Cycle

FH Flight Hour

FLF Freight Load Factor

FTK Freight Tonne Kilometers

LATAM Latin America & The Caribbean

LG Landing Gear

LLP Life Limited Part

MCTF Maintenance Cost Task Force (predecessor of MCTG)

MCTG Maintenance Cost Technical Group

MENA Middle East & North Africa

MR Maintenance Reserves

MRO Maintenance, Repair and Overhaul

MTBR Mean Time Between Removals

NAM North America

NB Narrow-body single aisle aircraft with more than 100 seats (excludes Embraer 190/195)

PLF Passenger Load Factor

Regions Africa (Sub-Saharan Africa)

ASPAC (Asia Pacific)

MENA (Middle East & North Africa)

Americas (North & South America)

Europe (includes CIS)

N. Asia (China, Hong Kong, Macao, Taiwan, Mongolia)


RJ Regional jets up to 100 seats (includes Embraer 190/195)

RPK Revenue-Passenger Kilometers

Supply Chain Includes all maintenance activities performed by third party (also called “contract maintenance” or

“outsourcing”) and the cost of material purchased to do work in-house

Total Maintenance Costs DMC plus overhead costs

TP Turboprops

TR Thrust Reversers

Units K ($#,000) Thousand

Mill. ($#,000,000) Million

Bill. ($#,000,000,000) Billion

Utilization Number of flight hours per aircraft per day (= FH / AC / 365 days)

WACC Weighted average cost of capital

WB Wide-body aircraft with more than one aisle or equivalent freighter, combination of WB2 and WB3+

WB2 Wide body aircraft equipped with two engines

WB3+ Wide body aircraft equipped with three or more engines


1. Global Picture This section provides some context to the MCTF analysis in other sections by presenting an overview of the airline

industry, the world fleet count and the Maintenance, Repair and Overhaul (MRO) market for 2019.

In 2019, the world fleet count was 27,343 aircraft with 80% of the fleet manufactured by Boeing or Airbus. Globally,

airlines spent $82 Billion on MRO, representing around 10% of total operational costs.

1.1. Airline Industry Landscape in 2019

1.2. World Fleet In FY2019, the world fleet consisted of 27,343 aircraft. This includes all active western built aircraft in commercial

operations (Passenger, Cargo, Combi), including narrowbody, widebody and regional jets and turboprops

(ATR42/72 and Q300/400 only). 80% of this fleet was manufactured by Boeing or Airbus. The remaining 20% are

the combined share of the other manufacturers (i.e. Embraer, Bombardier, ATR, Fokker, Bae, etc.).

Figure 1 - World Fleet by Manufacturer (2019) - Source: Cirium

In the last decade, the world fleet increased by 7,105 aircraft, broken down as follows: 71% NB, 22% WB, 4%TP and

3% RJ.


Figure 2 - World Fleet by Aircraft Category (2019) - Source: Cirium

Figure 3 - World Fleet by Region (2019) - Source: Cirium

A320 Family remains the most popular aircraft consisting of 8,080 AC and has a narrow lead over the 737 Family

with 7,018 AC in FY2019. (Fig. 4)


Figure 4 - Top 10 Most Popular Aircraft Families (2019) - Source: Cirium

The average utilization in 2019 was 7.85 hours/day (up 2% vs 2018). In FY2019, an aircraft flew on average 2,864

hours and 1,362 cycles. (Fig. 5)

Figure 5 - World Fleet Statistics (2010 - 2019) - Source: Cirium


The industry recorded a net post-tax profit of US$26.4 billion, decreasing by 3.3% compared to 2018.

RPK Growth, % ASK Growth, % Load Factor, % ATK Breakeven Load

Factor, % ATK

2018 2019 2018 2019 2018 2019 2018 2019

Africa 6.1% 4.5% 4.4% 4.2% 60.7% 59.7% 59.8% 59.1%

Asia Pacific 9.5% 4.8% 8.8% 4.5% 72.5% 71.8% 68.5% 68.4%

Europe 7.5% 4.3% 6.6% 3.6% 74.8% 74.4% 70.2% 70.8%

Latin America 7.0% 4.1% 7.3% 3.0% 67.9% 67.7% 66.0% 65.7%

Middle East 5.0% 2.3% 5.9% 0.1% 65.2% 65.1% 68.2% 68.5%

North America 5.3% 3.9% 4.9% 2.9% 64.9% 64.8% 59.0% 58.5%

Total Market 7.4% 4.2% 6.9% 3.4% 69.9% 69.5% 66.0% 65.9%

Table 1 - Airline Passenger Market (Dec 2019) - Source: IATA Economics

All figures in the table above are expressed in % change year on year.

1.3. Maintenance, Repair & Overhaul (MRO) Market Global MRO spend in 2019 was valued at $81.9 Billion, excluding overhead. This represented 10.3% of airlines

operational costs.

Figure 6 - World MRO Spend by Segment (2019) - Source: Oliver Wyman - Global Fleet & MRO Market Forecast


Figure 7 - World MRO Spend by Aircraft Category (2019) - Source: Oliver Wyman - Global Fleet & MRO Market Forecast


2. FY2019 Snapshot

2.1. Fleet Overview In FY2019, the MCTG fleet had 3,628 aircraft, which represented 13% of the world’s fleet. The fleet size of MCTG

airlines ranged from 1 to over 600 aircraft with an average fleet age of 10 years. They flew a total of 11 million flight

hours, and 4.7 million flight cycles. Nine airlines operated both passenger and freighter aircraft. One airline had

freighters only.

Table 2 - Fleet Distribution by Region (FY2019 – 32 Airlines)

AL: Airline

AC: Aircraft

Age: Average Fleet Age (years)

Util: Utilization (Hours / Day)


Figure 8 - Fleet Distribution by Manufacturer (FY2019 – 32 Airlines)

Figure 9 - Fleet Distribution by Aircraft Category (FY2019 – 32 Airlines)

The MCTG fleet mix is slightly different from the world fleet. Boeing (including McDonnell-Douglas) and Airbus are

overrepresented in MCTG fleet. They account for 91% of MCTG fleet vs 80% of worldwide fleet. On the contrary,

Embraer, ATR and Bombardier have a combined share of 9% of MCTG fleet vs 18% worldwide. (Fig. 8)

As shown in Figure 9, narrowbody aircraft (NB) were the most popular aircraft (60% of 32 MCTG airlines' fleet) with

2,898 flight hours per aircraft and 1,489 flight cycles per aircraft on average. In 2019, widebody aircraft (WB)

represented 31% of the fleet with an average age of 10.7 years (9.8 years for NB). Each widebody aircraft flew on

average 3,533 hours and performed 722 cycles (Table 3).


Regional jet (RJ) and Turboprop (TP) fleets are underrepresented in the MCTG analysis because reporting carriers

mostly have larger aircraft.

More details on MCTG fleet vs Worldwide Fleet in Annex I.

Figure 10 - Fleet Demographics (FY2019 – 32 Airlines)

MCTG airlines operated 22 different aircraft families in 2019. Figure 10 represents only the Top 16 aircraft families

with a minimum of 3 operators and 5 aircraft, and a total of 3,490 aircraft (96% of MCTG total fleet). Some aircraft

types well represented in the world fleet have been removed from this graph because they did not meet the ‘3

operators/5 aircraft’ rule in the MCTG fleet. The rest of the fleet (not shown here) is mostly composed of mature to

old fleet types that will be retired in a near future, and new entrants on the market.

Aircraft

Category

Aircraft Airlines Avg

Age

Utilization FH/AC FC/AC FH/FC Dispatch

Reliability

NB 2,177 30 9.8 7.9 2,898 1,489 1.9 98.97%

WB2 1,033 21 10.4 9.8 3,563 734 4.9 98.19%

RJ 229 10 8.9 6.6 2,422 2,007 1.2 98.70%

TP 101 7 8.2 5.8 2,121 2,310 0.9 98.45%

WB3+ 88 6 14.3 8.7 3,180 573 5.6 98.91%

3,628 32 10.0 8.3 3,043 1,307 2.3 98.67%

Table 3 - Operational Data by Aircraft Category (FY2019 – 32 Airlines)


2.2. Maintenance Cost Analysis In FY2019, MCTG airlines reported a total of $14.27B for their Technical Division spend: this is $12.09B for direct

maintenance cost (reported by 32 airlines) and $2.18B for overhead (reported by 27 airlines). $12.09B represent

15% of the world MRO spend for 13% of the world fleet.

They employed a total of 24,280 mechanics (reported by 23 airlines) and 16,439 OH staff (reported by 26 airlines).

Staffing and overhead (OH) are analyzed separately in Section 2.2.3.

2.2.1 Direct Maintenance Spend The 32 MCTG airlines reported $14.27B for their direct maintenance costs, the average maintenance cost was

$378M per airline, $1,095 per flight hour, $2,548 per flight cycle and $3.3M per aircraft.

Minimum Average Maximum

Aircraft/Airline 4 113 600+

Cost/Airline $10.1M $378M $2,185M

Cost/Flight Hour $97 $1,095 $17,813

Cost/Flight Cycle $128 $2,548 $89,466

Cost/Aircraft $0,0M $3.3M $26.1M

Table 4 - Direct Maintenance Cost - Unit Costs (FY2019 – 32 Airlines)

Some extreme min or max values are less representative of the typical operation since they are outliers of the

respective cost category due to periodic maintenance effects, exceptional low utilization or redelivery costs.

However, those outliers were not excluded from the statistics presented in Table 4.

Figure 11 - Direct Maintenance Cost Structure by Segment (FY2019 – 32 Airlines)


Engines and components remain the highest cost segments with respectively 43% and 22% of maintenance costs

(Fig. 11).

For more information on Component Maintenance Cost Management, go to the download section on the MCTG

webpage

Figure 12 - Direct Maintenance Cost Structure by Element (FY2019 – 32 Airlines)

Note: For a few years, we have asked the airlines to report the LLP costs in a separate field, and we included them in the

calculation of Engine Mtc costs. However, not all of them were able to isolate the costs and reported them either in their

Material costs or subcontracted costs. We recommend exercising caution when interpreting this data, especially the share of

LLPs.

http://www.iata.org/mctg

http://www.iata.org/mctg

airline maintenance cost executive commentary · 2021. 4. 30. · summary graphs and p&o...

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