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Aviation BriefingPrepared by ICF for ALTA

2018 Edition 1

INDUSTRYINSIGHTS

A320neo JetTrader ................................................................................................................................................................................3

Taking a Big Picture View of Aviation Sector Rates, Charges and Taxes… ............................................................................5

Making the Case for a Middle of the Market Aircraft ..................................................................................................................9

Calendar Controlled Maintenance Items for ALTA ..................................................................................................................... 15

Quarterly Aviation Briefing

2018 Edition 1

TABLE OFCONTENTS

A320neo JetTrader by Kara Levine | Manager, ICF [email protected]

Angus Mackay | Principal, ICF [email protected]

BackgroundAirbus and Boeing have largely operated a duopoly in the over 100-seat aircraft market since the purchase of McDonnell Douglas by Boeing in the late 1990s. In the late 2000s, induced by sustained high fuel prices and potential challenges to the then existing industry dynamic from Bombardier with its CSeries and from China’s Comac C919, the major airframers brought forward plans to update their narrowbody product lines. Rather than waiting until the 2020s to launch new designs, Airbus (later followed by Boeing) opted to take advantage of the engine advancements from Pratt and Whitney with its geared turbofan (GTF) PW1000G and CFM International with its Leap-X engine and offer re-engined narrowbody aircraft. The advancements from the engine manufacturers, coupled with aerodynamic and airframe improvements, were expected to deliver fuel savings of up to 15 percent.

The Airbus A320neo (New Engine Option) program, comprising A319, A320 and A321 family variants, was officially launched in December 2010 and orders from Virgin America (30 A320neos) and IndiGo followed shortly thereafter. The A320neo became one of the fastest-selling aircraft ever with more than 2,000 orders placed in the two years following the program’s launch.

The primary change in the A320neo over the A320ceo (Current Engine Option) relates to the engines. Like its predecessor, the A320neo is offered with two engine options, the CFM International (CFMI) Leap-1A and the Pratt & Whitney (PW) PW1100G-JM. The Leap-1A is a significant improvement over CFM’s venerable CFM56 line that powers the A320ceo family, Boeing 737NG, and Airbus A340-200/300 aircraft. The Leap-1A incorporates scaled-down technologies from GE’s GEnx Low Pressure Turbine - such as flexible blades - as well as utilizing advanced composites materials. The bypass ratio of the engine is 11:1, an improvement over the 5-6:1 of the CFM56-5B. The Pratt & Whitney PW1100G-JM, colloquially known as the GTF, is considered a more radical technology shift, using a reduction gearbox to permit the fan of the engine to rotate at a different speed than the rest of the engine modules in order to maximize engine efficiency and reduce the number of engine stages. According to Pratt, the engine offers improved fuel efficiency of 16 percent and reduces the noise pollution by more than 50 percent. To date, both engines have experienced reliability problems.

The A320neo retains the same cabin fuselage shape and length as the earlier A320ceo, but can seat up to nine more passengers due to the “Space-Flex” cabin which introduces a new galley and lavatory configuration. Other changes to the airframe are wingtip devices known as sharklets providing a 3.5 percent increase in fuel efficiency. Sharklets were first available for retro- and line–fit on A320s starting in 2012 and are standard on the A320neo. Improved cabin air purifying systems, lighting, and storage were also introduced with the A320neo.

As of November 2017, 169 A320neo aircraft were in service with more than 28 airline operators worldwide.

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 3

38%

24%

38%

CFM PW Undecided

Market OutlookThe A320neo competes in the larger narrowbody aircraft space against its predecessor, the A320, as well as the Boeing 737-800 and Boeing’s re-engined offering, the 737 MAX 8. To date the Airbus A320neo has recorded more than 3,500 orders and its backlog continues to outpace that of the latter aircraft. The orderbook for the aircraft is particularly strong in the Asia Pacific region, in part due to the growth of Low Cost Carriers (LCCs) such as IndiGo and AirAsia. Much of the backlog for the A320neo seems to be dedicated to traffic growth rather than replacement as the majority of the current in service fleet of the A320 is less than 10 years in age (2,612 out of over 4,000).

The first A320neo entered into service with Lufthansa in January 2016 and nearly 170 aircraft have been delivered. The A320ceo is also being delivered, and is likely to do so through the end of the decade due to both teething problems with the new aircraft and engines, as well as the low fuel cost environment, which has diminished the cost advantage of the A320neo with regards to fuel savings.

With respect to engine choice, the CFM Leap engine seems to be the preferred option with 38 percent of the combined backlog and in-service fleet. Nevertheless, a large number of orders are currently listed as undecided as to engine choice (almost 40 percent); however, many of the orders placed in the last year have opted for the Leap engine likely influenced by the continued PW1100G-JM issues.

The overall market for the A320neo is still developing and the aircraft has certainly faced short-term challenges with respect to engine program development. However, with the strong orderbook from a diverse set of airline operators and leasing companies, the aircraft seems destined to gain a significant market share of the large narrowbody segment. If Airbus’s bid for Bombardier passes regulatory muster, the aircraft likely will not face a significant competition outside of that offered by Boeing. As a result, it is likely that the duopoly position of the two manufacturers will continue over the next decade.

A320neo Fleet Status

RegionNumber ofOperators

Active Fleet

Firm BacklogIn Service +

BacklogOptions

Africa 0 0 23 23 0

Asia/Pacific 14 84 1,215 1,299 254

Europe 6 43 442 485 329

Middle East 0 0 178 178 70

North America 2 12 172 187 0

South America 6 27 371 398 40

Unknown 0 0 1,141 1,141 10

Grand Total 28 169 3,542 3,711 693

ENGINE CHOICE FOR IN-SERVICE AIRCRAFT AND ORDERS


It is widely understood that the growth of air travel and expansion of air service has brought significant benefits for local economies as well as for airlines, airports and hotels, which is the big picture. Curiously, many industry beneficiaries lose sight of this and devote energy to opposing the very fees and taxes that fund aviation and tourism infrastructure. This often creates unfortunate tensions among stakeholders in the aviation and tourism sectors, when they should be working as one for the common good. Fees and taxes imposed on the industry arise primarily from the stakeholders’ need to fund their operations, which is understandable. These organizations include national civil aviation departments, immigration and customs services, airports, tourism departments, and airlines, but can also include a country’s general budget.

Fees and taxes that are levied include:

§§ Taxes on air tickets and hotel stays, paid by passengers/visitors

§§ Airport fees paid by passengers in their tickets

§§ Airport fees paid by airlines as landing fees, rent, parking and more

§§ The requirement for a visa along with complex issuing procedures and often a hefty fee for the visa, paid by travelers and airline crew

§§ Restrictive air service bilateral agreements which can limit aviation competition and protect inefficient airlines

This short article will not address each issue in detail but will focus on a few examples that illustrate the need for stakeholders to understand each other’s requirements and to work together for the good of multiple stakeholders as fees and taxes are established.

Airports need revenue to operate and to fund capital investments, while airlines need to keep costs at reasonable levels to permit profits and expansion. Hotels need revenue to operate, maintain, and promote their businesses, while governments need revenue to operate, create infrastructure, and to promote their destinations.

Taking a Big Picture View of Aviation Sector Rates, Charges and Taxes by Jared Harckham | Vice President, ICF [email protected]

Eric Toler | Manager, ICF [email protected]

Recent years have seen countries in Latin America and the Caribbean experience a broad range of passenger growth rates. Some countries have experienced consistent, annual double-digit growth as a result of supply and demand factors, including the expansion of the low-cost carrier model, robust economic growth, and the growing middle class.

PASSENGER TRAFFIC GROWTH IN SAMPLE COUNTRIES, 2011-2016 CAGR

Source: Airports Council International

Mexico+10%

Peru+15%

Chile+9

Argentina+7%

Brazil+5%

Colombia+10%

Panama+20%

Dominican Republic+8%

Ecuador-2%

Uruguay+1%


Note: Assumed a base one-way fare of USD 800 (international) to compute VAT, where applicableSource: ITA Matrix Airfare Search by Google, UNWTO

Some stakeholders argue that in many countries in the Latin America and Caribbean region, taxes increase the cost of airfares, making those destinations less competitive. In addition, high airport fees can raise costs for airlines, making it difficult to justify entry or expansion in a market due to lower levels of profitability. These arguments are intuitive, but a case can be made that each situation is different and that market performance does not always support the arguments.

The chart below illustrates airport and government taxes on a one-way, international ticket (assuming USD 800 cost), along with the growth rate of tourist arrivals. Although BOG has relatively high taxes, tourist arrivals have still grown by 10 percent per year on average since 2011 according to the UN World Tourism Organization. Cancun tourist arrivals have grown at the same rate as Lima, but Cancun’s taxes and fees are a fraction of those in Lima. Thus, it is not a clear-cut case that high airport and government taxes and fees curb tourism – clearly there are myriad other factors at play.

COMPARISON OF TICKET TAXES ON ONE-WAY INTERNATIONAL

AIRFARE (BASE FARE OF USD 800)

Source: Airportcharges.com, ICF AnalysisNote: Landing fees in the table above are for international landings on A320-sized aircraft. Peak-hour charges are not added, where applicable. The landing fees only include direct landing fees and no other surcharges such as parking, follow-me, etc.

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SJO PUJ CUN SCL BOG LIM EZE GRU MVD UIO

Another example of controversial costs are the landing fees and other charges at airports. It is understandable that airlines want these costs to be as low as possible, but there are cases when airport charges must be understood by carriers because they fund airport facilities that enable massive economic impact and connectivity for the community and support improved airline safety and operational efficiency. For example, the new Quito airport opened in 2013 at a significant cost. Importantly, it replaced a dangerous old, in-town airport where the runway length limited air service and where numerous fatal accidents had taken place. The new airport provides the infrastructure for most aircraft to take off in safe and modern conditions with room for growth. The high cost of the new airport along with political risk issues led to relatively high fees for airlines, but this was balanced by a newer and safer place to do business, allowing aviation to grow for all stakeholders. Even with the relatively high taxes and fees and economic problems, tourist arrivals at Quito grew by seven percent per year on average since 2011.

AIRPORT INTERNATIONAL LANDING FEE (USD)

$38 $60 $51

$31 $49 $44 $35

$20 $36 $30

$180 $149

$144

$144

$76 $60

$41

$32

$218 $209

$195

$175

$125

$104

$76

$52

$36 $30

$0

$50

$100

$150

$200

$250

BOG UIO PUJ LIM EZE MVD SJO CUN GRU SCL

Airport Departure FeeGovernment Imposed Tax

Growth of Tourist ArrivalsCAGR 2011-16

10% 6% 7% 8% 1% 1% 6% 8% 4% 12%


There are also charges and processes that are not beneficial to the industry. Many countries still require visitors to have a visa. Visas may be needed for reasons of national security but a bigger problem is the high cost of visas that discourage tourism and long processing times. Eliminating or streamlining requirements for routine tourist visas is a critical initiative for a market serious about tourism.

Economists and airport consultants around the world have calculated the economic contribution (direct, indirect, and induced) of airports to the regional economies they support. While this contribution may be obvious to airport management which sees passengers and cargo flowing through their airports daily, it is often less well known to other aviation stakeholders sitting in government offices away from the airport.

Some examples of the economic impact of aviation include:

§§ Copa Airlines’ new Panama City – Denver route is expected to create 244 new jobs and $26 million in economic impact for the state of Colorado¹

§§ Aeromexico’s new services from Guadalajara, Merida and Queretaro to Atlanta are expected to generate $10 million in economic impact for the state of Georgia²

§§ Iberia’s launch of service to San Juan, Puerto Rico from Madrid is estimated to have generated an economic impact of $21.2 million for the island³

The need for revenue creates tensions and parties work at cross-purposes to achieve the greater goal, which is sustained economic impact. Among the barriers to the sustainable development of traffic are restrictive visa and immigration policies, airport and government taxes, and home country airline interest. In the case of the latter, some governments maintain restrictive bilateral agreements as a way of protecting their home country airline from competition, which at the same time stifles growth by preventing airlines from serving the market. All of this stands in the way of promoting passenger traffic and tourist arrivals.

One way to assist stakeholders in understanding the big picture of the economic impact of air service is through air service development committees. Airports, jointly with other stakeholders, can help grow air service and visitors via a coordinated effort to achieve sustainable connectivity. The airport is often in the lead role but other stakeholders can be:

§§ Chambers of Commerce

§§ Regional or Local Tourism Entities

§§ Hotel Associations

§§ Specific Industry Associations

§§ Economic Growth Agencies

§§ Local Governments

¹“Copa Airlines added to international lineup at Denver International Airport.” The Denver Post, April 19, 2017.²ICF Analysis³“Gobernador anuncia nueva conexión aérea hacia Europa.” Governor’s Office Press Release, November 16, 2015.

ECONOMIC IMPACT

Visa/Immigration Policy (National Security) Passenger Traffic

Airport/Government Taxes (Need for $$$) Tourist Arrivals

Home Country Airline Interest (Political Pressure) Infrastructure


Air service development committees can offer airlines market data and recent economic developments, specific route proposals, incentive programs, and marketing and branding support, among other initiatives. They can also explain the costs, fees and taxes in the destination.

This group of air service and tourism stakeholders can offer incentives and discounts to airlines to encourage growth in strategic markets, which may help offset some of the fees and taxes. These can be a broad range of agreements from simple to high-risk:

§§ Discounted landing, parking, and rental fees at the airport

§§ Funds for advertising or other uses

§§ The pre-purchase of seats on the route by the community

§§ A revenue/profit guarantee

§§ Discounts on fuel

§§ Tax exemption/rebate

Costa Rica is a best-practice example of a country that takes a proactive, coordinated approach to air connectivity and building tourism. The country’s key airports, the DGAC, various government ministries, and the National Tourism Board all understand the critical importance of tourism to the economy and the role that aviation plays in supporting the tourism industry. The Costa Rica Tourism Institute is funded by a $15 tax on all tickets issued outside that country. With this, the organization promotes the country in joint campaigns with airlines and operators, finances tourism infrastructure and more. Air service receives the benefit of tax-exempt jet fuel, joint promotion and relatively low charges to airlines.

Stakeholders in a Successful Air Service Development Program

Chambers of Commerce

Regional or Local Tourism Entity

Hotel Association

Specific Industry Associations

Economic Growth Agencies

Local Governments

Airport &

Advisor


Making the Case for a Middle of the Market Aircraft?by Haitham Mellouli | Associate, ICF [email protected]

Aircraft and engine design and technology have been pushing the edge of what has been possible in the world of commercial aviation. The Boeing 787 and Airbus A350, along with the re-engined Boeing 737 and Airbus A320, have opened up new markets that were not economically feasible in the past. Routes such as Boston-Tokyo, the recently announced revival of Singapore-Newark, and Norwegian’s Europe-North America network are possible today in large part due to the innovative design, material advancement, and operating capability of new technology aircraft.

As new markets are opened at the edges of aircraft capacity and flight ranges, ICF believes there is a market in the middle ripe for a new aircraft that would provide operators with similar opportunities that the 787/A350/737MAX/A320neo provided but in a seat class category that bridges the gap between current production single aisle aircraft and smaller widebodies. Developments in the midsize space promise similarly exciting opportunities.

CAPACITY AND RANGE OF NEW TECHNOLOGY AIRCRAFT

Source: ICF analysis.

MoM Opportunity

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1003,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000

Range - miles

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acit

iy -

Sea

ts

737-MAX10 A321neo

737-MAX8 737-MAX7A319neo

A320neo

A330-8neo

A380-800

A350-1000A350-900

787-8787-9

777-8

747-8

A330-9neo787-10

777-9

737-MAX9


Defining the Middle of the Market AircraftThe definition for the Middle of the Market (MoM) aircraft is somewhat fluid, given the diversity of opinion expressed by airline executives, aircraft lessors, manufacturers, and other stakeholders. One simple way to define the future MoM aircraft is as an aircraft targeted to replace the current Boeing 757 capability with some growth up to 270 seats and range capability up to 5,500 miles. Another way to define the MoM aircraft is an aircraft that fills the gap between the maximum range and capacity capabilities of the 737 MAX 10/A321neo and the larger 787-8/A330-8neo types. Further research indicates that U.S. and European carriers desire 4,500-5,500 miles of range at a capacity of around 240 seats, while Asian operators are seeking a lower range option in a higher density configuration of up to 300 seats.

After significant analysis across its diverse practice areas, ICF believes that a good MoM aircraft, sometimes referred to as the New Midsize Aircraft (NMA), should be capable of transporting 175-270 passengers with a range of up to 5,500 miles, and powered with two engines providing 40,000-45,000 pounds of thrust. ICF believes the list price of such an aircraft will be in the range of $130-160 million. (Airlines will generally pay much less than list price.)

Making the Case for the MoM AircraftThe business case for or against the MoM aircraft is often debated with vigor. Opponents state that Airbus’ and Boeing’s current offering can sufficiently cover most markets that a future MoM aircraft would serve.

Long-Haul Statistics of the Airbus A320 and Boeing 737 Families

A320 737

Longest route BAH-CDG PTY-MVD

Distance 3,000 miles 3,384 miles

Seats 136 155

Operator Gulf Air COPA

Frequency (annually) 364 flights 637 flights

Number of routes above 2,500 miles1 77 166

1 Includes only scheduled commercial airline operation with more than 100 frequencies annually.

Source: ICF analysis based on IATA PaxIS July 2017 data.

The two prime manufacturers differ on the need for new aircraft in this market segment. Airbus contends that it already has a dominant position at both ends of the market with its A320neo and A330neo offerings. Boeing is constrained in terms of developing a new derivative aircraft from existing products by the range, payload, and operating limitations inherent in a stretched 737 product, while facing challenges in terms of high unit price and operating economics should it choose to shrink its 787 aircraft.

Airlines are currently utilizing a variety of 737, A320, 757, 767, and A330 aircraft on MoM mission profiles, as depicted in the table on the previous page. Larger aircraft, such as the 767 and A330, are able to accomplish the mission profile, but with a significant cost disadvantage. Narrowbodies, such as the 737, 757, and A320, are able to accomplish a similar mission with a number of limitations, primarily on capacity and range. For example, Gulf Air uses a low density Airbus A320 aircraft to fly from its hub in Bahrain to Paris-Charles De Gaulle Airport. Meanwhile, COPA uses a 737-800 to complete a 7-hour flight from its hub at Panama City to Montevideo in Uruguay. Both of these routes push the edge of the performance of their respective airframes, thus requiring special considerations and operating parameters in order to complete their intended mission.

Current Aircraft Design LimitationsWhile the current offerings can complete most of the proposed missions of the MoM aircraft, the greatest drivers behind the demand for this MoM aircraft are operating efficiency and economic effectiveness. The 737 and A320

are already at their design limits.


Quick Facts: Boeing 757

Active + Parked 816 aircraft

Average Age 22.6 years

Longest Route RDU-CDG – 4,052 miles

Largest Passenger OperatorsDelta – 136 aircraft

United – 85 aircraft American – 61 aircraft

1. Current Age and Fleet Size

One driver behind the demand for a MoM aircraft is the current age and fleet size of the 757, the aircraft closest in terms of capability to the MoM. As the table below shows, the average age of serviceable 757 aircraft is nearly 23 years. As a result, many of the current in service aircraft are likely to be replaced in the near future.

Source: ICF analysis based on CAPA Fleets and IATA PaxIS July 2017 data.

2. Take-Off Performance

Take-off capability is an important differentiator in what will make a truly successful MoM aircraft. The 757 Series is generally able to take off at full maximum takeoff weight (MTOW) under Hot and High Conditions with considerably shorter runway requirements than the 737 and A320 families.

The 757 owes its high-performance take-off capability to a relatively lightly loaded wing area and powerful engines. Wing loading and engine thrust capability limit any further stretches to the 737/A320. Both would require carefully integrated new wings and engines, as well as major modifications to the airframe and landing gear to meet capability requirements of a future MoM aircraft. The extent of these modifications will narrow the cost gap between a new clean sheet design and a stretch design, thus making a new MoM aircraft design a more likely option.

3. Costs

As aircraft manufactures explore options to fulfill the MoM category demands, significant consideration must be given to both acquisition costs and operating costs.

For commercial success, operating costs—primarily fuel, crew, and maintenance costs—must be significantly less

than that of current widebodies. In fact, uncompetitive operating and capital costs were the reason that aircraft such as the 787-3 and A330 Regional types (two recent manufacturer attempts to address the MoM segment) were largely unsuccessful.

A clean sheet design would be one that can meet both the technical and financial challenges of the MoM mission profile. Incorporating a common flight deck design with another aircraft (such as the 787 for Boeing, or either the A350, A330, or A320 family for Airbus) allows pilots, flight attendants, maintenance, and other personnel to be trained on a common platform and introduces unprecedented flexibility for operational management. This commonality is a significant advantage and is likely to be a factor in the success for any aircraft in this category.

MoM Aircraft Offers Efficiency and New Market GrowthThe chart below represents the seat capacity and distance of routes currently flown (in dark teal) and current new technology aircraft capability (in light teal). A large subsection of routes is served by aircraft that are much more capable than the route requires. This is generally an inefficient use of aircraft as manufacturers design aircraft to perform best in the upper range of their capabilities.

Source: ICF analysis based on IATA PaxIS July 2017 data.

0

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0 50 100 150 200 250 300 350 400 450 500 550

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ute

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Route Capacity - Seats

MoM Opportunity


A new MoM aircraft would not only replace aircraft operating inefficiently at well below their design capability but also stimulate new markets, likely in the 4,000-5,500 mile range, which cannot be served economically with present aircraft.

A new MoM aircraft is expected to open up new city pairs as represented in the table below, just as the 787/A350 did earlier in the decade. Such an example is shown in the map below, which illustrates new markets or those regaining service due to the introduction of the 787. The attractive economics of a new MoM aircraft are expected to stimulate growth in low cost long-haul service, potentially introducing new entrants to the industry.

INTERNATIONAL SERVICES LAUNCHED WITH BOEING 787 AIRCRAFT FROM THE U.S.

Source: ICF analysis based on OAG July 2016 data

Route Pair Distance (miles)

Tokyo – Las Vegas 5,500

Barcelona – Beijing 5,476

Berlin – Bangkok 5,345

Miami – Stockholm 4,967

Newark – Kahlui 4,895

London – Goa 4,780

Dublin – Seattle 4,527

Cancun – Saõ Paulo 4,101

Looking Forward At the 2017 Paris Air Show, Boeing shared some details of what may become its MoM aircraft. As expected, this aircraft will make heavy use of composite materials and will feature new engine technology. The most significant part of this new development, however, is the “hybrid” design of the fuselage, which will combine the comfort and boarding efficiency of a twin-aisle widebody aircraft with the economics of a single-aisle narrowbody aircraft.

Norwegian, already a beneficiary of expansion due to the 787 and 737 MAX, has expressed interest as a launch customer of the MoM aircraft. Market interest has been reiterated by many industry leaders. John Plueger, the Chief Executive Officer of Air Lease Corporation, stated at the ISTAT Americas 2017 Conference that the MoM aircraft “…could be the airplane that creates the next phase of growth for the low-cost carriers.”

Interest is not limited to Low Cost Carriers. Speaking about Boeing’s MoM aircraft concept, United Airlines Chief Financial Officer Andrew Levy said, “It has a lot of merit and, if they decide to launch it, we’d be very interested in considering it.” Other major airlines, such as Alaska Airlines and Delta Airlines, have also indicated interest.

It is likely that Boeing will launch the first MoM aircraft design both as a defensive measure against the A321’s order book dominance and to reassert leadership in the MoM category it once dominated after the simultaneous introduction of the 757 and the 767. Given its current development cycle commitments with the 737 MAX, 777X, and 787-10, Boeing will likely target entry into service of its new MoM aircraft around 2025. Concurrently, while Airbus has the engineering bandwidth to certify an aircraft earlier, it risks cannibalizing part of its very successful A321neo program. For that reason, Airbus has chosen to continue advertising the A321neo along the A330-8neo as the pair of aircraft best positioned to fulfill the mid-size aircraft market requirements.


Calendar Controlled Maintenance Items for ALTAby David Louzado | Principal, ICF [email protected]

In this day of high-tech maintenance planning systems and highly experienced planning and engineering staff across the industry, ICF’s asset management team is still finding situations where control of calendar driven tasks is not being managed effectively. Despite great steps in automation and computerized control of maintenance, human intervention is still required to ensure compliance in all but the most advanced maintenance planning systems.

When performing compliance audits, pre-purchase inspections, and redelivery audits, one of the easiest items to look for is the datum point for the calculation of next due compliance for a task which is calendar driven and requires off-wing action such as a landing gear overhaul or the expiration of a fire extinguisher cartridge.

Some organizations track compliance from the aircraft part installation date. Whilst this is acceptable for a newly delivered aircraft from the factory, where all tasks take their initial start point as the date of delivery or issue of the first Certificate of Airworthiness, different rules apply once the aircraft is in service.

When challenged on this subject some may argue that the clock starts from the day of installation, but if that were the case, it would not be a calendar controlled task. If, for example, a landing gear assembly with a twelve year overhaul life was to sit in stores for six years before installation, would it be right to wait eighteen years until the next overhaul?

ICF’s technical services and asset management team believe not, as the deterioration is driven by time as well as use. For many systems in use, the planning is controlled by

a last done/next due algorithm, but the compliance for a last done needs to be taken manually from the authorized release certificate (normally an FAA 8130-3 or EASA Form 1) date and not from the installation or task compliance date.

If these tasks are not manually checked, ICF recommends setting a flag in the system to ensure a manual override of the compliance date is entered unless the IT system is advanced enough to include full optical character recognition and a flag to identify those specific tasks that need to have the release dates entered, which are still quite limited. Even with smart technology that tags the release data from the certificate and ties it to the task, it is not that simple. Many release certificates contain additional life limit data in block 13, which is effectively a “free hand” area to add information that is relevant.

Compliance audits may not identify potential shortcomings in such practices and procedures, therefore these issues often only come to light when a lessor inspection or redelivery is taking place, or the aircraft is being sold to a third party. In this case it may be too late to remedy without significant costs to the business. ICF recommends that operator quality assurance procedures specifically look at the control of calendar driven tasks. Please reach out to ICF directly if you have additional questions on this or related subjects.


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ICF International Aviation ExpertiseFor more than 50 years, ICF International (formerly ICF SH&E) has been serving the air transportation industry. ICF provides trusted aviation and aerospace expertise to airlines, airports, governments, international agencies,manufacturers, and financial institutions.

ICF’s core aerospace capabilities include strategy and network planning, forecasting, operations, and logistics; revenue management; asset management and appraisals, supply chain and maintenance management, safety, and security and regulatory compliance; financial due diligence; and privatization, alliances, mergers, acquisitions, and alliances. For airports, ICF is a leader in air service development, demand forecasting, commercial planning, system and economic impact studies, sustainability, ground handling, and cargo operations. In addition to aviation, ICF is a leader in the energy, environment and transportation industries, public safety and defense, health, social programs, and consumer and financial business. This breadth of expertise further enhances the wealth of knowledge and experience available to its aviation clientele.

Committed to providing expert and impartial advice, ICF is both results and value driven. By participating directly in many emerging trends, ICF’s aviation consulting group is especially well equipped to assist its clients in adapting to a rapidly changing environment. The firm’s staff of nearly 100 professionals dedicated to aviation is based in offices in New York, Boston, Ann Arbor, London, Beijing, Singapore, and Hong Kong. ICF draws from a network of associates worldwide.

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