Airline Alliances – E&M Imperative
by Saravanan Rajarajan | 3 min read
It’s a fact that passengers benefit significantly by flying in an Airline which is part of 3 major global alliances; Star Alliance, One World and Sky Team. For example a person flying in star alliance member airline can connect to 1269 airports in 193 countries seamlessly. Alliance members get benefited by getting access to the member’s seat capacity, network destinations and optimized route economics.
Do these alliances offer any benefits to the MRO side of business?
Line Maintenance stands out in the co-operation between the alliance members. Member airlines preferably outsource their line maintenance if they fly to their member bases. A new entrant to the alliance stand to benefit by getting the revenue boost from this stream as long as it processes the relevant aircraft type release certifications.
Due to the cost pressure of MRO market, airlines still prefer to get the best deal whether it is within the alliance or outside. Moreover the relevant certification, Capacity, and contractual restrictions from the Lessor need to be looked in the outsourcing decision of the alliance member. However mutual sharing of capacity, Capability between the alliance members and long term strategic partnerships results in mutual gains which will benefit the members.
Dedicated alliance level online portal helps the members to disclose the surplus parts inventory. This provides the closed platform for the members to access the surplus parts and if needed the option to buy. Members phasing out a fleet or engine model stands to benefit to dispose of the surplus inventory and same time members in need of the items stand to benefit to get the item much lesser than the OEM price.
Alliance members can share the Parts at their bases for their AOG requirements, even though the airlines are managing through the International Association for Technical Pool (IATP).
Joint purchasing initiatives can start with cooperation on the Vendor Audits, Vendor Approval and ratings. However the strategic initiatives can result in the joint negotiation with the vendor on the supplies to the alliance members. Not all the items can be negotiated across the alliance members as the OEM’s has different aftermarket strategies with the member airlines. Commodity items like Consumables and Tires offer the best potential for these joint purchase initiatives.
Alliance offers the platform for the airlines to share their E&M practices and learn from the members. Especially if the partners operate the same fleet the benefit reaped would be significant due to the collective learning on Maintenance practices, Reliability management. With induction of new models like B787,A350 and engine retrofits like A320-Neo and B-737 Max alliance members can share their experiences and learning for smooth induction.
Alliance helps the airlines to discuss the common issues and sought assistance from the OEM’s. Common area for cooperation in Maintenance programs, reliability improvements and retrofit for performance enhancements. In few cases alliance members can work with OEM on propose SB for performance enhancements.
Alliance members can benefit significantly by integrating their IT systems for accurate and real-time data sharing. The flight schedules and differed MEL if available helps for better planning and on time release during transit. It also helps the airline to better plan the aircraft routing as it get the real time maintenance feed from all the members.
With the cutthroat competition and thin margins, airlines need to look beyond themselves to reduce cost and increase efficiency. Even though airline Alliances is not formed for E&M, it provides a greater platform for cooperation. Utilizing this platform for building relationship and working on the aligned interests will result in win-win between members.
Ramco Aviation Suite of M&E/MRO Solutions are currently helping Star Alliance and One world member airlines to manage their end to end E&M, Supply Chain , Finance business processes and advanced reliability reporting to OEM and regulators . Alliance members get benefited by managing the highly distributed and multi-company operations in an integrated manner with seamless data sharing & robust security.