July 02, 2006
Outsourcing catches on among large aircraft carriers
As different air carriers fight for airspace, they are also engaged in a different battle—the battle to cut costs and make them financially attractive to customers. While the smaller carriers have started outsourcing work to maintenance vendors from the outset, the large network carriers in the US are also beginning to see outsourcing as a viable option to stay afloat in their cash-strapped situation.
According to Eclat Consulting, network carriers outsource 40% of their maintenance work, but the figure touches 50% in the case of the low-cost carriers. A Mercer Consulting study emphasizes this growing trend. The study reveals that 56% of airlines are likely to go in for an increase in maintenance, repair, and overhaul (MRO) outflow, and consequently the outside service providers in this sector are likely to benefit.
If we are to look at individual policies of different aircraft carriers, an even clearer picture emerges. Northwest Airlines outsources all heavy maintenance work and most of its line maintenance, while US Airways Group has outsourced nearly 60% of its airframe maintenance since early 2005. Not to be outdone, Delta Air Lines and AMR Corp. have also jumped on the outsourcing bandwagon.
All this is not a shot in the dark; according to Mercer, outsourcing cuts costs by about 75% as compared to in-house work. However, quality concerns are already brewing, particularly in the Aircraft Mechanics Fraternal Association. This can lead to a rethink in the near future in case these clouds of concern gather into a storm.
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