Page 29 - AAA NOVEMBER - DECEMBER 2015 Online Magazine

INTERVIEW LUFTHANSA TECHNIK

for the MRO suppliers. In addition, they need for the usage of their aircraft We know from our maintenance staff every
intellectual property issues have to be and for rescheduling their flight plans, but day what problems are encountered and
solved and high investments for new test that is hard to do if you have less capacity, what materials are used.
equipment, tools, spare parts etc. have that include long term contracts. So if the OEM is interested in the
to be made. These are big challenges for experience we bring, it is a win-win situation.
Non-OEM MRO providers and they will AAA: Are you anticipating But if it doesn’t coalesce, then we compete.
have consequences for their margins. further capacity expansion?
In parallel, the costs for spare parts and Steinhoff: Yes, we do. As mentioned above. AAA: What are the long term threats
repairs are increasing significantly every for MRO industry with number of
year. Therefore new ways of cooperation AAA: Are you planning any changes carriers preferring to lease or exchange
and business models have to be developed to your engine MRO network engines rather than do shop visits?
by MRO suppliers. We expect a stronger since the engine MRO market has Steinhoff: The market share of the OEMs
consolidation process in the MRO business become increasingly volatile? will further increase. In a consequence
over the next years. Steinhoff: We will see big change in the competition will become even harder
engine MRO market. The OEMs hold 50%- than it is already now and especially
AAA: What changes are you planning for 60% of the aftermarket at the point of sale smaller suppliers will face serious
Lufthansa Technik’s strategic vision? already. So for an MRO that the accessible challenges. We see a consolidation
Steinhoff: LHT has already determined market in a traditional perspective, phase in the MRO industry for the future
a new strategic approach within the last with airlines as the direct customer, if this trend continues.
years. One main change are partnerships is smaller—at least for the first life of
which we intensified in the last years the engine. That definitely means more AAA: Studies show that By 2020, most
already. The other one is decentralization: cooperation among bigger MROs and companies in the aviation maintenance,
We want to grow stronger in the Asia- OEMs. That’s why we teamed up with GE. repair, and overhaul sector will use new
Pacific and Americas regions. One good The risk portfolio they take under technology in a way that fundamentally
example is our hangar expansion at their wings when they sign aftermarket changes how the industry works. How
Lufthansa Technik Philippines which will contracts makes a good fit between important is innovation, research and
be operational in early 2016. Therefore we partners because their traditional model development for the MRO industry?
will more and more decentralize functions is changing, too. They have to keep repair Steinhoff: Innovation is one of the
and organizations from Hamburg / costs in line with the contracts they basic conditions of our success. So we
Frankfurt to the world. sign—and that is the experience LHT asked ourselves the question of which
brings to the table. For older engines technologies would enter the market
AAA: Talking about hangars, how full and those working under the traditional with the new aircraft types, and whether
are your hangars? Are more carriers mechanisms, that is stable. they can be influenced by new technical
committing to longer-term contracts? solutions with respect to manufacturing
Steinhoff: Our hangars at LTP in Manila AAA: Do you agree that MRO shops are and energy savings. We considered this in
are fully utilized. We have an excellent finding it more difficult to meet the terms of new aircraft types as well as those
sales network in the market, a large technical requirements of customers already in operations, and the result was
amount of external customers and a good on certain engine platforms ? 170 individual projects that we identified
quality of service. Steinhoff: The market structure changes and captured in a technology roadmap.
But in general we see an overcapacity and it is very hard for an MRO other than We also brought the development
of hangars in the Asia Pacific market. The the OEM to make all the investments. teams in the product divisions together in
main difference between the different Because of the increased reliability of the innovation teams, and these employees
shops is how they are run. MROs that have aircraft and engines you need more and are now working exclusively on
just one or two lines probably don’t make more business to gain the scale - about innovation tasks. They are responsible for
sense. More carriers with big fleets want times two, times three. So for smaller implementing the roadmap together with
to buy complete lines. The tenders for facilities will have economically no chance our newly created central innovation team.
single checks are dwindling. We are seeing to survive. If you don’t have the scales, you Finally, we have more than quadrupled
bigger projects in the market. But bigger will not participate. our investments in innovation, and I think
airlines will not put all their eggs in one On the other hand the OEM is a we are going to see some very concrete
basket and commit to too long contracts. potential customer itself. They hold a lot of successes within the next year or two.
But I’m very sure that providers that can signed contracts and have a lot of risk in This process is an ongoing one, so I think
truly offer three or four lines exclusively their portfolio. We as LHT have a different we’re on the right path.
for bigger projects will succeed in the long approach to repairs and on-wing services.
run if they give the airlines the flexibility We look at it from an airline’s perspective. AAA: Thank You.
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