Airlines to Act Reasonably

Members of aviation sector without an exception are trying to survive from crisis of COVID-19 Pandemic. Key players of the industry are trying to take several immediate financial actions such as,

· Cut on payrolls

· Debts restructuring

· Loan options

· Rent holidays

· Sale & Lease back search

· Insurance claims

IATA informed that airline industry is estimated to lose $252bn in 2020 in passenger revenue. Even the payroll of flight crew has been cut and lessors’ obligations on lease agreements have been requested to be performed, there are still huge amount of cost burden remain on airlines: Maintenance Cost.

Maintenance cost is still on shoulders of airlines. During commercial operation restrictions, there are several ways to keep aircraft airworthy.

o Active Storage

o Prolong Parking

o Ghost Flights

Even for all these cases, maintenance costs do not reduce as much as expected. Airlines, which take appropriate actions for their fleet, will overcome this situation with minimum loss.

Common mistake of airlines is to ground the aircraft in their operation base. Generally, operational bases are the hub airports with high parking fees. In addition, airline engineers are not familiar with tasks required during parking, so it takes more material waste and longer working hours compared to aircraft parking experienced engineers. Moreover, airline stocks are not structured for tools and consumables required to ground whole fleet. Considering these disadvantages, taking professional support seems effective in both ways reducing maintenance costs and keeping asset value high.

Operational bases of airlines are selected considering passenger potential. Airport authorities invested more on the hubs which have more passenger potential therefore they demand airlines to pay higher fees compared to small airports. On the other hand, transferring aircraft is the other side of cost. Duration estimation becomes an important cost factor on calculation delta amount between higher parking fees and ferry flight costs. Considering flights from Wuhan re-opened after 76 days, estimation on the re-opening date of Europewide flights would be made. Additionally, airlines business model should be re-considered. As an example, holiday airlines may consider to extend this period more than business carriers. Mixed fleets should also consider to continue grounding a part of the fleet until next high season. Airlines may take decision accepting the calculation as part of their process.

Even Parking/Grounding requirements/orders are given in manufacturer documents, there are numerous cases that engineers to decide. Uncertainties may be asked to manufacturer, unless the airline asked in advance. Moreover, orders in manufacturer’s documents are closed with “if required” clauses. Lack of experience and wrong interpretation of manufacturer’s documents can cause over performance of tasks. Unnecessary application of tasks will cause to waste man-power and material for the airlines. Line maintenance engineers are also not experienced to perform corrosion protectors on open areas. Less application than required will result corrosion and over application will affect other parts on the asset on top of waste of resources. Experience on parking/grounding procedures are valuable for these days and there are many professionals for this application.

Additionally, storage cost are well-known as hidden costs of the airlines. Airlines mainly stock parts for operational requirements, but today it is vice versa. Engine covers are required more than ever. Desiccant stocks would be satisfactory especially in humid locations. Weekly checks of corrosion preventive condition applied on the bare metal surfaces are required, which means continuous stock management is required for both desiccants and corrosion preventive consumables. Shelf life of such material is another factor to be considered.

Even we evaluate only above given facts, it is very open that tailored evaluation is required for airlines for possible grounding solutions in these days. Airlines are currently trying to evaluate options without expertise support in order not to pay additional cost to experts in crisis situation. Unfortunately, a wrong decision may lead airlines to lose more when we have recovered COVID-19 financial crisis.