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Thursday, March 6, 2008

Positive COS and Effect for PMAs

Vicki McConnell, Technology Editor

Continued operational safety (COS) is crucial for all spare parts, whether made by OEMs or PMA companies. The Modification and Replacement Parts Association (MARPA) guidelines for COS may give aircraft buyers more confidence in the part quality and support they can expect when using PMA parts.

Three customers come into Gold Birds Aircraft to purchase pre-flown aircraft. One wants a LearJet 45 to offer for fractional leasing; another, a Cessna 172 for recreational flying. The third wants a well-maintained B737 or an A320 for added flexibility on a regional route. The sales agent has just the aircraft sought, and eagerly shows them off. Engine cowls are popped and turbines gleam. The Cessna seeker appreciates the heavier iron but slides into the smaller bird with obvious joy. Then the three prospects review the maintenance logs. As the sales agent watches their faces, he is surprised to see one start sweating bullets, one freeze up like a deer in the headlights and the third smile and reach for a wallet. All three have reacted to the same thing: record of the use of PMA parts during the operating and MRO history of the aircraft they want to buy.

These markedly different reactions are due to the hangar squawk that’s been going on for years between the two sources of spare parts, namely original equipment manufacturers (OEMs) and companies with FAA parts manufacturer approval (PMA). Some say OEM parts are the most reliable, but too expensive (sweating bullets customer). OEMs complain about reverse engineering by PMAers and encroachment into proprietary data, to which PMAers invite them to help protect that data by entering into licensed part supply agreements (deer in headlights customer, who isn’t exactly sure about the difference between the parts, much less the potential cost savings). Others herald PMA parts as cheaper and readily available, and PMA companies as more willing to listen to customer problems and offer a fix without creating inordinate aircraft down time (reach-for-wallet customer).

This contentiousness is legend, with the FAA squarely in the middle and keeping the ultimate issue in the crosshairs, which is safety. In granting type certificates to OEMs and PMAs to PMAers, the FAA doesn’t distinguish between two different levels of safety.

Now what if this long-standing blame game just stopped one day and the tarmac cleared of all the noxious fog. Both camps could see a vast realm of competition with ample room for various profitable options to meet the needs of commercial, military and general aviation (GA) customers worldwide.

Where did you land, Fantasy Island?

New Reality Zone

Maybe...or maybe there’s a new reality zone of positive commerce somewhere in between today’s contentious parts supply climate and far out fantasy land. In this new zone, everyone comes up a winner, especially customers. There are only two rules: First, OEM and PMA parts are viewed as equal in terms of design and safety, with ultimate value based on the highest level of quality, support and service provided over the lifetime of the part. Second, no one disputes that the aerospace industry remains in a financial recovery cycle, with business survival on the line for every OEM, supplier and operator.

Estimates for the total global MRO market range from $22 billion to $49 billion a year. Within this market, PMA parts have an obvious effect upon the OEM portion of spare parts. In a survey regarding engine MRO parts and services based on 5,000 shop visits, AeroStrategy projects PMAs could capture 3.9 percent of the U.S. air transport parts market by 2011 (see graph below). This represents a cash register ca-ching of $800 million.

By the same token, OEMs are going into the PMA business (Pratt & Whitney with CFM-56-3 life parts) or buying companies holding multiple PMAs (General Electric’s purchase of Smith Aerospace), and this may eventually put some of the smaller PMA suppliers out of business. With all interested parties scrambling after the same limited dollars, it might be time to overhaul the pricing paradigms for aircraft original and resale value, and forge interdependent alliances instead of continuing unproductive animosity. Then let free enterprise of the highest integrity win out.

Taking the COS-way

A key issue for both PMA companies and OEMs is responsibility relative to parts failure, and the need for a continued operational safety (COS) plan implementation by PMA companies. In 2004, the FAA challenged (but did not mandate) the PMA community to develop guidance on such implementation. In response, MARPA (Modification and Replacement Parts Association), an organization formed in 1998 by PMA companies and headquartered in Washington, D.C., created "Guidance Material for a PMA Continued Operational Safety (COS) System" (see chart below). The latest revision was made last September, and the 16-page document is available for review at no cost at www.pmamarpa.com.

MARPA’S COS guidelines encompass preventive systems and procedures, PMA part monitoring that includes part-specific tracking, and problem response actions. Jason Dickstein, MARPA’s president, points out "tracking becomes very important for questions of liability. MARPA encourages PMA companies to optimize their tracking systems, so should there be a parts problem, PMAers can be involved in the parts solution." Contrary to industry mythology still held by some aircraft OEMs and lessors who continue to eschew PMAs, Dickstein stated, "In terms of liability for a catastrophic aircraft failure, if it can be proven that the failure resulted from a PMA part, then the liability comes directly back to the PMA manufacturer."

Dickstein believes PMA parts warranties are often better than those offered by OEMs, but he noted that "early on in the history of aircraft warranties, the whole idea of following your product from development and sale through continued operational safety over the product’s entire life cycle was not mature among PMA companies or OEMs. Today, MARPA is working to integrate COS into the psyche of the PMA industry so that new PMA companies will have this mindset and business practice from day one."

Darren Lovato, president of DER Technologies, Inc. in Reno, Nevada, served on MARPA’s COS committee and helped write the current guidelines. "We tried to keep in mind the different PMA company sizes and resources to make COS implementation possible for all PMAers." He added that, in his experience, PMA parts are rarely involved in parts failures but just as with OEM parts, perform to an important extent based on whether or not they are correctly maintained and installed.

Foresight By PMAers

"Putting MARPA’s COS plan in place is to ensure aviation safety and that PMAers have responsibility for their products," commented John Wicht, FAA project manager for Rapco, Inc., Hartland, Wisconsin. "We’d do it even without the MARPA guidelines, and have by writing our own instructions for continued airworthiness (ICA) on our PMA parts."

ICAs, which detail part-specific service information when parts are modified in any way, are expected of OEMs. PMAers do this for their replacement parts as well. When customers complained that an OEM was requiring a part pull and replacement of pneumatic vacuum pumps at 500 hours due to anticipated vane wear, Rapco created a means for inspecting the pump vanes via a small inspection port located on the pump’s cavity, in conjunction with a measuring caliper to determine actual pump wear. Customers report getting an additional 100 to 500 hours with Rapco’s PMA pumps equipped with the inspection ports. In a similar application, Rapco provides wear indicators for brake linings with a calibrated notch in its PMA part that provides a way to visually inspect lining thickness, which is reduced by wear.

Wicht, who started his career as an A&P mechanic working on GA aircraft, believes "there are always going to be in-service problems with parts, whether it’s an OEM or a PMA part. The difference is in the superior support level that a PMA company provides." Rapco holds 87 different PMA supplements encompassing more than 300 PMA parts and supporting primarily GA and corporate aviation aircraft.

Agreeing with Wicht about ICAs is Larry Shiembob, president and CEO of EXTEX, which makes PMA parts for turbine engines and auxiliary power units. "We’ve been publishing our ICAs since day one." He lauds MARPA for bringing visibility to COS. He cites this example for ICAs: "On the Rolls-Royce RR250 engine, we changed the material and coating on the compressor wheels, as well as converting from metal castings to forgings, which are more durable. These changes required us to issue new ICAs instead of just copying those of the OEM. Just last year, Rolls-Royce changed their 40-year-old design and is now using the same processes and materials we incorporated years ago. This has also required them to issue new ICAs." EXTEX is the world’s largest source of PMA parts for Rolls-Royce RR250 series helicopter engines, and tripled its business in 2006 in PMAs for Pratt & Whitney PT6 fixed- and rotary-wing aircraft engines.

Rick Ray, director of business development at Seattle-based Jet Parts Engineering, stated, "COS has always been part of our development process and our customer service initiative. The old adage that the sale is never complete is especially true with PMA parts. As a part is certified, we invest a great deal of time and money in failure testing. In the unlikely event that a problem arises, the company’s 24-hour support and tracking system can isolate problems and alert customers. Simultaneously, our COS program guides us through identifying root cause and correcting the problem, with customers always in that information loop." In 2007, the company shipped 40,000 PMA parts to airline and third-party MRO customers.

Brother’s Keeper

Wencor, of Springville, Utah, holds 600-plus PMAs and credits 50 percent of its $150 million gross sales to PMA parts. Company Vice President, Nathan Dalton, told AM, "we’ve always paid close attention to COS elements, and have recently formalized our monitoring processes to enhance safety. Our management and outside sales force is trained in COS procedures so that customers can be aware of COS from initial contact." Dalton acknowledges that price is always a factor in selecting PMA or OEM parts and adds that product availability, reliability and product liability support are also tipping points that can come out in favor of PMA parts.

According to Rex Kamphefner, president of Aerometals in El Dorado Hills, California, "COS is all about total customer support and product support. Since we began getting PMAs in 1996, we have been striving to provide the kind of customer support we would like to receive from the OEM. Besides collecting in-service performance on OEM parts, we also ensure that we do enough analysis to fully understand load paths through a part and the way it interfaces with other parts. Then we can design a PMA part that is superior to the OEM part, as well as be able to support that part should in-service difficulties, if any, occur."

He cites an example of proactively answering in-service difficulties on an OEM landing gear strut. The strut was cracking due to loose bushings and the riveted connection of a fairing support in a high stress area. The PMA part Aerometals made not only solves the cracking problem, but has also been exempted from the OEM’s own Airworthiness Directive "because the deficiencies were designed out of our struts in the first place." The end result of such PMAer action "is that customers have less maintenance costs," said Kamphefner.

With 40 years of manufacturing experience, Growth Industries of Grandview, Missouri does 90 percent of its overall business in PMA parts for commercial aircraft and holds 3,000 PMAs. John Droege, vice president of marketing, said the company is in the process of formalizing COS as part of meeting AS9100 standards. Droege expects the substantial time and effort expended to comply with the requirements of this standard, and the COS plan within it, "will give customers and the FAA a stronger comfort level with the quality of parts we provide and lifetime support of those parts." He also believes, "when it comes to the consequences of part failure, we are our brother’s keeper. At our company, we take safety very personally. Before we PMA a part, we ask ourselves ‘what are the failure consequences with this part, and would we let our child or grandchild fly on a plane that uses this part?’"

COS in the GA Market

Though general aviation is often the smallest market segment in total sales for many PMAers, it’s prime territory for putting COS-based customer and part support skills to work. A little education about PMA parts, especially the potential cost savings, can go a long way toward netting more customers in this category of aircraft operators. Rapco’s Wicht said "we can’t manufacture and approve new PMAs fast enough for GA customers, from single owners to flight school, agriculture, charter and light cargo aircraft. Customers approach me all the time with new product ideas. As a person who has been that guy on the shop floor needing an airworthy part, I wish I could help them all."

EXTEX’s Shiembob stated, "two thirds of our business is in GA, which is a very different arena from the airlines. You’re dealing with many different customers who usually don’t have the resource of an engineering department to advise them. Small part orders and short-term contracts are prevalent across a wide scope of operators, flight profiles and maintenance practices. You also end up spending more time with GA customers down on the shop floor." He said EXTEX provides PMA parts to many legacy aircraft operators.

This is also the case for Aerometals, with Kamphefner commenting that the legacy OH-6 Cayuse helicopter used for corporate and private transport "is largely unsupported by the OEM. Last June, we were able to help the U.S. Border Patrol get its OH-6s back flying by fast tracking tail rotor pitch control assemblies that weren’t available from the OEM." This fast track approach also worked for vertical stabilizers on this model. "Along the way, we improved the part by replacing a fragile casting with a more robust machined fitting." Detailed analysis and creating an ICA for the PMA stabilizer not only meets FARs but also future COS needs. Aerometals is currently developing a more robust one-piece impeller machined from a single billet on its five-axes milling machine as a replacement for its brazed, 21-piece PMA impeller on the OH-6 to better resist cracking by foreign object debris. In 2007, Aerometals manufactured and delivered nearly 12,000 PMA parts.

"We can’t manufacture and approve new PMAs fast enough for GA customers."

— John Wicht, Rapco

Some 400 new PMA parts came to market from Wencor in 2007, 50 of which involve business aviation customers within the GA market. Dalton comments that most of these GA PMA parts are complex, such as DS air-cooled turbine blades and turbine engine gas path parts. He observed, "much of business aviation doesn’t monitor its costs as closely as commercial airlines, and most GA maintenance organizations don’t have elaborate processes or engineering departments to test PMA parts. So most rely on the FAA-PMA itself to ensure airworthiness."

Make Way for Mavericks

One of MARPA’s movers and shakers is Jack Buster, founder of Aviation Data, Central Point, Oregon. He believes the GA industry is a gold mine of opportunity for spare parts, and OEMs do a disservice to GA operators by making parts so expensive. On the flip side, he also wishes organizations such as General Aviation Manufacturers Association (GAMA) would pay more attention to the benefits of PMAs. Buster’s company has painstakingly combed the FAA database to create what he thinks is the most accurate listing of PMAs granted in the U.S. (with a few in Canada and Australia) since the 1960s. His current total is about 500,000, but Buster believes it’s possible that a million or more PMAs have actually been issued. "Of course, there’s a great deal of difference between receiving PMA approval and making PMA parts. The actual number of PMA parts is probably unknowable," Buster concluded.

What is known about PMA parts is that to date, millions of them are flying on commercial, military and general aviation aircraft without a single one officially attributed to a catastrophic failure. This is important as Pratt & Whitney moves forward in its PMA manufacture of life limited parts (LLPs), and as British Airways — long a PMA part detractor — now admits to flying them and is seeking out more opportunity for cost savings with PMA parts.

The toughest nut to crack for PMA part acceptance remains aircraft lessors, who represent a relatively large obstacle, according to AeroStrategy Principal and Co-founder, Kevin Michaels. Getting them into the PMA fold "is going to take awhile because there has to be a benefit for the lessees. Maybe some maverick lessor will decide to use PMA parts as a way of differentiating their market position," he suggested. "That would swing other lessors. But for now, the residual value risk still outweighs making a change away from OEM parts."

More mavericks, that sounds like a good third rule for the new reality zone of positive commerce. Maybe some OEM mavericks will follow the example of Boeing, which Dickstein said holds more PMAs than any other OEM and works on a business model that does not rely on aftermarket part sales. Though Pratt & Whitney refers to its replacement parts for the CFM-56-3 as "alternative parts," a spokesperson explains that’s because "on the gas path parts, we’re using the PMA process but for the life limited rotating parts, we’re using the more stringent FAA FAR 33 supplemental type certification process. The first part, the shroud, was certified last summer, and parts are currently flying on a Jet2.com aircraft. We expect certification of additional parts by mid year, with service availability as early as second quarter of this year for the next released parts."

Maybe some FAA mavericks will decide to do away with the PMA designation altogether. EXTEX’S Shiembob recommended to that maverick, "Just issue a design approval, period, and get rid of the stigma of PMA."

Buster, himself something of a maverick, concluded that the demise of the PMA designation might also make way for more of a "don’t fight ’em, join ’em" attitude by OEMs. He suggests that just as we’ve come to accept generic drugs and copier toner, so might replacement parts become just that: FAA approved is FAA approved.

In the new reality zone of positive commerce, that would be a good day for the Gold Birds Aircraft customers, as well as the sales agent and ultimately the OEM. The three customers would have the same reaction to the maintenance logs — a confident smile about the safety of all the equipment on the aircraft being purchased, and a willing reach for wallets.

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