Business & GA, Commercial

Q&A: AMC And The Evolution of Avionics Maintenance

By Jonathan Ray | March 1, 2008
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Axel Mueller, general manager with Lufthansa Technik in Tulsa, Okla., serves as chairman of the Avionics Maintenance Conference (AMC), an air-transport organization sponsored by the ARINC Industry Activities division.

During his two years as chairman, Mueller has overseen dramatic change, as AMC transitioned to the new business model of a self-sustaining membership organization and evolved with changes in the avionics maintenance market. Last summer, ARINC itself was sold to The Carlyle Group, of Washington, D.C.

In a recent interview with Avionics Editor Bill Carey, Mueller discussed changes in the airline maintenance industry and with AMC, asserting that the conference remains as relevant now as ever. In 2009, he reports, AMC will be collocated with its sister conference AEEC, formerly known as the Airlines Electronic Engineering Committee.

Mueller’s current term as chairman will end with this year’s AMC conference, scheduled for April 14-17 at the Tulsa Marriott Southern Hills in Tulsa, Okla.

Q: Could you summarize the history of AMC, the members of the organization and your mission?

A: AMC is an air-transport Industry Activity organized by Aeronautical Radio. The objectives of AMC are to promote reliability and reduce operating and lifecycle costs in air-transport avionics. This is done by approving maintenance and support techniques through the exchange of technical information.

The AMC consists of representatives from the technical leadership of our air-transport avionics maintenance community. The voting membership consists of the representatives of commercial airline operators, who are present and registered at the annual meeting. Each operator has one vote.

AMC accomplishes its objectives through a number of activities, including he annual Avionics Maintenance Conference, of course, known worldwide as the AMC, and Steering Group meetings. We have "Plane Talk," a quarterly newsletter, and AMC task group activities to define best industry practices. [We] liaise with other committees of ARINC Industry Activities like AEEC, FSEMC and other aviation or electronic industry organizations.

Q: Are there any changes resulting from ARINC’s sale to Carlyle Group?

A: For us, as the AMC, there will be no changes, and also for the other committees as far as I know. The ARINC Industry Activities will support the work of our three committees as before. The important work of the AMC as well as the AEEC and FSEMC was clearly recognized by Carlyle as a key consideration in ARINC’s long-term customer relationships and commitment to the aviation community. That was a big reason for that decision in our favor.

Q: What are the major trends in airline maintenance, and how is AMC changing to stay relevant?

A: Many of the start-up airlines of today and even some of the well established ones increasingly are no longer doing their in-house maintenance on avionics and are subcontracting their repair work to outside maintenance organizations, which are not necessarily the OEMs. A lot of external work is going to MROs, either airline MROs — former airline shops that became their own independent organization — or any independent maintenance organizations. There of course are different reasons for that; either the airlines are too small [such as] start-up airlines, or to economically justify their own repair activities, or are focusing their business totally on aircraft operation, typically what the low-cost airlines are doing. So avionics maintenance is no longer considered part of the core business, or it can be provided at lower-cost externally.

This has developed since the early nineties, which now strongly points to a maintenance market moving toward an open and competitive MRO business. Maintenance issues as discussed at AMC are more often discussed now between MROs, representing their airline customer, and the OEMs, also without the airline being present at the meeting.

The question is now, what does this mean to AMC? The basic structure and session of AMC has not changed much during the past 50 years. It’s amazing that the AMC is looking back to that long history without really significant change. The role players, the people at the AMC, did change along with the changes in the industry environment. I promoted an initiative for an industry-wide meeting [in January 2006], kind of an ad hoc meeting where 25 selected representatives from all parts of our industry were invited for a brainstorming session in order to receive direct feedback from the industry and evaluate change options for the future of the AMC.... The answer to the question, should AMC be continued in the future was confirmed. The value of the AMC was confirmed by all parts of the industry. The question of what should be changed in AMC — there the group came up with a number of recommendations for what to keep and what to change.

Basically, we can say the key element at AMC is the open forum. The open forum should promote a culture based on mutual respect, cooperation and minimal confrontations. The open forum as well should promote relationships among all constituent groups by educating delegates on the business background of specific questions, often asked by a member of one group, for example MROs, to a member of another group like OEMs. More and more, discussion issues are of the nature of product support issues, which go into contractual regions. There is, of course, some potential for disagreement and conflict.... The open forum has to serve as a moderator, if you will, to ensure that conflicting interests are aired in a neutral forum, and if necessary, these issues should be taken off-line for resolution. That means the moderator will say "please discuss that in your suite tonight, not in public."

Q: Last year, AMC adopted a new business model as a self-sustaining membership organization. How is that new business model faring?

A: The new business model is a result of detailed and thorough evaluation. It took, I think, almost a year until we came up with that new [model]. It was done by a committee strategy team consisting of members of the Steering Committee together with ARINC Industry Activities staff. The new model will provide, we think, a fair distribution of the funding required for the operation of AMC Industry Activities. It’s based on the size of the airline operation. It will be measured in RPK (revenue passenger kilometers) and FTK (freight tonne kilometers). This data is available through the IATA reports, Route Area Statistics.... A moderate payment is calculated for the airline for either AMC, AEEC, FSEMC or a combined one for all three committees. It’s a lot of work because most of the airlines don’t know what their part in ARINC Industry Activities would be and amazingly, for the smaller airlines, it’s really affordable.

Currently we are marketing that model. We are informing the airline world about that, I hope with success. There are airlines that [have been] AMC members or ARINC IA members for decades already. There are [other] airlines, I would say in the Far East mainly, where they have a very fast-growing aviation business. We have to go to those areas as well, to market the idea of AMC Industry Activities, to make them members of Industry Activities.

Q: At the last AMC in Phoenix, Ray Glennon, then vice president of ARINC Industry Activities, said the organization has had "mixed" success in signing airlines to new membership agreements. What has been the progress in signing airlines since then?

A: Since the last AMC, eight more airlines have signed AMC membership agreements. This brings the total number of members to 26 airlines. There are several more contracts under the final stages of completion. Hopefully, that will come out during the next AMC, so even higher numbers will [join]. This now represents about 50 percent of the total number of airlines visiting AMC. That is not good enough, but we are on the right track. It’s progressing, and we really anticipate more airlines signing up for membership... which fosters a strong airline presence. The AMC Steering Committee will continue to market the values of AMC in order to broaden the airline base. AMC is still an airline-driven meeting.

Q: What is the benefit to airlines of joining and participating in AMC?

A: The benefits of AMC for airlines are long-term, successful economic management and operation of commercial aircraft. This sometimes is overlooked by today’s bean-counters, whose goals are a little bit more short term. The activities at AMC, which stands for maintenance, and AEEC, which stands for equipment and system architecture standards, need to be viewed in a different, more holistic way. Actually, they are very close together. Simply, what is built today based on a new design has to be maintained tomorrow over the lifecycle of an aircraft program. A lot of valuable information flow is needed between those ARINC Industry Activity committees in both directions in order to optimize aircraft operation and maintenance.

Q: What is the advantage for avionics vendors to participate in the conference?

A: The avionics vendors have the advantage of meeting their customer in one location. There’s no [other] time in the year, no place anywhere, where you can, as a manufacturer, meet your customers. And furthermore, you can receive direct feedback about maintenance issues, problems, related to your products from those airlines. The other thing that also applies, of course, to the airline attendees is the establishment of networking, so you can build up contacts. Last but not least, is the chance to demonstrate new products in your suites in the evening.

Q: How do you accommodate the avionics OEMs with competing PMA parts manufacturers or MROs that want to take some of the aftermarket? How do you get all these people in one room?

A: Well, I think we have to get acquainted with the fact that avionics maintenance is no longer just a business between airlines and OEMs. It has evolved into that open, competitive marketplace, where airlines are seeking the most economic solution to keeping their aircraft flying. Many airline maintenance organizations, they have split off from their parent airline in order to participate in the opportunities of such a market. That, of course, creates some challenges for AMC since technical problems will more and more be prevented by MROs instead of airlines. AMC meeting policies and procedures have been adapted accordingly; that means MROs or other independent repair organizations have now to identify their customer whose item will be discussed in open forum sessions.

Q: How are airlines reacting to "avionics-by-the-hour" type arrangements? Are they increasingly accepting or participating in those types of arrangements? That’s a move on the part of OEMs to hold on to the aftermarket.

A: Avionics-by-the-hour is just one of many different products for component maintenance that are available on today’s marketplace. However, an important fact is that the OEMs are only able to provide service mostly on a limited scope of LRUs whereas the MROs are able to offer nose-to-tail services on an aircraft. That may include any part number, any technology. Especially the smaller airlines and those not having their own maintenance facilities — for them "power-by-the-hour" contracts really will provide an interesting alternative to sending out components separately to numerous maintenance sources outside.

Q: What is your greatest accomplishment as AMC chairman?

A: During the past two years, we have moved through, I would say, an extremely interesting phase of AMC history. I’m happy and also proud that, together with my colleagues on the AMC Steering Group and ARINC IA staff, that I was part of the necessary change process for AMC and the other committees within ARINC IA. I think we have started this process successfully. I will further accompany this process until my retirement, which will happen a good year from now. As long as I will be active in Lufthansa, I will, of course, support AMC.

Another interesting thing that is going to happen, starting in 2009, we will collocate AMC and AEEC. That is to improve the cross-flow of information between the standards setting committees and maintenance committees which I feel is very, very important.

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