Outsourcing The Effects on Pratt & Whitney Essay

Excerpt from Essay :

Outsourcing: "The Effects on Pratt & Whitney vs. Other Global Airline Vendors"

Aviation maintenance is the basic issue. Therefore the process of aviation maintenance and its issues have to be seen in the light of outsourcing. There are many systems in the regular maintenance of aircrafts other than mere issue of parts and replacements. It is in this light that the problems and position of the airline vendors ought to be considered. The many components on the ground include a proper workforce with perfect training and the maintenance issues of civil craft are part of key factors in aviation safety. The actors in the system not only include airlines, airports, manufacturing organizations, air traffic control, and corporate entities not directly involved with flights. The field under study is very broad, and hence there are many smaller specializations. For example even accident investigation comes under this broad span. The major failures can be avoided if engineers show high integrity for the development and operation of equipment and people. (Garland; Wise; Hopkin, 1999)

However the issue of integrity and safety has been discussed in depth especially after the aviation industry was allowed to outsource some of its maintenance operations. Today maintenance has then become so complex that maintenance is now almost automatic using computing and other electronic equipments. The aircraft automation and the change in the way the interaction of humans with the machines they control have occurred have created changes in the way the machines are understood and in the adaptation of technology. The major processes by which people and the machines interact determine how well the job gets done. (Billings, 1997)

The older and earlier planes had little maintenance but they were also unstable and uncontrollable. With the advent of sophisticated technology, while the flight has become safe, the maintenance of the machines require greater technical skill and precision parts and the aircraft automation was put in place to lower the possibility of better maintenance. Today the process of maintaining aircraft control, and many management functions and later the technological use of computers have changed the way the traditional maintenance and flight changed. (Billings, 1997) Therefore the way the maintenance is being done has also come to be changed. The major reasons for the outsourcing are cost factor.

Aircraft Issues:

Many aircraft that are used by the airlines come with component issues that are beyond the scope of ordinary maintenance crews and require highly competent engineers trained by the manufacturers of the aircraft. This can be seen in the case of Boeing and Airbus. The greater maintenance problems in these aircraft seem to be the landing gear and other critical assembly. Can these issues be solved with an outsourced vendor?

Maintenance Costs:

The U.S. airlines outsource 20% of the total maintenance work to contractors and the figure grows. The newer airlines and the established older ones both take to this practice. The newer airlines tend to outsource almost all their schedules after the deregulation came into effect. The companies outsource to Alaska, America, and the reason for this is that the vendors of the services provide more leverage in terms of cost. On the other hand established airlines like American, Delta, and TWA have their own in house maintenance crew and set ups. There are constraints for these airlines to outsource because of the many problems that attend the reduction of their staff. The convenience of outsourcing is used mostly by smaller airlines and the vendor assumes responsibility and quality. Vendors can be changed after a contract expires and this gives the flexibility to airlines and make them cost effective. (Office of the Under Secretary of Defense for Acquisition & Technology, 1996) For the aircrafts there are many issues with costs other than the components. For example there are the direct maintenance costs -- DMC of commercial aircraft that can be called the cost of owning the plane. The primary method in planning a maintenance schedule ought to be based on lessening the cost of ownership, in other words the maintenance costs. (Wu; Liu; Ding; Liu, 2004)

Airlines can also have issues in cost with the maintenance of fleets and sourcing of components. The big companies have problems with the maintenance of aircrafts with their own in house capacities on account of rising costs. Before the deregulation in 1978, the airlines had to have their own maintenance facilities. The spares and the maintenance schedules are all looked for in the light of cost savings and the repair stations seem to efficiently manage maintenance and spares needs. The ten major airlines spent over nine billion dollars for maintenance during the year 2000, of which over two billion dollars went to the outsourced services. This also goes hand in hand with the fact that over the years the outsourcing did decrease costs by ten percent, which is a substantial achievement in an industry beset with rising fuel costs, competition and a general slump. (Czepiel, 2003)

Thus outsourcing as a relief has to be understood from this perspective of the airlines. Aircraft maintenance as a part of fleet management is the biggest of the overall operational costs and is important in the planning of flight operations. Maintenance scheduling thus is a part of aircraft being able to be in flight and this depends on the maintenance facilities, capacities and skills of maintenance workers, and many more variables. Costs of flight maintenance are variable and depend on maintenance for a single aircraft or an entire fleet. The way outside vendors reduce cost is by undertaking to perform an identical operation on many aircraft at one time. Maintenance also depends on the flight plans and pressure to run services and on the wear and tear of aircraft components. The major factor in air craft maintenance is the method of creating a schedule to do preventive maintenance. (Steiner; Hosang; Barta; Wust; Eigel, n. d.)

Learning and becoming equipped is also possible for the vendors on account of the inputs from many organizations that look into the aircraft safety for example the organization that learns and passes on the findings of shortcomings noticed in accidents, for example air crashes and the organization is the NTSB which is thus responsible for the safety of traveling public for the entire world. It is the agency involved in the accident investigations and is responsible for investigating the transportation accidents and then creating safety rules for the governmental agencies such that the recommendations of the Safety Board thus helps create better maintenance systems and avoid commercial aviation accidents. (Steiner; Hosang; Barta; Wust; Eigel, n. d.)

A study conducted by the department of aviation showed how the airlines monitor, and use third party maintenance facilities. The outsourcing of major maintenance to larger repair stations was the subject of the study. It involved a major training of employees, and the tools and equipments that are used in the process. It also included the financial status of the off shore vendors. It was found that the Airlines extensively use such third party providers for the simple maintenance tasks. This may range from a simple service for a component to complete overhauling or even a D. check for the fleet of aircraft. (Billings, 1997)

Outsourcing had become viable for those who do not have sufficient number of crafts that can be serviced by in house and such airlines make substantial savings in outsourcing maintenance which is performed externally. The vendor attains profitability by multiple contracts from many such companies and the large volume makes the work outlay profitable and the vendor will thus charge a lower cost and in record time. There are now a lot of vendors and half of all maintenance operations in the United States airlines are done by third party aviation maintenance industry. There is also an oversight by the Federal Aviation Administration -- FAA and the oversight of repair stations also come under it thus making it possible that the vendors adhere to quality. (Billings, 1997)

Therefore the issue is not only of the costs and savings or safety. The complete maintenance spans a lot of activities which have become so complex that there must be minute specializations including the issue of aircraft automation and there are many management functions and other executive considerations that hitherto did not touch maintenance. Changing consideration and completion deadlines based on competition have changed the way the airline companies approach aircraft maintenance which is now an ongoing process in fleet management that generates the highest overall operational costs. The outsourcing of the maintenance is the method of breaking down of functions in such a way that through out the world the individual component of the maintenance capacities and skills of maintenance are available. For this specialization with opportunity to grow are necessary. The question relates to what is the position of 'Pratt & Whitney' and other 'Global Airline' vendors in this regard. The authorities have placed a great quality control needs on the vendors.

Outsourcing Now:

The major companies have begun outsourcing from the…

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