Executive Summary
The commercial aviation industry is crucial to the economy of many countries as it provides the fastest means of transporting people and goods locally and worldwide. However, this industry is sensitive, and mishandling it can lead to loss of lives and high-value goods. Therefore, aircraft must be correctly maintained and functioning optimally for stakeholders to achieve desirable results while averting catastrophes.
Commercial aviation companies often outsource workers from other firms or use third-party maintenance providers for their aircraft. These workers are hired on a temporary or regular basis depending on the project’s nature. Outsourcing helps companies cut operation costs, improve efficiency, and access new technology that they may not have been able to invest in.
Despite its perceived benefits, outsourcing has been criticized for causing domestic workers to lose their jobs to foreigners and reducing productivity as employees fear replacement. Any commercial aviation company planning outsourced labor should carefully consider these pros and cons before making any decisions.
Introduction
The commercial aviation industry is crucial to the economy of many countries as it provides the fastest means of transporting people and goods both domestically and globally. Without air transport, considerable time would be wasted in transit as other forms of transportation such as road, rail, and sea are comparatively slower. Air transport is undoubtedly the best choice for those who prioritize speed, efficiency, and comfort especially over long distances or when handling perishable and light cargo.
However, this industry is very sensitive to poor handling which can lead to loss of lives and high-value goods. Airplane crashes occur due to various reasons but poor maintenance of aircrafts causes alarm. Therefore, it is essential for the commercial aviation sector to maintain its operations such as airports, aircrafts, watchtowers, radios, computers among others optimally. This involves allocating a reasonable portion of the industry’s budget towards maintenance work which may include hiring technical staff who are highly skilled in maintaining aircrafts.
Some commercial aviation companies find hiring skilled technical staff costly hence opt to outsource this portion of their workforce. Nevertheless, investing in equipment and technology used for maintaining aircrafts ensures that they function optimally while prioritizing safety.
The purpose of this paper is to…
This paper aims to analyze the outsourcing process of commercial aviation maintenance, identifying its advantages and disadvantages for the industry, workers, and general public. The analysis will assist all stakeholders in making informed decisions before implementing such a process.
Definitions
Aviation involves the operation of aircraft and related machinery. It encompasses personnel, regulatory bodies, and airplane manufacturing companies (Babylon, 2007).
Commercial aviation is the business of operating aircraft to carry passengers for commercial purposes or profit. Examples of commercial airlines include United Airlines, American Airlines, and Continental Airlines. The types or models of airplanes used in commercial aviation include Boeing and Airbus, among others (SpaceDay, 2007). In general, the term describes that part of civil aviation that involves the operation of aircraft for hire.
Outsourcing involves assigning responsibilities for some or all tasks and activities involved in the development, running, or maintenance of a system to someone outside of the company or organization (Damacoc, 2007). The purpose is to reduce operating costs.
An air carrier is a commercial system of air transportation that provides both international and domestic scheduled and chartered services. This system includes air carriers, supplemental air carriers, commercial operators of large aircraft, as well as air taxis and air travel clubs. According to the Federal Aviation Administration (FAA) of the United States, an air carrier is defined as any citizen of the United States who undertakes, whether directly or indirectly or by lease or any other arrangement, to engage in air transportation” (RITA, 2009).
The importance of this topic to air carriers cannot be overstated.
Proper aviation maintenance is required for any commercial airline company. Analyzing the issue of outsourcing is therefore crucial for air carriers as it will help them plan adequately before engaging in any contracting with outsourcing experts. They will have full information on the benefits and disadvantages associated with the process. Furthermore, this research paper prompts air carriers to conduct further research on the topic to expand their understanding.
Commercial aviation maintenance outsourcing.
Commercial aviation companies are increasingly relying on outsourced workers from external companies and often enlist third-party maintenance providers for their aircraft. These workers may be hired temporarily or on a regular basis, depending on the nature of the project. In some cases, only a few individuals are hired, while in other instances entire firms are brought on board (Makhnach, 2009).
The outsourced work varies in scope and scale and may include servicing a specific component, engine overhauling, or performing a D check for an entire aircraft fleet (U.S. Department of Transportation, 2003). All aircraft are subject to periodic checks – A, B, C, and D checks – after a certain period of time. An A” check is performed after about 500 hours of flight or one month. This is typically carried out overnight but may take longer for repairs if many defects are observed. The “B” check is also done overnight and is performed every three months while the “C” check takes place after 2,500 hours of flight or between twelve to eighteen months during which the plane is placed in the hangar (maintenance base). Finally, the D check – also referred to as the Heavy Maintenance visit – occurs after approximately four or five years of flight. Many aircraft at this level are either stored or scrapped (Aerosphere, 2000).
Maintenance outsourcing can be done for a specific type of aircraft or for a specific maintenance function, such as the maintenance of a particular part of the aircraft engine (U.S. Department of Transportation, 2003). Several companies offer aviation maintenance services, with Duncan Aviation Inc. being a good example. The company has experienced airframe mechanics who provide services for any airframe maintenance event, whether scheduled or emergency. Other service providers within this company include A&P technicians, IA-aircraft inspectors, and research and records technicians (Duncan Aviation, 2009). They operate on a twenty-four-hour basis seven days per week and have been authorized by many aviation companies to perform their maintenance.
Some of the services offered by Duncan Aviation Inc. include pre-buying evaluations; bolster beam repairs; tool calibrations; removal of wings followed by corrosion repairs; replacement of junction plates; repairing tanks and any fuel leaks; replacement of horizontal stab bushings; landing gear overhaul and checking dimension ACs. They also install electronic flight bags upgrades in-flight deck and cabin entertainment systems as well as safety systems such as weather systems plus phones and high-speed data connections.
Interior services provided by Duncan Aviation Inc. include dynamic seat upholstery, tables and drink rails, lavatories among others while they also conduct maintenance works such as painting engine repair APU repairs (Duncan Aviation 2009).
There is an increasing need for maintenance services, which has led to a rise in the number of vendors. According to the United States’ General Accounting Office report of 1997, half of aviation maintenance work is done by outsourced companies. This has created high competition in the third-party aviation maintenance field (U.S. Department of Transportation, 2003). It should be noted that despite third-party vendors performing maintenance work, it is the responsibility of airline management to ensure that vendors adhere to approved policies, requirements and procedures. Lack of proper maintenance can be catastrophic as witnessed in 1996 when ValuJet Flight 592 en route from Miami International Airport in Florida to Hartsfield-Jackson Atlanta International Airport crashed into a swamp in Brown Farm Wildlife Management area of the Everglades. The accident resulted in two pilots and three flight attendants plus all one hundred and five passengers perishing. The investigation showed that ValuJet’s maintenance contractor had placed several expired chemical oxygen generators (Langewiesesche, 1998).
Factors Leading to Commercial Aviation Maintenance Outsourcing
Commercial aviation maintenance stations within commercial airlines face several challenges, prompting companies to outsource this section. The first challenge is the lack of qualified maintenance employees (U.S. Department of Transportation, 2003). There are very few qualified aviation maintenance workers available, and as the aviation industry continues to grow, more qualified workers are needed to keep up with ever-changing technology. This has led to companies competing for the limited pool of available workers, making it difficult for them to be employed on a permanent basis as they often move between different companies in search of better prospects.
One challenge in aviation is the high cost of investing in spare parts. The investment for spare parts per aircraft is typically fifteen percent of the purchase price, which makes many carriers unwilling to stock or maintain these parts. Instead, they opt to obtain them from third-party providers when needed, as this process is less expensive. Another challenge associated with spare parts is that it can be difficult to find approved parts due to the increasing number of manufacturers entering the market. To address this issue, the FAA in the USA has established criteria for approving spare arts (U.S. Department of Transportation, 2003).
Advantages of Commercial Aviation Outsourcing
Outsourcing in commercial aviation has several advantages, the first being access to cheaper labor. It is more cost-efficient for commercial airlines because they do not have to hire permanent workers who would require full salaries, benefits, and compensation like full-time employees. Additionally, outsourcing work to foreign countries can save on labor rates, particularly in developing countries where rates tend to be lower than in the US (Lovetoknow, 2009).
Outsourcing workers reduces a company’s operating costs because even though contract workers may receive higher salaries than regular employees, hidden costs such as transportation, housing allowances, medical coverage and meals are deducted. Furthermore, contract workers provide their own facilities and infrastructure such as computers and machinery which results in reduced operating costs for commercial airlines (U.S. Department of Transportation, 2003).
Through outsourcing, the aviation industry can overcome the shortage of qualified aviation maintenance personnel. According to George Ebbs, President of Embry Riddle Aeronautical University, the number of trained and experienced aircraft technicians does not match the rate of expansion in the industry. He cites two reasons for this: firstly, obtaining an FAA Airframe Power plant Certificate is expensive; secondly, training equipment and curricula are outdated and do not align with modern industry technology. To bridge this gap, airlines’ maintenance divisions and repair stations rely on contract workers – both licensed and unlicensed – to cover unplanned or seasonal peaks in specific projects or specialist maintenance loads (U.S. Department of Transportation, 2003).
Outsourced labor provides the commercial aviation industry with access to better technology and facilities, which may be too costly for every company to invest in. It would require significant investment to research and train own workers on the scientific and technological advancements of the industry. Therefore, relying on third-party firms who have the latest technology and equipment is a preferable option (Lovetoknow, 2009).
It should be noted that each aircraft from different companies may require its own maintenance technology. Hiring new employees every time new equipment or a new aircraft is introduced into the market would be too expensive. Outsourcing third-party workers who have knowledge in that particular area is a better option as they will leave when the work is done. If another different aircraft needs maintenance, a similar process can be repeated.
Another benefit of outsourcing is increased productivity when contract workers are used instead of company-based employees. Experts argue that employees who work on contract terms are likely to work longer hours than those employed permanently. Not many qualified workers are willing to work permanently in an industry if they have to work odd hours. However, third-party workers are ready to work even for 24 hours, working all shifts. This is because outsourced employees feel under pressure to finish the work and be paid, unlike company-based workers who receive their salaries whether they complete assignments or not (Lovetoknow, 2009).
Another benefit of outsourcing is that it allows industries to focus more on their core business. For commercial aviation companies, the main goal is to transport people and goods safely and profitably. Maintenance and repairs are secondary tasks in pursuit of this goal. Therefore, the company should not expend all its energy on work that is not its primary objective. To address this issue, they may need to hire contract workers for other tasks while concentrating on their main goal (Lovetoknow, 2009).
Another advantage of outsourcing is that it allows the company to engage in new developments and projects at a faster rate than relying on its employees. Hiring and training the right people can take several weeks or even months, and constructing new facilities may also take time to complete. By using contract workers, these projects can be completed in as little as one week (AllBusiness, 2009).
Finally, outsourcing can help reduce business risks. All businesses, regardless of their field, face some level of risk. These risks are generated by the rapid changes in markets, government regulations, competition, financial conditions and technologies. Outsourcing providers can manage any of these risks for the business and in most cases they may be more qualified than the company’s management to do so (AllBusiness, 2009).
Disadvantages of Commercial Aviation Maintenance Outsourcing
Despite its evident advantages, commercial aviation maintenance outsourcing also has disadvantages. One of the primary concerns is that regular employees may feel that their jobs are threatened. When workers realize that their jobs are being outsourced, they will likely feel insecure and may start searching for other employment opportunities or leave their current positions abruptly. Demoralization can be detrimental to any workforce as it can result in decreased productivity and substandard performance (Lovetoknow, 2009).
The second disadvantage of outsourcing is that the company may lose control of its business operations since it has allowed another entity to handle its affairs. Additionally, maintenance may not be done in accordance with the policies or structures of the company as the third-party firm also has its own policies. This may lead to conflicts between the outsourcing firm and the company or their workers. When management is in total control of every part of the operation, it can make any decision that it feels is beneficial to the business, but in outsourcing, it is not in complete control. It is also possible for outsourced workers to sign contracts just for monetary gain and thus end up doing shoddy jobs (Lovetoknow, 2009).
The aviation company is vulnerable to data breaches, even with its secured information. Outsourced workers perform duties for multiple companies and may come across trade secrets that they could exchange with other companies for money. Therefore, the company must be cautious about determining which details it should allow temporary workers to access.
Another major disadvantage of commercial aviation outsourcing, especially in countries like the United Kingdom and the United States, is that it has led to the loss of many jobs for locals to foreigners (Cyber Futuristic, 2004). Several companies are hiring maintenance experts from developing nations such as India so that they can pay them less for the same work. They also avoid other costs such as insurance, medical coverage, and pension contributions. This puts locals at a disadvantage as they may struggle to find employment even when jobs are available. Contractual misunderstandings may prompt outsourced workers to take legal action against the company, resulting in a loss of resources such as money and time (Cyber Futuristic, 2004).
Conclusion.
Today, business process outsourcing is conducted in several industries, including the commercial aviation industry. The main reason why most companies practice outsourcing is to cut their operation costs while improving their efficiencies. For example, they can access technology that they may not have acquired at that particular time and complete tasks much earlier than if they utilized their own employees.
However, despite the perceived benefits, outsourcing has been criticized for causing locals to lose their jobs to foreigners and reducing workers’ productivity as they fear being replaced. There is also a possibility that outsourced workers may be underqualified and thus do imperfect work. Additionally, outsourced workers are exposed to company secrets which they may reveal.
Any commercial aviation company planning to have outsourced labor should consider these pros and cons carefully before making such a decision.
References
Aerosphere (2000) is a valuable resource for information on aeronautics. To access this resource, visit the website and retrieve the necessary data. The retrieval date for this information was March 4, 2009.
Visit http://www.aerosphere.com/Magazine/AERONAUTICS/aeronautics.shtml for more information on aeronautics.
AllBusiness (2009) discusses the benefits of outsourcing for small businesses. The article can be accessed at https://www.allbusiness.com/the-benefits-of-outsourcing-for-small-businesses-4968174-1.html.
From http://www.allbusiness.com/human-resources/workforce-management-hiring/1084
Babylon (2007) provides information on aviation. The source can be retrieved from http://www.babylon.com. This information was accessed on March 4, 2009.
Visit http://www.babylon.com/definition/aviation/English for the definition of aviation in English.
Damacoc (2007) provides a glossary for data warehousing. The source can be accessed at: http://www.damacoc.com/data-warehouse-glossary/.
Here is the link to access the presentation: http://www.damacoc.org/presentations/2007_04_11_Adelman_DWGlossary.doc
Duncan Aviation Inc. (2009) provides business aircraft service and support. The company offers a variety of services to ensure the safety and efficiency of your aircraft. To learn more, visit their website at https://www.duncanaviation.aero/.
From http://www.duncanaviation.aero/
Langewiesche, W. (1998, March). The Lessons of ValuJet 592. The Atlantic Online. Retrieved from insert URL here.
March 4, 2009 from http://www.theatlantic.com/issues/98mar/valujet1.htm
LoveToKnow (2009) discusses the pros and cons of outsourcing. The article can be retrieved from http://www.lovetoknow.com/Business:Pros_and_Cons_of_Outsourcing.
http://jobs.lovetoknow.com/Pros_and_Cons_of_Outsourcing
Olga Makhnach (2009) discusses the pros and cons of outsourcing in her article. She highlights the benefits and drawbacks of this business practice. The article can be accessed at:
http://ezinearticles.com/?Pros-and-Cons-of-Outsourcing&id=519756
RITA (2009) is an air carrier that can be accessed by visiting their website. The website was retrieved on March 4th, 2009.
Visit http://www.bts.gov/dictionary/search.xml
SpaceDay (2009) provides a glossary of aeronautics terms. The information was retrieved on February 4th, 2009.
Visit the following website for a glossary of aeronautics terms: http://www.spaceday.org/index.php/Glossary-of-Aeronautics-Terms.html
The US Department of Transportation published a report in 2003 on the practices and perspectives of outsourcing aircraft.
Maintenance.
Retrieved March 4, 2009 from:
http://www.tc.faa.gov/its/worldpac/techrpt/ar02-122.pdf
