APEX Insider: Lufthansa Technik on the Benefits of Aftermarket MRO Services

APEX Insider: Lufthansa Technik on the Benefits of Aftermarket MRO Services

This week APEX Media is visiting the Hamburg,
Germany headquarters of Lufthansa Technik, a global leader in aircraft MRO. Henning Jochmann
is head of cabin modifications here and he’s agreed to spend a little bit of time with
us talking shop. So, hi Henning, thank you so much for having
us today at Lufthansa Technik in Hamburg and inside your awesome A320 mock-up here. – Good to have you here. – Thank you, thank you so much. So, let’s talk a little bit about what goes
on at this site for Lufthansa Technik in Hamburg, we are at the headquarters. – Yes, and maybe you know it, but Lufthansa
Technik is one of the largest MRO providers and MRO stands for maintenance, repair and
overhaul. And if you look at maintenance, repair and
overhaul you see that there’s a big amount of services that we offer to the market, starting
with engine overhaul, digitization to base and line maintenance, components overhaul
and the whole value chain needs to operate safe aircraft. – And this market, the MRO market is quite
massive, I mean by some very cursory internet research anyway I see that the market is approximately
worth 75 billion US dollars an could grow to 100 billion US dollars by 2024 or 2025. Does that sound about right by your estimates? – That’s some amazing figures. If you look at the next five years, talking
about such big things that’s what we also see for the market, it’s one of the most
growing markets and the background of course is new aircraft coming up in the market and
there are more aircraft in the air than ever before, so the MRO business is a business
you need. Every aircraft needs MRO, so it’s a consequence
that the market has grown in this way. – What portion of this market would you
say belongs to Lufthansa Technik? You guys are one of the largest players, yes? – Yes, if you look at the figures, 5,000
aircraft flying around and I think every fifth aircraft in the world that is still operating
at the moment is maintained by LHT, Lufthansa Technik. – So, how is the fact that airlines want
to have ubiquitous connectivity across their fleets and they fact that more and more technologies
are being integrated into the cabin, how is this changing business for you guys? – It’s a challenge, to be honest. We see it from our group fleets but also from
our customers that there are different needs for connectivity. If you go to the line-fit catalogue of the
big OEMs, you see one line-fit option for connectivity, but that’s not always the
solution that the customers really need. That’s what we do in the market at the moment,
we offer different connectivity solutions to the market that fits, for example, for
a premium airline that needs a completely different in-flight connectivity solution
to a low-cost airline which online needs a small broadband to check the credit card data,
for example, to do duty free. That’s exactly what we do, we offer a product
catalogue that offers more than one solution for nearly every modification programme. – Right, so honestly the aftermarket space
is really where a lot of the in-flight connectivity installations are happening. – Yes, definitely, and what’s interesting
is people always ask me the upgrade market, when it starts, and for us the upgrade market
starts exactly after an aircraft is coming out from the line-fit. – A lot of them don’t even fly it first,
they’ll bring them straight over to have their modifications done. – Exactly, to bring in a premium economy
class, to bring in an economy class, to change something because a line-fit catalogue from
the OEMs for modification are exactly the same as the upgrade product catalogue, so
if you forget to install an connectivity system in the line-fit you can go for the solution
in the upgrade service, but there is only like I mentioned one solution and that is
what we want to change. – OK, you guys are looking to diversify
your services out of being thought of as a service provider to Lufthansa Group airlines
to work with lots of different airlines, so how are you going about that? – Well, first of all, Lufthansa is in our
name, so it’s very important for us. Nevertheless, we were approached by lots of
our customers outside of the Lufthansa Group and they asked us for help in the context
of we need other modification solutions and not the modification solutions that are on
the market right now. That was the starting point, we thought OK
let’s talk about this. We saw that there’s a need for customized,
very clever, intelligent modifications and, with our knowledge about the MRO business,
if you see all the aircraft in our hangars, our group airlines operate about 800 aircraft,
so we have lots of experience of flying these aircraft, about their behaviour in the air
and in the operation and if you fit all this together, you can develop of course better
products. When it comes to my department of cabin modification,
there is of course a big need for bringing information about the difference an OEM solution
of a modification with an SB to the STC solution offered by third parties. That’s exactly what we’re doing at the
moment in the market, explaining the difference between what’s necessary to bring modifications
to the market. That’s one reason why we raised the IAMA
approach, for example. – OK, and can you tell us a bit more about
the IAMA approach, what is it? – Of course, I can talk about that. IAMA as a name stands for Independent Aircraft
Modifier Alliance and the name is exactly what’s behind it. I mentioned before that a lot of customers
approach us to ask us for help to develop new modifications that fits with their fleets,
and when you talk to them they say OK, but you do it with the help of an STC, which stands
for supplemental type certificate, it is the base we create to bring everything you want
on an aircraft. We saw that there was a little bit of uncertainty
about the real value of the STC, and what happens to the aircraft if other solutions
are coming from the OEMs. So we ask why they think that, as it’s the
same authority level, we have to fulfil the same requirements as the OEM to bring something
on the aircraft, so why is there so much unknown about the value of an STC. The came and made points like it’s the quality
of the STC, you never know what you get, that was a big statement, and then we knew we had
to create something, so we approached our biggest competitors, which was hard for us
by the way. We talked to them and said you must have the
problems, you also offer STCs to the market, what do you see? And everybody we talked to said oh my god,
yes, you’re absolutely right. We decided we had the same problem and we
have to work together. To be absolutely clear, this is not a Lufthansa
Technik thing here, this is a task force if you like to combine ventures to show the market
that there are real alternative solutions in the market that fulfil the same quality
standards and the same standards of security like the OEM solutions.

About the Author: Michael Flood

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