Aircraft MRO & PMA Pricing

How does the pricing work in the overhaul MRO network?

Typically, there are two sets of prices. Firstly, from the OEM, the price is the price. Then there is also the aftermarket. These are parts that have been inspected and are still good for use. They could be brand new, but because they’ve been sitting on a shelf for a while, they won’t be sold at a brand-new price. Then there is a market in spare parts. There are brokers who sell parts, all around the world, who buy old engines – not necessarily such old ones – and strip them for parts.

Let’s say I’ve got a CFM56 engine on my aircraft. I own the aircraft and I’ve got a contract with the MRO provider that we agree on the overhaul. Do I then have to state whether I would approve of taking PMA parts or OEM parts? As an airline, do I know how much I’m going to pay for each?

For the work package for an engine, the shop will, typically, say right, there is a standard work package. For that standard work package, this is the price. That price includes the necessary spares, as required. Anything that is out of the work scope, is then presented to the customer. We found this was damaged or worn beyond expectations; this is outside the agreed work package. We need to replace this. We can source you a used one, which has still got enough life on it, at this price. Or I can order one from Safran or Rolls Royce, at this price. What do you want to do?

As an airline, I would get a big invoice of one package, which is the overhaul, for the engine. Would it have line by line itemization of all those parts?

Yes.

Then they would give me an option as to whether it was an Airbus part or the PMA part and I would choose between the two?

Yes. There is the work package, which is the standard work, this is what we’re going to do and this is what we’re not going to do. Here are things that sometimes happen. So if this happens, this is what it’s going to cost. Anything else will be discussed on a case by case basis.